September Edition 2022

14 There is a tradition and mentality geared towards innovation, where success stories attract more talent and failures generally do not discourage, but encourage additional attempts. Oded Uni, partner at Gornitzky, said: “We see very young students taking computer science and cyber-security courses at school with a view to be drafted to Israel’s elite technological military units (which, many times, would open the door to a successful hitech career). Another reason is what I call ‘the practicality of the invention.’ While in other places we sometimes see a race for the coolest technology, in Israel the unicorns are usually focused on solving real problems which could yield an unbelievable value. Another explanation is that considering Israel’s small size, Israeli startups are set up from inception with an eye towards the global markets. That dictates awareness of market trends and strategic planning customarily found only in more mature companies.” Leading multinationals, growth and early-stage global VCs are now identifying Israel asanunparalleledplaceof talent andsuccessful innovation. In addition to multinationals such as Google, Meta, Amazon, Intel, Motorola, Medtronic, and many others opening hubs in Israel, now prominent VCs such as Insight Partners, Tiger Global, Blackstone and the Vision Fund are putting people on the ground. According to a report by Start-Up Nation Central, an Israeli nonprofit in the technology sector, the most active foreign investor in Israeli companies in 2021 was Insight Partners, a New York-based firm that invested in 49 rounds in 2021, up from 17 in 2020. The company’s portfolio includes Israeli success stories like Wix and Monday.com, as well as Shopify and Twitter. American investment firm Tiger Global Management participated in 16 funding rounds in Israeli start-ups in 2021, up from just three in 2020. Foreign VC funds make up four of the top 10 most active funds in Israel, according to the report. "We are also seeing substantial contribution by existing investors in the financing rounds whowish tomaintain their holdings in companies they had previously invested in," pointed out Yael Benyayer, partner at EBN. "Many, many new funds are closing, new deals are being announced every day,” adds Jeremy Lustman, partner at DLA Piper. “The Israeli market is still on fire, relative to others, but just not at the height we were a few months back." Who is investing?

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