2024 VC SurveyStartup Nation’s response to October 7 will “improve the prestige of the Israeli high-tech industry,” says DTC
2024 VC Survey
Startup Nation’s response to October 7 will “improve the prestige of the Israeli high-tech industry,” says DTC
Dell Technologies Capital’s Yair Snir joined CTech to share insights on the VC space in 2024
“While it’s too early to say, as the local events in Israel haven’t been finished yet, I think that the core of the Israeli tech scene, coupled with recent indications of the impressive ability of Israeli founders to quickly accommodate to extreme situations will actually improve the prestige of the Israeli high-tech industry, and take it to new even higher records and achievements,” said Yair Snir, Managing Director at Dell Technologies Capital.
He joined CTech for its 2024 VC series to share insights on how the country and its tech economy will bounce back following a challenging 6 months.
VC fund ID
Name of the fund/funds: Dell Technologies Capital
Total assets: n/a; DTC invests ~150M to 200M per year on average
Leading partners: Scott Darling (President), Yair Snir, Omri Green
Latest investments in Israel: VAST Data, Quantum Source Labs, Ibex, FloLive, Pecan.ai.
Selected portfolio companies: In addition to the above, notable investments and exited companies include JFrog, Lightspin, Redis, Adallom, and Cymulate.
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?
As expected during downturn periods, while 2023 was thinner in capital on all fronts, it enables both the CEOs of existing companies as well as founders of new companies to rethink things, and crystallize their minds about what customers really need, how the new normal will look like, or what should be done differently. Consequently, it’s reasonable to believe that in 2024 we’ll see the yield of it.
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?
Both macroeconomic trends and what’s happening domestically influence the Israeli tech scene. No matter what’s happening domestically, we continue to innovate. But, Israeli startups innovate and build here specifically to sell to the global market. What’s happening in the world’s biggest economies and in the Fortune 1000 has direct implications for those startups.
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?
While it’s too early to say, as the local events in Israel haven’t been finished yet, I think that the core of the Israeli tech scene, coupled with recent indications of the impressive ability of Israeli founders to quickly accommodate to extreme situations will actually improve the prestige of the Israeli high-tech industry, and take it to new even higher records and achievements.
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?
One of the benefits of having a single LP and the structure we have at Dell Tech Capital is that we have the support and latitude to make new and follow-on investments no matter the macro environment.
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?
Founders and leadership teams at startups had to mature as corporate leaders very quickly in 2023. Just as they had in 2020 when the pandemic first hit. As a result, they’ve made contingency plans, built redundancies into their team, and have mapped out multiple paths forward. As investors, we’re preparing by helping founders see around the corners and understand the challenges and opportunities despite the pessimistic climate.
How many investments did you make in 2023, and how does it compare to 2022?
If you consider both new and follow-on investments as “deals,” globally we made fewer total investments in 2023 as compared to 2022. But, in comparing those two years, we made more first-time investments into early-stage companies in 2023. Despite the headwinds, there are still people out there founding interesting new companies to solve technical challenges for the enterprise.
In your view, will the amounts and/or the number of deals in 2024 be more like those of 2023 or 2021-22?
I think deal activity will be slightly higher this year versus 2023. But, I don’t think we’ll see the levels of 2021-22 across the industry again for quite a while. A couple of conditions will have to be true for that to happen: An IPO window needs to have opened at some point, we need to see major successful M&A activity, and GenAI will have matured from promising tech to delivering ROI in the real world.
Which high-tech sectors will you focus on in the upcoming year? Which areas will maintain their prominence, and which ones appear less attractive?
Our focus remains on early-stage enterprise and B2B companies, specifically in areas including cybersecurity, the data stack, and DevOps. I’m personally interested in early-stage companies, Seed or Series A with the passion to build a company step by step.
Do you think it is likely we will witness encouraging IPOs, the emergence of unicorns, or remarkable exits in 2024?
I think the pace of exits and newly made unicorns will be slower than the most active years, but we will see a recovery begin to emerge. There will be a lot of opportunities for corporates that are looking to increase their product offerings to make strategic buys this year. Some of those will be significant acquisitions. IPOs might start to pick up in the second half of 2024, but indications are that 2025 is when we’ll really see that window open up. When it does, it might be the most significant period of IPOs we’ve seen in a couple of decades.
Provide an example of an intriguing investment you made in 2023. What sets this company apart, or what is distinctive about its sector?
Quantum Source’s amazing story is unique in two aspects: the team and their very ambitious technology. Aiming to enable quantum computers to scale to millions of qubits, three serial entrepreneurs who sold companies to multinational corporations, and one professor from the Weizmann Institute of Science joined forces to establish Quantum Source.
Practical and current tips for founders planning upcoming money-raising efforts:
For early-stage companies raising right now, they should still lead with the fundamentals: what they’re building, who their customer is, and why they are the right team to connect those two things. But, they also can show:
- They are adaptable and resilient. That they have redundancies built into their team and their technologies.
- A realistic understanding of their significant milestones and how their runway gets them there.
- A growth mentality despite all the pressures to be more conservative. This is still early stage venture and risks are OK.
Name two portfolio companies that you think will thrive in 2024:
VAST Data
Sector + description of the service: A data infrastructure company that unifies a company’s data from across data centers
Investment amount + total: $398M to date.
Founders + year of establishment: 2016 by Renen Hallak and Jeff Denworth
Redis Labs
Sector + description of the product: An open-source, in-memory data store that supports real-time, low-latency, high-throughput applications.
Investment amount + total: $357M to date
Founders + year of establishment: 2009 by Ofer Bengal and Yiftach Schoolman
Reasoning why this is their year:
Both companies, each one in its space, are addressing the need for being a data-driven business. They serve a huge market and have been growing their footprint constantly while maintaining a healthy unit economics. They’re efficient companies that have built technologies that markets are only going to need more of.
