2025 VC SurveyHorizon Capital highlights MusicTech as a key sector in 2025
2025 VC Survey
Horizon Capital highlights MusicTech as a key sector in 2025
“Over the past two years, we witnessed a revolution born from the fusion of AI and music,” said Managing Partners Yaniv Jacobi and Lior Segal.
“One of the fields set to thrive in the coming year is MusicTech. Over the past two years, we witnessed a revolution born from the fusion of AI and music,” said Horizon Capital Managing Partners Yaniv Jacobi and Lior Segal. “Unfortunately, many companies entered the space unethically, using content without proper licenses, leading to numerous lawsuits that slowed the industry's progress.”
For several weeks, CTech has been asking prominent investors in Israeli high-tech for their insights and predictions on where the industry will go in 2025. While many have stated their optimism for sectors like Defensetech or Quantum Computing, Horizon Capital has shined a light on multi-media - provided that the sector grows in an ethical and positive way.
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Horizon Capital Managing Partners Yaniv Jacobi and Lior Segal
(Photo: Horizon Capital)
“Now is the time for companies with real technology to shine by protecting artists' rights and driving the market in a positive and sustainable direction,” they added.
You can read the entire interview below:
Fund ID
Name of fund/funds: Horizon Capital
Total sum of the fund: $50M
Partners: Yaniv Jacobi and Lior Segal
Notable/select portfolio companies (active): Verbit, Datarails, Siteaware, Vee, Bites, Rep, Seesion42, Aiode.
Notable exits: Own Company (FKA OwnBackup), Nanorep, Ondigo, Appoxee.
2024 is over. How would you summarize the year for the Israeli high-tech industry?
2024 was a transformative year for the global venture capital landscape. After the sharp downturn in 2022, the market began to stabilize, though challenges persisted. In Israel, the year presented a dual reality: ongoing difficulties stemming from regional instability and economic uncertainty, contrasted with extraordinary resilience demonstrated by Israeli entrepreneurs. Founders showed their ability to adapt and deliver under unprecedented conditions, reaffirming the strength of the local tech ecosystem. At Horizon Capital, this year reinforced our optimism, which we proudly shared with our investors.
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?
The biggest challenge for Israeli startups lies in overcoming the lasting effects of the 2022 valuation bubble, which made many investors cautious after seeing limited returns. Despite this, 2025 holds significant promise for those who can endure. Founders who launched in 2023-24 and sustained their ventures have demonstrated exceptional strength and vision, and if they weren't so visionary, we could call them crazy. Those resilient entrepreneurs have the potential to lead the next wave of innovation, and if the ecosystem is fully committed to them, they will thrive.
How will new American leadership affect the global high-tech industry or economy? And where does this place Israel and its entrepreneurs?
With a focus on boosting private sector growth, the new U.S. administration could create opportunities for technology and innovation. We predict to see a pro-business government that could close the gap of the last few years. One of the most important things we always say to our portfolio companies is to remain relevant regardless of political changes. We expect that the Fed's interest rate cuts will reignite IPO activity, inject fresh capital into the market, and boost momentum in the Israeli tech ecosystem.
What are the three most important things the Israeli government should do today to accelerate the high-tech engine in the coming year?
- Education. Education. Education. The Israeli government should first prioritize education, particularly in STEM subjects, to ensure a steady pipeline of skilled talent for the future. This is the most important thing, and we are afraid that will change.
- They should provide targeted support to companies in regions affected by conflict (in the North and Gaza), ensuring their ability to recover and grow.
- Foster an environment that incentivizes entrepreneurship, enabling startups to scale locally rather than seeking opportunities abroad.
Are there new sectors you see as relevant? Are there any fields you anticipate will weaken significantly in the coming year?
AI will remain dominant, but its focus will shift from hype-driven applications like chatbots to transformative technologies addressing core industries. Sectors such as legal, construction, traditional manufacturing, and even finance are poised for disruption through automation and data-driven solutions by AI. These advancements will create lasting value and efficiency, and it's a great opportunity for VCs to get into unserved areas.
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?
While Israel isn’t at the forefront of the AI revolution yet, its entrepreneurs possess unique qualities such as boldness, creativity, and perseverance that show that it's never too late for Israeli founders to take over markets. The industry should focus on leveraging these strengths to build impactful, scalable AI solutions.
Could the global IPO drought end in the coming year?
We believe the IPO market is on the verge of recovery. Behind-the-scenes activity suggests growing momentum, and as conditions stabilize, companies with strong fundamentals will lead the charge back to public markets.
From an investor’s perspective, will the coming year be better for early-stage startups or more mature companies?
Both stages offer unique opportunities in 2025. Early-stage startups will continue to attract attention due to their high growth potential, while mature companies that shifted over the last couple of years from focusing solely on top-line revenues to building healthier businesses, in terms of capital and operational efficiency, are also well-positioned to secure late-stage funding.
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 are gearing up for fundraising next year and are excited about the opportunities ahead. Stay tuned for updates.
How many investments did you make in 2024, and how does it compare to previous years?
In 2023, Horizon Capital was recognized as one of the most active investors in Israel relative to fund size, completing six pre-seed investments. In 2024, we led two rounds and participated in six follow-on investments, showcasing our commitment to nurturing innovation and growth.
Two notable companies that you think will thrive in 2025.
One of the fields set to thrive in the coming year is MusicTech. Over the past two years, we witnessed a revolution born from the fusion of AI and music. Unfortunately, many companies entered the space unethically, using content without proper licenses, leading to numerous lawsuits that slowed the industry's progress. Now is the time for companies with real technology to shine by protecting artists' rights and driving the market in a positive and sustainable direction.
Company Name: Aiode
Sector + description of the product/service: MusicTech: Aiode, supported by Abbey Road Red, is bridging the gap between the creative freedom of working with live musicians and the convenience of digital music production by modeling real musicians to their virtualized selves. Aiode's approach leverages advanced proprietary AI, revolutionizing audio synthesis by building a suite of modeled musicians that music-makers can collaborate with on their songs, each skilled in different instruments and styles. Aiode is committed to supporting the musicians' community and creating a new revenue stream for musicians around the world. Aiode's here to make music creation more accessible, efficient, and creatively rewarding. Aiode's commitment to ethical AI training and legal data sourcing provides producers with the assurance that all generated music can be used commercially.
Investment amount + total: Horizon - 1.5M$, Total investment- 5M$
Founding Year: 2022
Company Name: Session42
Sector + description of the product/service: Entertainment/MusicTech: Session42 is an innovative music-tech company behind HitCraft, a platform that allows musicians and creators to craft AI-powered profiles. These profiles embody their unique knowledge, experience, and musical style, enabling the authentic generation of music, lyrics, and production in the artist's distinct style. This empowers anyone to create music alongside the world’s greatest talents, democratizing access to high-quality music production. Investment amount + total: Horizon - $1.5, Total Investment - $3.6M.
Founding Year: 2023
