2024 VC Survey“Israeli startups have established a reputation for best-in-class innovation”
2024 VC Survey
“Israeli startups have established a reputation for best-in-class innovation”
Oren Yunger, Managing Partner at Notable Capital, joined CTech to discuss Israeli innovation post-October 7.
“The startups in our Israeli portfolio serve global markets and that serves as a stabilizing effect. They managed to stabilize through the shock and unprecedented times of October 7 through today,” explained Oren Yunger, Managing Partner at Notable Capital (Formerly GGV). “With employees around the world, the leadership teams have experience in managing through uncertainty and we expect they will continue to innovate and strive for growth.”
In 2023 GGV Capital announced that it would split into two independent partnerships. These would operate as distinct firms and separate brands. The U.S. team, which invests in Israel, announced its new name and brand, Notable Capital, in March 2024.
“On a recent trip to Tel Aviv, the thing that stood out was the resilience and agility of the companies to transcend the challenges of 2023,” he added. “Israeli startups have established a reputation for best-in-class innovation.”
VC fund ID
Name of the fund: Notable Capital
Total assets: $4.2 billion
Leading partners: Glenn Solomon, Managing Partner; Hans Tung, Managing Partner; Oren Yunger, Managing Partner; Jeff Richards, Managing Partner
Latest investments in Israel: Gem Security - Notable Capital (fka GGV Capital U.S.) led the Series A in July 2023
Selected portfolio companies: Descope, Gem Security, Monte Carlo, Orca Security, Pecan, Torq, Vdoo, Wing Security, Snappy, KHealth, Hippo
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?
We don’t consider 2023 a “lost” year. It was a difficult year in many ways, but we believe that founders and teams showed resiliency and adapted quickly. Through the disruption, they continue to deliver value to their customers in an accelerated trajectory.
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?
Most of the Israeli tech companies in our portfolio have offices in Israel and the U.S. with employees and customers around the world and so they are affected by local and global events. On a recent trip to Tel Aviv, the thing that stood out was the resilience and agility of the companies to transcend the challenges of 2023.
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?
Israeli startups have established a reputation for best-in-class innovation, especially in key areas such as cybersecurity and developer lifecycle, and we believe they will continue to do so. For example, just a few days ago we announced a successful acquisition of one of Notable’s Israeli portfolio companies, Gem Security, continuing an incredible Israeli M&A hot-streak.
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?
Building a company is not a straight diagonal line to the right. Companies and markets operate in a constant state of change. In our firm, we hold a very long-term view and so do our investors. The partners in our firm have worked together an average of 13 years so there is a high degree of trust with investors and entrepreneurs in our ability to navigate rocky waters such as we saw in 2023. As a result, our team can work with founders to calibrate market uncertainties. For example, throughout 2023, we worked with founders to ensure they had ample runway to withstand challenges and bumps in their journeys.
Related articles:
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?
The startups in our Israeli portfolio serve global markets and that serves as a stabilizing effect. They managed to stabilize through the shock and unprecedented times of October 7 through today. With employees around the world, the leadership teams have experience in managing through uncertainty and we expect they will continue to innovate and strive for growth. The Notable team takes a long-term view and has built unique operating capabilities to support the development and growth of companies in our portfolio.
Did you raise fund money in 2023 for an existing fund or a new one? What are your expectations regarding this matter for 2024?
Last year GGV Capital announced that it would split into two independent partnerships that will operate as distinct firms and separate brands. The separation was completed and the U.S. team, which invests in Israel, announced its new name and brand, Notable Capital, in March 2024.
How many investments did you make in 2023, and how does it compare to 2022?
The firm made more than twice the number of new investments in 2023 than in 2022. The pace is likely to increase in 2024 with continued momentum in data, cybersecurity, cloud infrastructure, fintech, and AI.
In your view, will the amounts and/or the number of deals in 2024 be more like those of 2023 or 2021-22?
It is likely the investment pace for Notable Capital will be more like 2022 than 2023, especially as it relates to new investments.
Which high-tech sectors will you focus on in the upcoming year? Which areas will maintain their prominence, and which ones appear less attractive?
Notable Capital is focused on investments in Cloud Infrastructure and Business and Consumer Applications. Within these categories, we expect to see growth and new innovation in Data, AI stack, Developer Life Cycle, and continued interest in Cybersecurity companies where data privacy will be a top priority. On the application side, we see opportunities emerging in applications for real-time financial decisions and embedded Fintech for commerce as well as efficiency and tech adoption for small businesses. AI’s transformative role will be seen across every sector.
Which type of companies stand a better chance of garnering increased attention from VC funds this year - early-stage or advanced rounds?
AI is likely to soak up the largest pieces of the funding pie across all stages and will be an outlier with continued elevated valuations. There will be an appetite for later-stage companies that demonstrate strong business fundamentals and efficient ARR growth. Companies that are less disciplined may have a more difficult time raising capital. There is still strong interest in early-stage companies but these will find significant competition as investors flock toward all things AI. While 2023 was a year of right-sizing, there is optimism for 2024, particularly as the public markets begin to open up.
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 Notable Capital team does not anticipate any significant shifts to our sourcing and due diligence process which is very team-oriented and may be different than some other venture investors. We first identify sectors of opportunity where we have significant experience and networks. We find founders and entrepreneurs who share our enthusiasm for the opportunity and invest in what they are building. The diligence process allows for 1:1 meetings and technology review with both the investment and platform teams so that the founders get to know us and can rapidly discern where and how we can add value, and we learn about the company, their vision, and how they work – often in a very compressed timeframe. We also leverage our sector-focused operator networks to help us dive deeper into the products and how they are being perceived by buyers.
Do you think it is likely we will witness encouraging IPOs, the emergence of unicorns, or remarkable exits in 2024?
To paraphrase Morgan Stanley, the “sober” IPO market is over. Market conditions are stabilizing and AI is creating a lot of excitement and momentum. This is giving way to M&A and a new wave of IPOs.
Provide an example of an intriguing investment you made in 2023. What sets this company apart, or what is distinctive about its sector?
In July 2023, Notable Capital led a $23 million Series A round for Gem Security, a startup that’s changing the way that organizations identify and stop attacks in the cloud. Over the last five to 10 years, the enterprise has shifted the focus of its infrastructure to the cloud, and traditional security operations haven’t kept pace. Gem’s Cloud Detection and Response platform helps security operations teams be faster, smarter, and better prepared—all while sparing each team from spending months on building custom solutions themselves.
The most outstanding aspect of Gem is the team. We can trace our relationship with Gem back across two generations of founders in Notable’s portfolio, starting when Orca Security’s founders first introduced us to Wing Security’s co-founders, Noam Shaar and Galit Lubetzky. About 18 months prior, Noam and Galit told us we had to meet an exceptional team led by Arie Zilberstein, a former member of Noam’s Unit 8200 team and serial entrepreneur, along with CTO Ron Konigsberg and VP of Product Ofir Brukner also Unit 8200 team members. Their leadership qualities, product vision, and experience in the area of incident response were evident in the company they are building.
Practical and current tips for founders planning upcoming money-raising efforts:
Tell a compelling story. Articulate the vision, why it matters, why now, and why you. Importantly articulate why the product is a must-have vs. a nice-to-have, especially in rocky markets.
- Know what you need and don’t over-raise. Demonstrate operational discipline and efficiency to manage building a long-term business.
- Focus on how you have been able to take feedback and iterate quickly. We understand that building a startup is not one straight line to the right and we want to work with founders who can move quickly and grow.
Name two portfolio companies that you think will thrive in 2024:
Monte Carlo
Sector: Data observability
Investment amount + total: Raised $236 million to date
Founders + year of establishment: Founded in 2019 by Barr Moses (CEO) and Lior Gavish (CTO).
Why this year?
The company is gaining momentum with large-scale customers such as JetBlue, Affirm Autotrader, Compass, Cisco, Pepsico, GitLab, Asics, GoodRx and more. With the rise of AI, companies rely more heavily on their data to drive efficiency and innovation. Monte Carlo enables companies to trust their data and make sure it can be used in production. We see it as a major tailwind with both mid-market and enterprises alike.
Drata
Sector: continuous security and compliance automation platform
Investment amount + total: Raised $328m to date
Founders + year of establishment: Founded in 2020 by Adam Markowitz (CEO), Daniel Marashlian (CTO), and Troy Markowitz (COO).
Why this year?
Trust is becoming the backbone of every business - B2B and B2C. Following the meteoric growth of Drata in its first 3 years of operations the company is serving over 4000 customers and gaining strong momentum with mid-market and enterprise companies. This year we will see Drata launch several major initiatives that will position them to become a full GRC platform and start to take on heavy and slow-moving incumbents.
