2025 VC Survey"Israel is firing on all cylinders as it relates to AI"
2025 VC Survey
"Israel is firing on all cylinders as it relates to AI"
Aaron Rinberg, Partner at Ibex Investors, spoke to CTech about his predictions for the year ahead.
"We are meeting many amazing Israeli founders and companies and that’s why I can confidently say that Israel is firing on all cylinders as it relates to AI," said Aaron Rinberg, Partner at Ibex Investors. "That being said, this is mainly focused on the foundational technology layers and not on the implementation of AI within broader solutions. We’re already seeing almost every company implementing AI at some level within their platform which further underlines the capabilities of the technologists in the ecosystem."
Rinberg spoke to CTech for its 2025 VC Survey about some of this predictions for the year ahead and what Ibex Investors has its eyes on as we settle into 2025.
You can read the entire interview below:
Fund ID
Name of fund/funds: Ibex Investors
Total sum of the fund: $719M (Israel-focused strategies as of November 30, 2024)
Partners: Justin Borus, Aaron Rinberg, Cooper Stainbrook, Adam Eisenberg, Mike Donnelly, Jeff Peters
Notable/select portfolio companies (active): Appwrite, Control Plane, DigitalOwl, Honeycomb, BeamUp, Weka
Notable exits: Lightspin, Dome9, Oribi
2024 is over. How can you summarize it in terms of the Israeli high-tech industry?
The year was a tumultuous one for high-tech with higher highs and lower lows for participants in the industry. The backdrop of October 7 weighed (and continues to weigh) on everyone but the risk appetite increased greatly à QQQ (ETF that tracks the tech-heavy Nasdaq) was up ~25% and we saw ~$9.6B of capital deployed across Israeli private companies (up ~40% from 2023). Overall, the year can be summarized by a mood of cautious optimism with notes of personal sadness.
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?
As a fund that focuses on enterprise software investments, we see that the opportunity around cyber security is massive with Israel continuing to dominate as a market leader. The challenge is created by the same opportunity as the sector will need to continue proving itself as a fertile investment space without drawing too much attention from investors who may perceive it to be a bullet-proof opportunity. Internally we continue to stay true to our investment methodology and process, leveraging our presence both in Israel and the US, while always recognizing that as a steward of our investors’ capital, we need to avoid ‘Icarus companies’.
How will new American leadership affect the global high-tech industry or economy? And where does this place Israel and its entrepreneurs?
The new administration has made no secret about its affinity towards Israel as well as its positioning vis-à-vis nearshoring. It is safe to assume that this might place Israel and its entrepreneurs in a relatively stronger position globally.
What are the three most important things the Israeli government should do today to accelerate the high-tech engine in the coming year?
- Take steps to have major carriers return to normal flight schedules
- Government-mandated language programs (to increase workforce integration)
- Develop Eilat (and the surrounding region) to become an addition to the Tel Aviv ecosystem.
Are there new sectors you see as relevant? Are there any fields you anticipate will weaken significantly in the coming year?
The great thing about technology is that it can continuously innovate itself and create value by doing so. Technology tools developed in 2010 run on infrastructure that has become obsolete – Snowflake, for example, was founded in 2012 (can 10+-year-old architecture be considered the most innovative solution). As such, we’ll continue our focus on deploying capital to support Seed stage companies within the enterprise software and fintech space while supporting late-stage companies on their path to go public (and holding those public positions within our public-focused investment vehicles).
Our stage-focused investment practice means that we’re constantly measuring early-stage companies against their full potential (their public equivalents) and are hyper-focused on the competitive edge of our public positions relative to up-and-coming technology threats.
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?
We are meeting many amazing Israeli founders and companies and that’s why I can confidently say that Israel is firing on all cylinders as it relates to AI. That being said, this is mainly focused on the foundational technology layers and not on the implementation of AI within broader solutions. We’re already seeing almost every company implementing AI at some level within their platform which further underlines the capabilities of the technologists in the ecosystem.
Could the global IPO drought end in the coming year?
Ibex has holdings in early-stage startups and growth companies, as well as public companies. From what we identify, it indeed could. Many companies were gearing up to go public during 2022 and have been operating as such for the past 10-12 quarters. This coupled with strong 24-month public market performance we believe could lead to several strong IPOs in 2025.
From an investor's perspective: will the coming year be better for early-stage startups or more mature companies?
It really depends on the definition of ‘early-stage’ and ‘mature’, the barbell ends of very early and very late and will likely have a good 2025, and the middle “classic venture / early-growth” space will likely be tough as investors look for more equity compensation for the risk they are taking which may be challenging for existing shareholders. I think stage isn't the right thing to look at in terms of prediction - investment opportunities are really dependent on the specific company in question, their market opportunity, and plan to capitalize on the opportunity. Take 2022 as an example year, the tech-heavy NASDAQ index was down ~32.4% - its worst year in over a decade - but (and hindsight is 20/20) deploying capital with OpenAI that year would have been at a sub $4B valuation (compared to the ~$150B+ current valuation).
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 raised two new private investment funds in 2024 and except for our open-ended Israel-focused strategies currently don’t expect to be fundraising in 2025, but time will tell.
How many investments did you make in 2024, and how does it compare to previous years?
2024 was a strong year for us with 21 new investments (8 direct investments and 13 investments via our secondary fund).
Provide an example of an intriguing investment you made in 2024. What sets this company apart, or what is distinctive about its sector?
We invested in Arya who provides an intimacy concierge for incumbent relationships. Traditionally relationship apps have been focused on net-new relationships (e.g. Tinder, Hinge, Bumble, Ashley Madison, Plenty of Fish, eHarmony, etc.), but what caught our eye with Arya was the fact it is enabling individuals that are currently in a relationship to unlock their full potential.
Two notable companies that you think will thrive in 2025.
Company Name: BeamUP
Sector + description of the product/service: Platform that enables asset protection and provides end-to-end visibility across the supply chain. The first enterprise-ready AI-powered operations intelligence platform that provides organizations with full facility observability and AI-powered insights for data-driven decision-making.
Investment amount + total: $7M (Ibex) $15M (total)
Founding Year: 2019
Reasoning why this is their year: BeamUP’s platform has been developed and battle-tested with the largest and most demanding companies in the world with the team scaling their penetration both within their existing customer base as well as across their target verticals. Additionally, BeamUP has been working with industry experts to ensure that their solution unlocks a new dynamic of industry-wide best practices.
Company Name: DigitalOwl
Sector + description of the product/service: Platform for insurers and legal professionals that enables them to transform their medical review analysis process to be completed in both a more timely and more accurate manner. Enabled by AI, DigitalOwl empowers professionals to view, triage, connect, and (thanks to GenAI) chat with complex medical data in a secure and compliant software environment.
Investment amount + total: $11M (Ibex) $38M (total)
Founding Year: 2017
Reasoning why this is their year: While already having achieved revenue growth by going to market with the initial iteration of DigitalOwl’s platform the team has been working diligently to implement an internal AI engine that will withstand the insurance industry's rigorous compliance standards. Demo’d in mid-2024, the new version of the platform was released towards the end of the year and is seeing significant inbound interest from customers that were previously in various stages of deliberation. DigitalOwl is fast being recognized as the de-facto tool to use to remain competitive within the insurance underwriting space turning the historically tedious task of medical record review into a competitive advantage.
