Author: January Barnes
Israel has long been a hub for innovation and excellence. The Israeli tech industry has weathered the front of many crises, from financial downturns, the Covid pandemic to ongoing hostilities in the Israeli-Palestinian conflict.
Israel has one of the most active and impressive start-up ecosystems in the entire world. Recent atrocities upon the people of Israel have left the country is mourning. So the question is, how will these events and wartime efforts effect the start-up ecosystem? and how will Israeli start-up founders navigate this complex environment.
We spoke to Nir Gartzman, Cofounder and Managing partner theDOCK. theDOCK – actively invest in bold founders who bring novel technologies into the digitally transforming Maritime, Ports & Logistics sectors.
Who better to talk to understand how the Israeli start-up and investor world is responding to the October 7 th terrorist attacks? I can only imagine how dark these last weeks must have been for you. Israel declared war on Hamas after more than 1,500 terrorists broke through
the fortified Gaza border on October 7 and murdered some 1,500 people, most of them civilians, including babies, children and the elderly. Many were murdered in their homes and some 260 were massacred at an outdoor music festival. 222 civilians, including women, children, and babies were kidnapped and held hostage in Gaza without any contact or access to basic humanitarian aid.
Conflict is not a new threat to Israel but on this scale is unforeseen. It is also no coincidence that cybersecurity start-ups have emerged from Israel which will most definitely help the country in modern day wartime.
Most recently research firm Start-up Genome says Israeli city’s start-up scene worth $120 billion; AI, cybersecurity and big data the strongest sectors and in 2022. The city also gained 30 new unicorns, or firms valued at over $1 billion, and 20 companies went public, raising $4
billion. Over 130 multinational companies also now have innovation centres in Tel Aviv.
So let’s find out what’s happening now in the Israeli start-up and investor sector in these wartime conditions.
1. Firstly I wanted to speak to you, as you’ve always had such a deep understanding and connection to the Israeli start-up ecosystem, having supported and promoted numerous Israeli start-up founders and it’s vital in times of conflict that businesses can still function and most importantly function well. Most importantly theDOCK focuses on maritime, ports and logistics start-ups. These are crucial areas in a time of war so we’d love your perspective on how these types of start-ups are adjusting and helping these wartime efforts?
During these challenging times, start-ups (and their founders) play a vital role in supporting wartime efforts. The maritime & logistics sectors are crucial for the transportation of essential
goods, medical supplies, and humanitarian aid; by enhancing their logistics and supply chain technologies to ensure the efficient movement of resources, both with government
agencies and with civilian volunteering organisations.
Additionally, innovations in cybersecurity have become increasingly essential to protect critical infrastructure. As a parallel to these actions, startups continue to service their global customers and ensure the local economy & infrastructure is strong even after the crisis is over.
2. Also we are aware that your friends and colleagues have all stepped up to help and are volunteering to collect food and equipment for our fellow citizens in the south who were temporarily mobilized to safe locations. Can you elaborate further of what you have been doing these past 2 weeks?
In times of crisis, the Israeli community comes together. My colleagues and I have been actively involved in volunteering to collect and distribute food and equipment to those affected by the conflict. It's essential for businesses and individuals to contribute to supporting our fellow citizens during these challenging times.
3. What are the biggest challenges Israeli start-ups are facing since the October 7th attacks?
Israeli start-ups are facing several significant challenges. These include disruptions in the supply chain, difficulties in fundraising due to market uncertainties, and the potential for
talent shortages as individuals may be called up for military service. These challenges require adaptability, resilience, and innovative solutions- as startup founders excel in these
areas (in comparison to most people in society), we are optimistic about their ability to survive!
4. Israel is a country of just 9 million people but is known as the world’s “start-up nation.” What resources can Israeli start-up founders’ access to help them navigate the changing landscape of the Israeli start-up ecosystem and ensure they keep this “start-up nation” mentality?
Israeli start-up founders have access to various resources to navigate the changing landscape. These resources include government initiatives, such as grants and support from
organizations like the Israel Innovation Authority. Additionally, established networks within the Israeli and global start-up ecosystem provide invaluable guidance to founders in these times.
“Your network is your net worth!”
5. What are 2-3 theDOCK portfolio start-up founders that have demonstrated resilience and exceptional leadership since October 7th – are there any specific start-ups that are helping the Israeli army or general cause?
It is manifested by their ability to play a ‘dual role’- While some of their human capital is involved in military efforts (and play essential roles in supporting logistics and supply chain
operations) the companies continue to deploy their solutions with global customers, keeping a ‘business as usual’ activity amid global competition from startups who do not have this
It's mostly determination, talented employees and supportive families which make it possible.
6. Many founders, investors and business leaders may have been called up to military service - Israel has already called up more than 300,000 reservists, many of whom are working in local tech firms and companies - can you speak to what both start-ups and investors are doing in these conditions and how they are navigating given entire start-up teams and founders are now faced with fighting in a war?
The mass mobilization of reservists can affect both start-ups and investors. Some start-up team members and founders have been called up for military service, which can lead to
temporary workforce challenges. However, the Israeli start-up community is known for its adaptability, and many companies have contingency plans in place to ensure business
7. Tech is the single biggest sector of the Israeli economy. Therefore it’s essential the government support this industry. There are so many initiatives from both the government and private sectors to support civilians and support the troops. Can you elaborate on any specific initiatives or causes that we should know about that are supporting both the Israeli VC investment and start-up ecosystem as a result of the October 7th attacks?
The Israeli government and private sectors have launched initiatives to support civilians and troops. For instance, the Israel Innovation Authority's allocation of NIS 100 million in assistance grants is a significant step. Private-sector initiatives, such as providing mentorship, resources, and funding, are also crucial to maintaining the resilience of the Israeli start-up ecosystem.
8. Does having experienced the pandemic and a work from home mentality equipped Israeli start-ups and investors with the capacity to survive and even perhaps thrive in this wartime conflict?
The experience gained from the pandemic, which necessitated remote work and adaptability, has equipped Israeli start-ups and investors to better handle the challenges
of wartime conflict. The ability to work remotely and stay agile has become an advantage in these uncertain times.
9. In 2021, Israeli start-ups raised a whopping $27 billion of VC investments — more than in the previous three years combined, according to the Israel Innovation Authority, a government agency. How does what is happening effect start-up founders deal flow or investment opportunities? Some believe think the war could ultimately strengthen the sector as it will likely draw support from investors keen to help the country rebuild. Do you think this is true?
Good question! IMHO- The ongoing conflict may temporarily affect deal flow and investment opportunities due to market uncertainties. However, it's possible that investors will view
Israeli start-ups as crucial for post-conflict recovery, potentially strengthening the sector in the long term.
10. What are you seeing already from start-up founders and the Israeli tech community that shows light at the end of the tunnel? Or is it too early to have an assessment?
Despite the challenges, the Israeli tech community is resilient and innovative. We are already seeing inspiring initiatives and collaborations that show promise for a brighter future. It may
be too early for a full assessment, but the spirit of innovation persists.
11. On another note – do you think we will see new start-ups that can effectively help and assist in the war efforts and position Israel as a leader in wartime technology?
As a matter of fact, this process has already begun and is continually evolving along with 75 years of struggle in our harsh neighbourhood. Like Golda Meir, the women prime minister of Israel in the 70’s quotes in the past- “our secret weapon is that we do not have anywhere else to go”.
We innovate or die.
12. What advice would you give any Israeli investor, founder, entrepreneur or thought leader reading this now and wondering what’s next?
Israeli entrepreneurs, investors, and founders should remain adaptable and resilient (which they already are!). Collaboration, innovation, and strong support within the
Israeli ecosystem will be crucial for navigating these times.
13. Given theDOCK is a vertical Venture Capital firm investing in Maritime, Supply Chain, and Offshore sectors. How are these startups navigating “business as usual” given the changing political climate and the wartime efforts, are they having to pivot or have some come to a complete stand still?
Start-ups are facing unique challenges even in times of routine. In this evolving political and wartime environment, some may need to pivot their strategies to meet new
demands, while continuing operations and delivering their promises to current customers.
I believe that it’s too early to answer this one with specific examples.
14. The Israel Innovation Authority, which is charge of directing the nation’s tech policies, will allocate NIS 100 million ($25 million) in assistance grants to provide about 100 cash-strapped start-ups with a lifeline to cope with the challenges posed by the war situation. Will this be enough? What more should the authorities and government be doing to support their start-up and investor ecosystem in this time of war?
The allocation of NIS 100 million in assistance grants by the Israel Innovation Authority is a significant step in supporting cash-strapped start-ups. However, more can be done, and it's
essential for authorities and the government to continue providing resources and support for the start-up and investor ecosystem during these challenging times- from tax incentives to regulatory adaptations- we as investors- are pretty loud in front of our government to act faster in this respect.
15. What can people do to help theDOCK and your portfolio of start-ups to help get through these challenging times?
To continue their ongoing trust in our portfolio companies, and keeping belief that we will end up stronger, more resilient and better in delivering safer and more efficient world trade in the long term.
Thanks in advance for that!
ABOUT THE AUTHOR
Note from the Editor - January Barnes:
On a personal note - Not to compare wars, as each war is entirely different but in the case of Ukraine – despite war they still managed to create an outstanding start-up ecosystem that is both scalable and global. This attests to their talented and resilient workforce. I have no
doubt that Israel will too also rise to the challenge. I want to also say how very sorry I am that your country has had to endure such unspeakable horrors and one can only hope that your country and people will emerge stronger and better from these unprecedented and
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