2025 VC Survey“Israeli startups are resilient, creative, and can navigate crises well”
2025 VC Survey
“Israeli startups are resilient, creative, and can navigate crises well”
Roi Bar-Kat, Managing Director at Intel Capital, joined CTech to share insights for its 2025 VC Survey.
“In 2025, I anticipate a primary challenge for Israeli companies will be selling to foreign customers and meeting goals affected by the recruitment of workers and reserve personnel,” said Roi Bar-Kat, Managing Director at Intel Capital. “Another challenge will be fundraising from foreign investors due to the perceived level of increased risk and uncertainty in the Israeli tech industry.”
Bar-Kat joined CTech for its 2025 VC Survey, where prominent investors are asked on their predictions for the year ahead.
“Despite these challenges, we are very optimistic about the long-term success of the Israeli tech industry,” he continued. “Israeli startups are resilient, creative, and can navigate crises well. At Intel Capital, we continue to invest in the Israeli market, focusing our investments in cyber, AI, and cloud infrastructure.”
You can read the whole interview below.
Fund ID
Name of fund/funds: Intel Capital
Total sum of the fund: Intel Capital has invested in over 200 active companies globally, of which 30 are based in Israel. The fund invests $400-500M globally every year.
Partners: Roi Bar-Kat, Managing Director (Israel); Assaf Araki, Investment Director (Israel); Lisa Cohen, Investment Director (Israel); Yoni Greifman, Investment Director (Israel)
Notable/select portfolio companies (active):
Israel-Based: BRIA.AI, Xyte, Zenity, AI21, WSC Sports
Cloud: Anyscale, Fly.io, Inworld AI, MinIO, RunPod
Devices: Overwolf, Metalenz
Frontier: Beep, Figure AI, Fabric8Labs
Silicon: Neuroblade, Xsight Labs, SambaNova Systems, Ayar Labs, SiPhox
Notable exits: Astera Labs (2024); Joby Aviation (2021)
2024 is almost over. How can you summarize it in terms of the Israeli high-tech industry?
Israel has long since established itself as a leader in the tech industry, and 2024 has been no different. This year, Israel’s tech sector has seen significant growth and progress, including Wiz’s $1 billion and Hailo’s $120 million rounds in H1, among others. At Intel Capital, we made four new or follow-on investments in Israel-based startups this year, including Xyte and BRIA.AI, that have seen massive success.
In just over one year, Israeli tech startups raised $9 billion in funding – ranked among other major startup incubators like Silicon Valley and New York. Investors see Israel as a hub for potential new investments in the latest technologies, especially cybersecurity and AI.
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?
In 2025, I anticipate a primary challenge for Israeli companies will be selling to foreign customers and meeting goals affected by the recruitment of workers and reserve personnel. Another challenge will be fundraising from foreign investors due to the perceived level of increased risk and uncertainty in the Israeli tech industry.
Despite these challenges, we are very optimistic about the long-term success of the Israeli tech industry – Israeli startups are resilient, creative, and can navigate crises well. At Intel Capital, we continue to invest in the Israeli market, focusing our investments in cyber, AI, and cloud infrastructure; we expect to continue that trend in 2025 and explore investments in companies addressing security problems that result from the use of generative AI.
How will new American leadership affect the global high-tech industry or economy? And where does this place Israel and its entrepreneurs?
Since governments frequently change and adapt their policies, and the journey of a startup often spans a decade or more, our focus is on supporting ventures from inception to exit. This approach allows us to maintain consistency and work independently of political changes.
What are the three most important things the Israeli government should do today to accelerate the high-tech engine in the coming year?
We observe increased activity from the Israel Innovation Authority. With the government’s support, new programs aimed at transferring intellectual property (IP) from academia into the private sector could significantly boost the number of deep-tech startups in Israel.
Are there new sectors you see as relevant? Are there any fields you anticipate will weaken significantly in the coming year?
In 2025, the industry will see increased investments in core technologies across cybersecurity, especially as new attack surfaces emerge as a result of using generative AI to create code and applications. This provides ample opportunities for application security startups like low-code/no-code security provider Zenity to help major enterprises strengthen their security.
The data center and the cloud stack will also continue to thrive, ranging across compute, memory, networking, hardware, and software.
We also expect to see more investments in companies developing generative AI tools for businesses – from infrastructure to end-user applications – but with an increased focus on storage, sustainability, and data security.
This year, Intel Capital made four new or follow-on investments into Israeli companies across the manufacturing, security, construction, and real estate sectors, among others, including all-in-one hardware manufacturing servitization provider Xyte, visual generative AI platform BRIA.AI, construction management platform Buildots, and Zenity.
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’s tech sector is massive and houses a widespread, dedicated network of AI experts – from development to implementation to security. As it advances, AI is becoming an essential building block of any tech product, and we’re not far off from using and speaking to AI similarly as we do for straightforward code. We expect to see increased innovation and investment in areas where AI is making a real, tangible impact, such as data analytics, vertical applications, and automation. Across the globe, there is so much noise and many companies are focused on R&D, but investors want to see companies using AI to actually improve business function. The ROI of AI is going to be a crucial measure of success next year and I believe that Israel has the talent to stay at the forefront of innovation in AI.
Could the global IPO drought end in the coming year?
We anticipate the public market will continue to open up for very late-stage companies that have shown continued growth over the past few years – one of our own portfolio companies, Astera Labs, went public in March of this year. However, we also expect the threshold for new IPOs to be significantly higher in 2025 than in previous years, due to investor skepticism from the 2024 AI boom. Despite the higher bar, the trend of corrections in valuations will continue for this exact reason, alongside continued competition that will drive innovation in the tech sector.
Intel Capital is more optimistic about the potential for mergers and acquisitions in 2025, especially in AI, cybersecurity, and cloud infrastructure.
From an investor's perspective: will the coming year be better for early-stage startups or more mature companies?
The coming year will be more promising for growth-stage and mature companies because investors are becoming more skeptical and realistic about valuations after the 2024 AI boom. Inflated valuations this year and in years past have fueled the downfall of many companies that failed to meet revenue projections; growth-stage companies are less likely to have this risk, so I anticipate that investors will make fewer bets on early-stage companies overall. We also expect the market will divide: strong companies will continue to attract investors, and the correction value will be smaller, and companies with lackluster operating results will have more difficulty raising funds.
Did you raise fund money in 2024 for an existing fund or a new one? What are your expectations regarding this matter for 2025?
Intel Capital is the VC arm of Intel. We maintain a relatively consistent investment pace year after year and anticipate maintaining a similar investment cadence in 2025.
How many investments did you make in 2024, and how does it compare to previous years?
In 2024, we made four investments in Israeli companies. This matches our investment pace in 2023, and we expect to maintain a similar pace as we discover more opportunities in 2025 as we continue our search for quality investments across the globe.
Provide an example of an intriguing investment you made in 2024. What sets this company apart, or what is distinctive about its sector?
This year we led Xyte’s $30 million Series A round in January. Xyte is pioneering the Hardware-as-a-Service business model, offering device and hardware manufacturers outcome-based and usage-based solutions rather than only physical assets. Xyte’s vision is to enable the shift from One-Time Sales to Subscription-Based business models as manufacturers seek increased flexibility, affordability, and constant innovation. At Intel Capital, we believe HaaS and the subscription-based hardware sales model is the future of hardware manufacturing. Xyte’s visionary approach focuses on enabling device and hardware manufacturers to embrace this future, transforming the way they interact with their customers.
Two notable companies that you think will thrive in 2025.
Company Name: Xyte
Sector + description of the product/service: Xyte is the all-in-one servitization platform designed for device and hardware manufacturers to cloudify, operate, support, and commercialize their connected devices in a unified platform. Its flagship offering, Xyte Device Cloud, enables original equipment manufacturers (OEMs) across different industries to transform their devices into integrated business solutions that combine hardware, software, and services. Leveraging a Hardware-as-a-Service business model and offering out-of-the-box applications for asset management, remote support, e-commerce, and subscription management, Xyte helps boost revenue and market growth, optimize operational efficiencies, gain insights into performance, and develop sustainable customer relationships.
Founding Year: 2019
Reasoning why this is their year: Today, product value extends beyond what’s physical – even for devices and hardware; product value can be gauged by the service it delivers. Device manufacturers using one-time sales models lack customer knowledge, connection, and confidence in retention, but by leveraging Hardware-as-a-Service models that operate similarly to SaaS businesses, they can create new revenue streams and build more sustainable ecosystems. As the industry continues to embrace servitization and subscription-based business models, Xyte is at the forefront of this movement.
Company Name: WSC Sports
Sector + description of the product/service: WSC Sports is a leader in AI-powered sports content technology, empowering the NBA, ESPN, YouTubeTV, LaLiga and 500 other sports organizations to connect with their fans through AI-tailored sports content experiences. WSC Sports’ platform automates the creation, management and distribution of content, enabling sports rightsholders to expand reach, grow fanbases, and unlock revenue opportunities across platforms. Its advanced technology enables the creation of personalized and engaging content for fans, tailored to their preferences and viewing habits.
Founding Year: 2011
Reasoning why this is their year: For over ten years, WSC Sports has been delivering top-tier AI-based content solutions to the biggest companies in sports media. Its client roster has grown to approximately 500 teams, leagues, federations, broadcasters, and other sports media rightsholders. The company plans to evolve into a comprehensive hub for AI content management, creation, and distribution solutions, with a deeper focus on fan engagement for clients. These solutions are designed to solve a specific pain point for customers while creating, managing, or distributing sports content that was previously outside of the scope of AI, like capturing interviews and reactions from fans, content licensing, and in-network video creation.
