2025 VC Survey“Israelis tend to thrive under pressure and uncertainty,” says IL Ventures
2025 VC Survey
“Israelis tend to thrive under pressure and uncertainty,” says IL Ventures
Managing Partners Elad Frenkel and Yoni Heilbronn joined CTech to share how they think Israel will respond to the “uncertainty” surrounding Trump’s new term.
“The incoming administration is believed to be ‘good for business’. President Trump and Elon Musk, who will play a key role in the inner workings of the US government, are supportive of deregulation and for making business easier,” said Elad Frenkel and Yoni Heilbronn, Managing Partners at IL Ventures. “It is still unclear what foreign policies the new American leadership will follow.”
The duo joined CTech for its 2025 VC Survey to discuss some of the potential repercussions of a new American administration and what that may do for Israeli tech. “It is quite certain that the only certainty will be uncertainty – and this will significantly affect the global economy. Israelis tend to thrive under pressure and uncertainty – so one should assume that Israel will benefit from this situation.”
You can read the entire interview below:
Fund ID
Name of fund/funds: IL Ventures
Total sum of the fund: $30M
Partners: Yoni Heilbronn, Elad Frenkel
Notable/select portfolio companies (active): CaPow, Cybord, Pickommerce, Matics, Verstill, Blue Circle.
2024 is over. How can you summarize it in terms of the Israeli high-tech industry?
2024 has been a challenging and in many aspects unprecedented year, unlike any other before. Companies in the local ecosystem had to deal with significant uncertainty in all aspects, as well as with instability regarding personnel and general management issues.
Economic and political stability are a basic and preliminary condition for economic success, and therefore companies that managed to overcome this challenging year are in our view equipped with better tools to succeed in the years to come.
For us at IL Ventures 2024 ended with distinct optimism, as two of our portfolio companies recently finalized significant A rounds, led by prominent global investors. This provides us with significant confidence and conviction in our investment strategy as we enter 2025. We are focused on tangible, deep-tech technologies disrupting traditional industries, and we invest mainly in Seed stage startups with product-market-fit and early revenues in the fields of AI, robotics and automation, logistics and supply chain, smart manufacturing, energy, and more.
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?
There are already early signs of improvement in the state of the industry as we prepare for 2025. The most prominent indicator is the return of prominent foreign investors to the market (Sequoia, Accel, Hamilton Lane, to name a few) as well as the inflow of capital to the high-tech industry.
In the first three quarters of 2024, more money was invested in the high-tech industry than in 2023 in its entirety. If the security situation continues to improve as can be expected, potentially coupled with significant regional shifts such as the “Saudi Deal” - then there will be a dramatic improvement in the state of the industry.
The global macro trends of geopolitical instability, supply chain and logistics disruptions, labor shortages, and rising costs due to reshoring and near-shoring present a tremendous opportunity for startups that bring innovative, non-trivial, and “must-have” solutions to meet these challenges and answer pressing market needs. The Israeli high-tech sector, which over the last couple of years developed significant resilience amid political instability and armed conflicts, has a lot to offer in this respect and we expect many new and exciting deep-tech companies to be founded in the coming years.
We at IL Ventures are looking forward to continuing to lead early-stage investments in companies that disrupt traditional industries, and closely support our current portfolio in all aspects, mainly in bringing in new business opportunities.
How will new American leadership affect the global high-tech industry or economy? And where does this place Israel and its entrepreneurs?
The incoming administration is believed to be “good for business”. President Trump and Elon Musk, who will play a key role in the inner workings of the US government, are supportive of deregulation and for making business easier. It is still unclear what foreign policies the new American leadership will follow. On one hand, it is inclined towards lowering global tensions – i.e. ending the conflict in the Middle East and Ukraine, as well as “restarting” relations with China and North Korea.
On the other hand, chatter about raising protective tariffs and expansion into Greenland and Panama presents a different approach to international relations. Therefore, it is quite certain that the only certainty will be uncertainty – and this will significantly affect the global economy. Israelis tend to thrive under pressure and uncertainty – so one should assume that Israel will benefit from this situation. There is also no doubt in our mind that the US under the Trump administration will continue to be the driving force behind the global economy. Israel, which brings real and tangible value to the US economy, should significantly benefit from its support of US interests.
What are the three most important things the Israeli government should do today to accelerate the high-tech engine in the coming year?
- End the armed conflict in Gaza and bring the hostages home immediately – this will help the most.
- Dramatically increase government support and budget for deep-tech startups and VC funds, including cancelation of the pre-condition of matching capital when funding startups.
- We highly recommend the government incentivize foreign corporates to fulfill their outstanding offset obligations by allowing them to invest in the local eco-system either through VC funds or directly. Israel had more the $20B open commitments of foreign obligors which are not being met. Providing a proper incentive in the form of multiplier recognition will potentially bring billions of dollars into the high-tech engine that is driving Israel’s economy.
Are there new sectors you see as relevant? Are there any fields you anticipate will weaken significantly in the coming year?
We foresee strong demand for innovative technologies in AI, robotics, digital transformation, supply chain, logistics, and energy. Companies that do not provide “must have” products and solutions but rather “new to have” ones – are destined in our view to weaken in the coming year.
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 is completely in the game with regard to the AI revolution, mainly with vertical AI solutions for specific use cases. Israel has a lot to offer in this respect. For example, Cybord, one of our portfolio companies, is at the forefront of this revolution. It provides real-time analysis and traceability of electronic components while they are being assembled. The company which recently completed a successful A Round, is dramatically disrupting the global electronics industry and solves a huge quality challenge with its AI technology. This is a great example of a “must-have solution” which answers huge market demand.
Could the global IPO drought end in the coming year?
There are initial signs that the IPO drought will indeed end in 2025, as we see mature companies going public. No doubt that the new US administration will be supportive in this respect.
From an investor's perspective: will the coming year be better for early-stage startups or more mature companies?
From our point of view, the coming year will be promising for early-stage, deep-tech startups in Israel. The convergence of foreign capital coming back to Israel with the influx of innovation that we are already beginning to witness and with attractive valuations present a unique opportunity for early-stage investors. In our mind, there is no doubt that the time to invest in Israel is now.
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 did not raise fund money in 2024. We do expect to do so for a new fund during 2025, as we see very positive momentum - both from investors’ perspective who are coming back and doubling down on Israel plus heightened interest from local institutional investors, as well as from a deal flow perspective, as we see very attractive startups in the fields in which we operate.
How many investments did you make in 2024, and how does it compare to previous years?
In 2024 we took a cautious stand and were focused on supporting our portfolio companies and doubling down on our most promising portfolio companies, which collectively raised more than $30M.
Provide an example of an intriguing investment you made in 2024. What sets this company apart, or what is distinctive about its sector?
We made an exciting new investment in Pickommerce AI Robotics.
Pickommerce developed an innovative solution to an unsolved global need for replacing the human picker at the picking and packaging station, the “Last Mile” in logistics warehouses. Today there is an estimated global shortage of approximately 90 million workers in these roles. This is a challenging task for a robot, especially in an e-commerce warehouse, which is characterized by a large variety of items with different geometry, texture, weight, dimensions, and other parameters.
Pickommerce's platform is a fully autonomous pick-and-pack station, integrating multiple gripping technologies into a single, AI-powered pick-and-pack station, allowing effective handling of diverse objects. With a focus on the “Last Mile”, Pickommerce provides an innovative, patented pick-and-pack solution without requiring significant changes to existing warehouse setups.
The company has immense product traction, and we foresee the company growing quickly in 2025 to meet customer demands.
A notable company that you think will thrive in 2025.
Company Name: CaPow
Sector + description of the product/service: Perpetual power to robotic fleets
Investment amount + total: The company raised $23.5M. IL Ventures led the seed round and participated in the A round.
Founding Year: 2019
Reasoning why this is their year: Following a great year in 2024 in which the company’s unique technology matured and gained significant commercial traction from industry giants, CaPow recently finalized a significant A round which was led by a top-tier global investor. With a stellar team, it now has sufficient resources to fulfill its potential and ensure robotic fleets in warehouses and factories have zero downtime due to charging, as they receive their power perpetually in motion.
