ISRAEL, FROM SILICON VALLEY

Darya Henig Shaked & Maya Kaplan Atrakchi


The Israeli tech scene is known for its strong connection to major global tech capitals, and Silicon Valley in particular. Therefore, the estimation of approximately 100,000 Israelis living in Silicon Valley is not surprising. The population isn’t exactly a diaspora as many Israelis working in tech in Silicon Valley have relocated temporarily. Nonetheless, Israel’s integration into the Silicon Valley tech scene is rare and quite

unique in comparison to other global tech hubs of its kind.


Generally speaking, and evidenced by numerous studies, the US VC ecosystem, and venture capitalists globally, invest in (and hire) individuals similar to themselves in terms of background, culture, language, life experiences, and industry. In a nutshell, this is a core reason for the massive homogeneity in innovation and why a shift towards equality has moved very slowly (~1% per decade) since the inception of venture capitalism in the 1940’s.


Having said that, there is a growing curiosity and openness to new ideas and founders amongst venture capitalists worldwide, and Israel is a driving force of that curiosity. VC activity in Israel in the 1990’s was one of the most intensive in the world, exceeded only by California and Massachusetts. Since the 1990’s with groundbreaking technology companies such as ICQ and CheckPoint, to significant IPOs and acquisitions in the 2000’s including Mobileye ($15.3B - largest Israel acquisition in history), Lemonade, Waze, 888, Wix, and to the high valuations of SentinelOne, IronSource, Playtika, Monday.com, Jfrog, Gong and more, Israel has produced an exponential trend of growing companies, valuations, capital raises, and products that have attracted the attention of the venture world and continues to do so (nearly 70 unicorns and counting- in 2021 M.A. & D.S.). If a US VC doesn’t have a local branch in TLV, it has a

General Partner, scout, or trusted source exploring the Israeli tech ecosystem and/or startups founded by Israelis outside the borders of the country.


Whether it is due to a survival way of thinking that is embedded in the Israel DNA, a creative and problem-solving culture and economy, government support, strong R&D capabilities, an educated and skilled workforce, the unified (and tech-focused) mandatory military service, or a Jewish belief of Tikkun Olam, Israel attracts the focus of US and global VCs, and has been referred to as the ‘new’ Silicon Valley or “Startup Nation”. Interestingly, many of these pillars of Israeli society bear similarity to Silicon Valley including military roots, academia, influx of human capital and government support (U.S. Small Business Investment Act similar in kind to Israel’s Yozma).


Silicon Valley and Israel generally have a symbiotic relationship founded in a deep emphasis on technology and innovation. Many US-headquartered corporations including Apple, Facebook, Microsoft, Google, IBM, Intel, Cisco, and others have R&D centers in Israel, and many Israeli founders and executives spend significant time in Silicon Valley to interact with investors and customers, recruit talent, and enhance their skill set. From January 2003 to February 2021, 57 California headquartered investors, of which 54 are from the Bay Area, have invested in 750 Israeli startups. In short, the story of Silicon Valley and Israel is one of mutual value.


That said, in the past, some US investors have been hesitant to invest in Israel. Concerns include the tax implications of investing in an Israel-based company, the physical distance between Israel and the US market and the associated sales challenges, and cultural differences. In terms of culture, it goes without saying that Israelis have a reputation of being direct, which can be perceived at times as aggressive, in comparison to their U.S. counterparts. Nonetheless, many of these attributes are viewed positively, signaling a confident and decisive leader able to weather the storm of building a successful company. Moreover, in today’s post-COVID world, geography and distance are becoming less of a concern for VCs - Israelis with US-based entities, lead teams remotely, close funding rounds without a face-to-face

meeting, and even investors that to date have not invested outside the US, are now starting to invest in the Israeli ecosystem.


As an Israeli living in Silicon Valley and an American living in Israel, we have a front-row seat to the deep ties between these two centers of innovation. These ties will only continue to grow as understanding between cultures deepen, and successes multiply and scale. The Israeli and Silicon Valley ecosystems each offer a unique set of solutions, tools and opportunities, and the relationship between the two ecosystems has only begun.

 

Darya Henig Shaked is a venture capitalist and social justice advocate. She is the founding, managing director of WeAct Ventures, an investment firm aimed at increasing diversity in the innovation industry and does both direct and LP investing in women led venture funds/ startups. In addition she has founded and led an international community of female founders and investors that has organically grown to 5000+ members.

Darya@weactventures.com


Maya Kaplan Atrakchi is a general partner at WeAct Ventures, co-founding the investment arm of WeAct that directly invests in women led startups. In addition, Maya

is a private investor with M2 Family Ventures, and an attorney at Jackson Lewis P.C., the leading U.S. workplace law firm.

Maya@weactventures.com