Even in war, Israel remains a venture capital destination

Despite the horrific terrorist attacks experienced on October 7 and the ensuing now four-month war to eradicate Hamas, Israeli startups continue to attract the interest of investors. 

While the Israeli economy has contracted as expected and VC investment has fallen from record highs, Israeli entrepreneurs, despite many juggling responsibilities both on the battlefield and in the boardroom, have continued to forge ahead. The ability of Israeli startups to continue to raise capital not only reflects Israeli resilience but also investor confidence in Israel’s potential to remain a global technology and innovation leader after the war.

Furthermore, the willingness of investors to shake off the current environment as well as the possibility of a protracted, multi-front conflict and continue to invest in Israeli companies shows that, for some, Israel remains a top destination for finding superior opportunities.

Some notable raises since the beginning of the war include:

• Cybersecurity startup Ionix raised a $42 million Series A in early February to accelerate its scaling efforts. The round was led by Maor Investments and included Hyperwise Ventures, Team8 Ventures, and US Venture Partners.
• Also in February, Tel Aviv based Clarity raised $16 million seed round for its deep-fake detection software. The funding round was led by Walden Catalyst Ventures and Bessemer Venture Partners.
• Oasis, a cybersecurity platform for managing non-human identities, came out of stealth mode to raise a $40 million Series A in January. Investors included Sequoia Capital, Accel Partners, Maple Capital, and Cyberstarts. 
• Fintech Pontera, which develops software to help financial advisors manage retirement accounts, raised $60 million to help expand its workforce. Funders included Iconiq, Blumberg Capital, The Founders Kitchen, Collaborative Fund, and Hanaco. 

It’s no coincidence that many of the firms involved in recent rounds have deep experience investing in Israel. Such firms understand the geopolitical climate better than most and possess better insights into the present and future of the country than those who may shy away from making current investments in Israel. In the absence of a crystal ball, the actions of these ultra-informed individuals may serve as a reliable gauge of Israel’s anticipated post-war recovery.

Demonstrating the sustained appetite for Israeli opportunities, investors are also securing capital for deployment in the country. Ibex Investors, based in Denver, recently announced a $106 million raise intended for investment in Israeli seed-stage companies. Justin Borus, the founder and Chief Investment Officer (CIO) of Ibex Investors, remarked to CTECH, “Despite the ongoing war and challenging global macroeconomics, our LPs recognize the opportunity to achieve significant returns precisely from such opportunities. Many of the world’s greatest innovations arise directly from periods of war and conflict, and we believe this time will be no exception.”

Without a doubt, Israel is facing challenging times. The scars—both mental and physical—from the October 7 attacks are still fresh, and the nation is entrenched in a grueling battle against a ruthless adversary. However, history attests to Israeli resilience, indicating that following this conflict, Israel will once again reclaim its position as one of the most sought-after destinations for innovation and venture capital. I’d bet on it, others already are.