Scale-up Nation “is becoming a pillar of strength that carries the entire sector”
A new era of scale-ups is emerging in Israel, with tech companies rethinking their growth strategies for long-term success.
SNC PANEL - Yariv Lotan, Galit Zuckerman-Stark, Aaron Mankovski
(Credit: Calcalist)
“What we’re seeing is how fundamental Scale-up Nation is within the Startup Nation,” said Yariv Lotan, VP of Digital Products, Development, Data and Insights at Startup Nation Central. “It is becoming more a pillar of strength that carries the entire sector and will probably do that for years to come.”
In a rapidly evolving tech ecosystem, Israel is poised for its next great leap: transitioning from "Startup Nation" to "Scale-Up Nation." A panel of founders and investors recently gathered at Startup Nation Central in Tel Aviv to discuss the health of the Israeli tech environment, sharing insights on the ability to scale up their companies and the health of the ecosystem to facilitate such growth.
Lotan made the opening remarks to the panel, which also included Galit Zuckerman-Stark, founder and CEO at Medasense, and Aaron Mankovski, managing partner at Pitango. The panel was conducted just as news broke that the Israeli economy grew by 1% in 2024, despite the economic burden of the country’s ongoing war with Hamas and Iran and its proxies. He highlighted the fact that even though the majority of funding in Startup Nation was invested in the early stage, the importance of growth in these companies cannot be overstated.
“Investors flock to quality and like to invest in companies that are more promising and that have proven their ability to scale up rather than just investing in the early stage,” he added. “80% of the rounds in Israel this year were early rounds. But when you look at the amounts, the scale-up amounts were much more significant. I think for scale-ups, money is definitely the fuel.”
Startup Nation Central is an independent non-profit that provides a deep dive into Israel’s tech founders, investors, and companies. It displays the country’s ecosystem through partnerships, events, and its Finder tool. Its most recent annual report was titled ‘The Year of the Scale-Up Powerhouse’ and highlighted its evolution within the sector. “It became more challenging over 2022/2023, but now in 2024, when numbers are coming up, you need to grow more conservatively and more responsibly.”
For years, there was hope that Israel’s reputation as Startup Nation would evolve into ‘Scale-up Nation’. While the consequences of the pandemic and ongoing war impacted the performance, in the short term, the panelists remain optimistic about its future. For Pitango’s Mankovski, it’s about identifying space referred to as ‘The Bermuda Triangle of startups’ and how to navigate the stormy waters to success.
“I think the key number one challenge for growth companies is to build up the right go-to-market,” he said. “It's not only go-to-market and how you build it, but it's also about an efficient go-to-market because if you spend $2 to bring a dollar of income, it's not efficient. Obviously you can do it at a certain time to penetrate the market, but you cannot do it for years.”
Pitango was founded in 1993 and has invested in more than 250 companies, seeing almost 90 of them become publicly traded companies or acquired by strategic players. It has raised more than $3 billion across its three dedicated funds: Pitango First, Pitango Growth, and Pitango HealthTech, and portfolio companies include AppsFlyer, AI21 Labs, Via, and Riskified.
“If you look at companies, how you scale is your global growth and your global revenues along the way,” he continued. “Sometimes people grow from $1 million to $2 million. This is great, it's 100% growth, but the real challenge is how you grow from $50-100 million. And those challenges are not only how you build up, your go to market, your people, your channels but also between ‘the Bermuda Triangle of startups’ of $50-100 million.”
Galit Zuckerman-Stark, Founder and CEO at Medasense, elaborated more on this idea when examining how companies can achieve continued growth. Medasense is a healthtech company helping address pain management through its AI technology and sensing platform. By quantifying pain response, the company intends to optimize pain care for patients around the world.
“Many more companies are now above $100 million and becoming scale-up companies,” she said. “But I think the mindset of the industry also grew and matured. What used to be a startup thinking of having a product to sell is now companies thinking about having a product, bringing it to the market, bringing revenues, and proving the business model. All the market across the system has matured.”
Overall, there was consensus among the panel that Scale-Up Nation can be right around the corner if properly given the time to grow financially with proper investment. “We have today the highest number of companies in the history of the country with more than $100 million in revenues,” concluded Mankovski. “It's a big thing… I think the notion of Israeli companies growing and creating growth becomes part of the DNA. It's an extremely important pillar of why we are so successful.”
You can watch the entire panel in the video above.
