2025 VC Survey"Israeli entrepreneurs are some of the best in the world and are poised to take advantage of 2025"
2025 VC Survey
"Israeli entrepreneurs are some of the best in the world and are poised to take advantage of 2025"
Chaim Schiff, CEO of Elephant Secondary Market Platform, joined CTech to predict how the markets are expected to shift and what that may do to Startup Nation in 2025.
“President Trump’s election has had an overall positive impact on the global economic outlook,” said Chaim Schiff, CEO of Elephant Secondary Market Platform. “Good vibes in the global market will only serve to boost Israel. We are a formidable player in the tech ecosystem and a high tide raises all ships and that will include ours.”
Schiff joined CTech for its 2025 VC Survey on the cusp of Trump’s second term in office and shared how it may have impacted markets. Notably, how it will influence Israeli high-tech and Startup Nation.
“Israeli entrepreneurs are some of the best in the world and are poised to take advantage of 2025,” he added.
You can read the entire interview below.
Fund ID
Name: Elephant Secondary Market Platform
Notable/select portfolio companies (active): Tens of global and Israeli Unicorns and Decacorns are listed on the Platform
2024 is over. How can you summarize it in terms of the Israeli high-tech industry?
From our vantage point as operators in the global secondary market for private tech, we’ve seen a slow but steady return of investors to the fray after a cooling off post-ZIRP (zero interest-rate period). This is certainly true in the Israeli ecosystem as well – appetite from investors to gain access to the top late-stage companies and for sellers to source liquidity for their shares.
In this post-ZIRP environment, we’ve also seen more flexibility from tech investors and shareholders who previously may not have considered secondaries for liquidity, several Israeli investors have become more interested in selling their shares to source liquidity even at a discount to last-round pricing.
It’s also just been pretty amazing to see the tenacity of Israeli founders, investors, and everyone else in the broader ecosystem pushing things forward throughout the year and everything that this country has gone through. It’s incredible that not only has the country not shut down in response to the war, but the tech ecosystem is in a great position to thrive in 2025.
Looking ahead to 2025 - What challenges and opportunities await the Israeli high-tech sector in the coming year, and how are you, as investors, preparing for them?
In The Elephant’s capacity as a secondary market for private tech, we serve investors, companies, as well as sellers. In our view, one of the greatest challenges here in Israel will be faced by the many employees impacted by the recent tax increases. Increasing costs and frozen tax credits mean a higher cost of living. This will make sourcing additional liquidity exceedingly relevant. Not only for high-tech workers but for their employers as well. Employees fretting over their financial needs is not a good recipe for a thriving business.
On the other hand, we are seeing that companies are increasingly open to providing a platform for their employees to access pre-IPO liquidity. This is an opportunity that we’ve seen steady growth in both on a global scale as well as for Israeli companies in particular. A larger secondary market creates a more nuanced tech sector with solutions and opportunities across a wide range of participants.
Without giving away much, we’ve been developing relationships and products to further support all parties in the tech sector achieve their goals through the secondary market.
How will new American leadership affect the global high-tech industry or economy? And where does this place Israel and its entrepreneurs?
Without getting into politics, President Trump’s election has had an overall positive impact on the global economic outlook. Good vibes in the global market will only serve to boost Israel. We are a formidable player in the tech ecosystem and a high tide raises all ships and that will include ours.
Israeli entrepreneurs are some of the best in the world and are poised to take advantage of 2025.
What are the most important things the Israeli government should do today to accelerate the high-tech engine in the coming year?
Two major threats could impact the sector and Israel’s ability to continue benefiting from the economic engine of recent years.
The first threat is already here and may intensify in the coming years: the phenomenon of Israeli companies registering abroad, primarily in the United States. In this regard, the state can and should offer one-time tax incentives to entrepreneurs as a lever to encourage the establishment and registration of companies in Israel during their early stages. These tax benefits, provided at such an early stage, have almost no immediate cost to the state budget due to the companies’ nascent status and inherent uncertainty. The government should also consider offering tax incentives to funds that invest in early-stage companies established in Israel, rather than in companies whose technology and IP are Israeli but are incorporated abroad.
The second phenomenon the state must address is the brain drain to other countries. This is a much more dangerous and challenging issue to tackle in a globalized world with high workforce mobility. However, the solution should also involve tax benefits for entrepreneurs and employee stock option programs for individuals living and working in Israel.
Are there new sectors you see as relevant? Are there any fields you anticipate will weaken significantly in the coming year?
Quantum, while not a new sector, has become increasingly relevant for our global community of investors. We’re receiving significant demand, there’s been some recent relevant news, as well as some significant developments coming out of companies in this vertical from across the globe. If the interest we’ve seen to this point is an indication, Quantum is a vertical that will only continue to grow in relevance in 2025.
While there are some Quantum companies here in Israel, they are a bit younger. We look forward to seeing them come to recognition on the global stage as they continue to grow.
Another sector where we see growing interest in the secondary ecosystem and we anticipate positive developments and strong momentum in the coming years is homeland security, military technologies, and the civilian applications of these technologies. This trend is being driven by two key developments that are expected to unfold in the coming years.
The first stems from a dramatic increase in budgetary spending by European countries on defense and military procurement. This phenomenon is already underway, largely as a result of the war in Ukraine and the rising tensions between NATO countries and Russia and China. It is also fueled by growing pressure from the Trump administration on NATO member states to meet their commitment of allocating 2% of their budgets to defense.
The second trend, where Israel and its high-tech sector hold a unique and leading position, is a direct outcome of the current war. This conflict has unequivocally demonstrated that cutting-edge technology in the service of the state and military is one of the greatest advantages on the future battlefield. Israel has a significant opportunity to leverage and capitalize on this by establishing a new leading high-tech sector (just as it did in the past with cybersecurity) if it can effectively support and promote the safe transition of these technologies into commercial, civilian, or governmental applications.
In terms of primaries (and consequently also in secondaries), AI is obviously the hottest vertical. We’ve seen huge interest in the leading global AI companies in the space and we expect to see continued growth in this area. It is always special when we can put Israeli companies front and center for our global investor base. Right now AI is where investors are looking and we hope to see that trend influence the Israeli ecosystem more and more in 2025.
Is Israel missing out on the AI revolution in the global arms race? If not, what should the local industry focus on to join the global race?
As I mentioned above, there is huge interest in the secondary market in AI companies, mostly in the leading global unicorns and decacorns (valued at over $10 billion). Israeli companies are not there yet, but we hope that it is a matter of time.
Could the global IPO drought end in the coming year?
On the one hand, there is clearly a lot of optimism about the market in general and high hopes that companies will finally go public.
On the other hand, there has been talk about companies staying private longer. The idea of a longer-term growth strategy, while staying private, in contrast to a 2021 model of growth seems to have taken root.
Now these are not necessarily mutually exclusive. Companies that are much later stage and have been waiting to go public for some time are not the same as smaller companies which, were it 2021, might have gone public at an earlier stage.
Perhaps we’ve come to a differentiated private market where companies can stay private longer without negative implications. Take Ali Ghodsi, the CEO of Databricks, a private company valued at over $60 billion, who expressed earlier in 2024 that he is in no rush to take the company public. Obviously, the secondary market would play a big part in this model.
From an investor's perspective: will the coming year be better for early-stage startups or more mature companies?
As a secondary market platform, we deal mainly with late-stage and mature companies as secondaries are a better fit for these types of companies. We definitely see 2025 as a year where the scope and scale of secondaries will continue to expand and grow in line with the steady increase we have seen in this market over the last decade.
Did you raise fund money in 2024 for an existing fund or a new one? What are your expectations regarding this matter for 2025?
We have plans to enter the funds sector in 2025. Stay tuned.
How many investments did you make in 2024, and how does it compare to previous years?
We have processed dozens of transactions on the platform this past year and activity on our platform continues to grow.
Two notable companies that you think will thrive in 2025. These can be from your portfolio or not.
Company Name: Classiq
Sector + description of the product/service: Quantum. Classiq is a software platform designed for creating algorithm design. The company's platform offers design, optimization, analysis, and execution functionalities, enabling researchers and developers to build complex quantum algorithms faster and with less expertise.
Investment amount + total: Total raised - $62M
Founding Year: 2020
Reasoning why this is their year: We’ve been watching Classiq for several years. As we’re seeing investor interest in the Quantum sector growing, we’re confident that the company will be a part of the conversation.
Company Name: Island
Sector + description of the product/service: Cybersecurity company that has developed an enterprise browser designed to allow work to flow freely while remaining fundamentally secure.
Investment amount + total: Total raised - $550M
Founding Year: 2020
Reasoning why this is their year: This is a 4-year-old company that’s weathered some tough years in tech and Israel and is valued at $3B. It is a testament to the ability of the Israeli tech ecosystem.
