2024 VC SurveyHere’s what’s “truly crucial to the state of Israeli tech”, according to Battery Ventures
2024 VC Survey
Here’s what’s “truly crucial to the state of Israeli tech”, according to Battery Ventures
Barak Schoster, Partner at Battery Ventures, joined CTech for its 2024 VC Survey to discuss Startup Nation in wartime.
“What is truly crucial to the state of Israeli tech are the forces of entrepreneurship, creativity, and the desire to build impactful technology companies with the potential to make the world a better place, each of which our community holds in abundance,” said Barak Schoster, Partner at Battery Ventures. “In many ways, Israeli companies are global first and serve global markets, and as a result, local events do not have a significant financial impact on those companies.”
Schoster joined CTech for its 2024 Survey to share some of the ways Startup Nation has recovered from the events of the last year.
VC fund ID
Name of the fund: Battery Ventures
Total assets: Battery has raised more than $13B since the firm’s inception.
Leading partners: Israel-based Partners are Barak Schoster, Shiran Shalev, and Senior Partner Scott Tobin.
Latest investments in Israel: My most recent investment in Israel was in MineOS, which automates daily privacy and compliance operations in a no-code approach, helping mid-to-large size organizations avoid manual and repetitive tasks.
Selected portfolio companies: The companies with which Barak is involved, including seeds, are Mine and Wing Cloud, as well as one in stealth mode.
From your perspective, was 2023 a ‘lost year’, or can the events that happened during it be seen as a springboard for opportunities in 2024?
Last year held significant personal tragedy for many of us, our friends and colleagues, but I don’t believe 2023 was a lost year. Our communities came together in unprecedented ways, working side-by-side, on reserve duty; and in other ways, sharing friendship, creativity, and ideas. We at Battery continued our work to find the best companies and court the local technology ecosystem, as we see significant investment opportunities in Israel.
What do you believe is more crucial to the state of Israeli tech: the influence of global processes and the global economy, or the local events ranging from the political protest to the war state?
What is truly crucial to the state of Israeli tech are the forces of entrepreneurship, creativity, and the desire to build impactful technology companies with the potential to make the world a better place, each of which our community holds in abundance. In many ways, Israeli companies are global first and serve global markets, and as a result, local events do not have a significant financial impact on those companies.
Has the prestige of Israeli high-tech been damaged, or are the protests and the war merely a 'small bump in the road' from which the sector can recover within months?
I would say the Israeli high-tech market has become even more competitive as more global funds have launched investment activity here. The bar for some rounds has changed since 2021, since interest rates have changed, but we see that in every market as a global firm. Founders know how to adapt to any state. Neither the protests nor war have changed the fact that some of the most impactful inventions in Israeli high-tech were created as a result of collaboration between Israel and the global market.
How much effort was required of you to maintain the fund's status with your investors in 2023? What were their primary concerns and how did you address them?
Our message to all key stakeholders is that our multi-stage strategy is a good one for these volatile times.
How are you preparing for the most pessimistic scenarios, such as the continuation of the war in Gaza deep into 2024, the opening of another front in the north, or further reduction of government support for high-tech?
We of course worry about our team members, our colleagues, and our partners and wish for the war to end. As a global, technology-focused investment firm, our presence in Israel is strategic and we have deep commitments to the Israeli tech community.
Did you raise fund money in 2023 for an existing fund or a new one? What are your expectations regarding this matter for 2024?
We are currently investing from our 14th flagship fund, Battery Ventures XIV, and companion fund Select Fund II, together capitalized at a combined $3.8 billion.
How many investments did you make in 2023, and how does it compare to 2022?
We saw a similar pace of deal-making in Israel in 2023 compared to 2022.
In your view, will the amounts and/or the number of deals in 2024 be more like those of 2023 or 2021-22?
I anticipate that we will see a similar number of deals to 2023, though if we find more good opportunities, that number could certainly go up.
Which high-tech sectors will you focus on in the upcoming year? Which areas will maintain their prominence, and which ones appear less attractive?
Battery partners with companies at every stage and in every domain across the globe. We would love to speak with founders who have unique ideas in mind to help take them to a global scale.
Which type of companies stand a better chance of garnering increased attention from VC funds this year - early-stage or advanced rounds?
Both! Battery invests at every stage, from earliest stages to IPO and buyouts. We want to partner with the best founding teams at every stage of the way and support them in making an enduring impact on our planet.
As a former founder myself, who has been through the fundraising process, I quickly learned that to gain the right attention from customers, colleagues, potential hires, advisors, and investors, I should be excellent both in execution and storytelling. The importance of quality execution and storytelling has not changed for today’s founders.
What changes will you implement in your approach to evaluating investments in startups in the coming year, compared to the previous two years? What practices will you abandon, and what criteria will you now demand from founders?
The bar for product-market fit is higher than it used to be and investors are paying close attention to unit economics.
Do you think it is likely we will witness encouraging IPOs, the emergence of unicorns, or remarkable exits in 2024?
Yes, I expect that we will see more IPOs in 2024 and in 2025.
Provide an example of an intriguing investment you made in 2023. What sets this company apart, or what is distinctive about its sector?
In my opinion, MineOS, founded by Gal Ringel, Gal Golan, and Kobi Nissan, is one of the most interesting companies in the privacy-automation space. MineOS's multi-product strategy created a unique flywheel that serves both consumers and enterprises by minimizing privacy risks. Mine has a viral effect on the privacy community and makes the hard task of regulation governance a true delight.
Practical and current tips for founders planning upcoming money-raising efforts:
- When speaking with investors, be sure to emphasize your go-to-market strategy alongside your technology.
- Use the latest AI and productivity tools to be more efficient.
- Start with a focused wedge but be able to articulate the bigger story.
Name two portfolio companies that you think will thrive in 2024:
Novidea
Sector + description of the product/service: Novidea is a growth-stage SaaS company that offers a modern agency-management system (AMS) for insurance brokerages, MGAs and carriers globally.
Investment amount + total: Battery led the company’s $50M Series C round in March 2023; Since then, the company has raised an additional $30M, bringing its total funding to ~$120M.
Founders + year of establishment: The company was founded by Roi Agababa (CEO) in 2010.
Reasoning why this is their year:
We are very impressed with the Novidea team and their commitment to improving business processes for an industry that has long been underserved by technology. They are now seeing the fruits of that labor pay off, as customers increasingly recognize their product as the industry gold standard, implemented by some of the largest and most sophisticated insurance firms worldwide.
LinearB
Sector + description of the product/service: LinearB is a growth-stage developer tools company that offers analytics and workflow tools to improve and increase the productivity of engineers and developers by focusing on objective, data-driven insights from Git-based and project-management systems.
Investment amount + total: Battery led the company’s $16M Series A round in March 2021. Since then, the company has raised an additional $50M, bringing its total funding to over $75M.
Founders + year of establishment: The company was founded by Ori Keren (CEO) and Dan Lines (COO), who were both senior engineering leaders at CloudLock where they struggled with rapid growth across their technical organization and often found themselves making engineering decisions based on intuition versus data.
Reasoning why this is their year:
Every company is now a software company, and the number of developers is only rising. The introduction of generative AI and the spree of AI-based development tools only made tracking code and the R&D organization more challenging. We expect LinearB to benefit from this tailwind.
