2025 VC SurveyEntrée Capital: New US leadership to bolster Israeli tech's position in AI and defense sectors
2025 VC Survey
Entrée Capital: New US leadership to bolster Israeli tech's position in AI and defense sectors
Key fields are expected to dominate in 2025 with efficiency and scalability as critical success factors, says the firm
“New U.S. leadership will shape global funding and policy priorities, and Israel's strategic importance to the U.S. together with its ability to align with key U.S. prioritization of AI, Crypto, and Defense, will ensure its role as a key player,” said leadership of Entrée Capital. “Providing incentives for founders to build and scale their businesses locally while being able to operate globally is essential.”
The VC firm joined CTech for its 2025 VC Survey to share predictions for the year ahead as American leadership is set for a change, boosting innovation and creativity among businesses.
You can read the entire interview below.
Fund ID
Name of the fund/funds: Entrée Capital
Total assets: $1.25B under management
Partners: Avi Eyal, Ran Achituv, Eran Bielski, Adi Gozes, Eyal Azulay
Name of Participant: Entrée Capital
Notable/select portfolio companies (active): monday.com, Riskified, HiBob, Stripe, Anchor, BRIA, Darrow, Classiq, Empathy, Travelier, Blink.
Notable IPOs/ exits: monday.com, Breezometer, Talon Cyber, Perimeter81, Coupang.
2024 is over. How can you summarize it in terms of the Israeli high-tech industry?
Despite global economic pressures, funding slowdowns, political challenges, and a year marked by war, the ecosystem has shown incredible resilience and adaptability. Israeli founders have continued to innovate, focusing on core strengths like AI, cybersecurity, and fintech, while also seizing new opportunities borne from the war - Defense. The industry’s ability to thrive and grow in difficult times reaffirms Israel's position as a global technological leader.
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?
Looking ahead to 2025, on the opportunity front, we anticipate a resurgence of startup creation, with founders and teams returning to full power. Key fields such as DefenseTech, AI, Crypto, and DeepTech will lead investments. The global wave of leveraging AI to solve real-world problems is only starting, and we believe it will become a market as big as SaaS is today.
With growth-stage funding still challenging, Israeli startups must scale efficiently to stay competitive globally. Additionally, organizational challenges from the past year continue to impact many companies, particularly those with significant Israeli operations. The venture capital funding market is going through a significant change, which will probably result in far fewer VCs around to fund companies.
Our team is committed to continuing to position our portfolio companies for success. This includes optimizing growth and strengthening management teams. By backing visionary founders with strong operational execution, our focus remains on enabling them to thrive in the Israeli ecosystem and on the global stage.
How will new American leadership affect the global high-tech industry or economy? And where does this place Israel and its entrepreneurs?
New U.S. leadership will shape global funding and policy priorities, and Israel's strategic importance to the U.S. together with its ability to align with key U.S. prioritization of AI, Crypto, and Defense, will ensure its role as a key player. Providing incentives for founders to build and scale their businesses locally while being able to operate globally is essential.
What are the three most important things the Israeli government should do today to accelerate the high-tech engine in the coming year?
- Increase Funding for DeepTech and R&D: Expand incentives and financial support for technologies like AI and quantum computing.
- Israel's Global Positioning: Simplify bureaucracy, promote key programs, and position Israel in the world to reduce anti-semitism, anti-Zionism, embargoes, and boycotts.
- Education: Invest in STEM (Science, Technology, Engineering, and Mathematics) education and training programs that prepare the next generation for emerging fields.
Are there new sectors you see as relevant? Are there any fields you anticipate will weaken significantly in the coming year?
We see exciting opportunities emerging in new sectors, particularly in Defense/Dual-Use technologies, adoption of Crypto, and AI across various verticals. Generative AI continues to be a transformative focus, especially as it evolves into "Vertical AI," addressing industry-specific use cases like legal, accounting, and other professional services. AI Agents are only starting to become a ‘killer solution”. We believe consumer and fintech will still remain weakened.
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?
Israel has largely missed the LLM foundation where the big companies have already emerged. However, it is not missing out on the AI revolution, as there are dozens of vertical markets and supporting infrastructure, focusing on markets where its founders have deep expertise, such as cybersecurity.
Could the global IPO drought end in the coming year?
The IPO drought will in all likelihood end in 2025, possibly with more IPOs in the latter part of the year. It will take some time to return to the heady days of 2020/2021.
From an investor's perspective: will the coming year be better for early-stage startups or more mature companies?
We hope it will be great for all companies!
Did you raise fund money in 2024 for an existing fund or a new one? What are your expectations regarding this matter for 2025?
Our last fund was raised in 2022 and we run a three to four-year cycle.
How many investments did you make in 2024, and how does it compare to previous years?
Excluding follow-on rounds, Entrée Capital completed 10 new investments. We had four Israeli exits (plus three more globally) and over 15 companies raised follow-on capital.
Provide an example of an intriguing investment you made in 2024. What sets this company apart, or what is distinctive about its sector?
We led an investment into AIR, an EVTOL company that is producing in Israel a medium range (100km), medium payload (250kg) advanced piloted, and autonomous aircraft (‘drone with wings’). AIR has already secured the Israel Defense Force as a customer, a large logistics company for deliveries to ships and islands in Asia, and has over 1,000 pre-orders for its US-certified 2-person version. It is unique in that its distance: payload ratio, and it has paying customers today, at a fraction of the capital raised by EVTOL companies in this category.
Two notable companies that you think will thrive in 2025. These can be from your portfolio or not.
Company Name: Guidde
Sector + description of the product/service: SaaS, AI
Investment amount + total: $11.6M total funding
Founding Year: 2020
Reasoning why this is their year: We’ve all heard about the growing use of AI in images and video this year, and Guidde is at the forefront of video documentation with cutting-edge technology and AI. Guidde enables companies to create video content for their products with astonishing ease, just a few clicks.
Company Name: Classiq
Sector + description of the product/service: DeepTech (Quantum)
Investment amount + total: $63M total funding
Founding Year: 2020
Reasoning why this is their year: Quantum computing is advancing rapidly, and Classiq is reshaping the game in a future world that's still evolving. Unlike many other companies in the quantum space, Classiq is focused on creating an operating system for quantum computers, tackling the deeptech challenge of software- not hardware.
