"Given the current saturation in the cyber market, opportunities in fintech and digital health can sometimes be even greater"
Sarit Firon, Managing Partner at Team8, was speaking at a panel held as part of Calcalist's InvesTech conference in collaboration with IBI Capital. According to Firon, in recent months there has been growth in the number of new companies opening: "There is an amazing phenomenon, the determination of employees to close the gap created by the war is tremendous."
“Given the current saturation in the cyber market, not everyone investing in cyber will necessarily outperform those investing in other sectors. Opportunities in fintech and digital health can sometimes be even greater,” said Sarit Firon, Managing Partner at Team8, at Calcalist’s InvesTech conference, held in collaboration with IBI Capital.
The panel, moderated by Sophie Shulman of Calcalist, discussed challenges and opportunities facing the Israeli ecosystem in the aftermath of the war. In addition to Firon, panelists included Barak Schoster, Partner at Battery Ventures and co-founder and former CTO of Bridgecrew, and Gidi Shalom Bendor, Founder and CEO of IBI Capital’s S Cube.
Sarit, was the past year in high-tech really strong, or was it an illusion? Tell us about the war period.
Sarit Firon: "When the war broke out, 25% of the employees at our portfolio companies, as well as some from Team8, were drafted into the reserves. Two of our startups’ CEOs were among them. A few days into the war, one of them told me, ‘Sarit, I’m drowning. I won’t be around for the next month and a half—I need you to step in for me.’
"My partners at the fund and I had to step up and help our companies navigate the crisis. One CEO was absent for five months, while the other was gone for many months as well. But after about a month of adjustment, I witnessed something remarkable: the determination to catch up was so strong that these two companies achieved more in six months than they had originally planned for the entire year."
Is there a recovery?
Sarit Firon: "Absolutely. There was a significant drop in the number of new startups founded immediately after the war. Many potential founders were in the reserves and realized it wasn’t the right time to launch a company. However, in recent months, we’ve seen a resurgence in new startups, and we are quickly returning to pre-war levels."
Gidi, what differences do you see between Israel and the U.S. in valuations and fundraising trends?
Gidi Shalom Bendor: "Valuations in the U.S. have always been higher. We conduct 700 valuations a year, and while we saw a recovery in the U.S. in 2024, that recovery didn’t happen in Israel. There was strong fundraising in cybersecurity, but in other sectors, the gap widened. In the U.S., valuations rose by 30% or more, whereas in Israel, they declined. Israeli entrepreneurs are giving away a larger percentage of their companies for less capital."
Barak, is cyber still the driving force of Israeli high-tech?
Barak Schoster: "Cyber still presents a major opportunity. With advancements in AI, it’s possible to automate processes that large firms like Accenture and Deloitte currently allocate massive budgets to. AI enables automation of time-intensive processes.
"That said, Israel has created significant value beyond cyber as well. Virtualization technology was developed here in Ra’anana by Qumranet, and the chips powering AI’s high-speed networks were also invented in Israel."
What’s expected in 2025? Will fintech make a comeback? Is Israeli AI innovative enough?
Gidi Shalom Bendor: "AI has become a buzzword, and simply mentioning it increases a startup’s chances of securing funding—whether or not it’s truly relevant. In 2024, 80% of companies that raised funding had AI or cyber in their descriptions. But AI isn’t just a slogan; it’s real and touches every sector, bringing new challenges along with its opportunities."
Sarit Firon: "We continue to invest in cyber, fintech, and digital health. Cyber isn’t going anywhere, and opportunities for new cybersecurity companies continue to grow. While cyber has been a key driver of Israel’s tech sector, let’s not overstate its importance—there have been outstanding companies in other fields as well.
"The challenge with cyber is that demand is constantly evolving, leading to an influx of companies solving the same problems. I know many entrepreneurs who are tired of cyber and want to pursue other fields. They’re building excellent fintech and digital health companies, and their opportunities are just as strong—if not stronger—than in cyber."
What about the availability of investment capital? Barak, is there less competition between funds?
Barak Schoster: "We’re in a highly sophisticated and competitive market where entrepreneurs can carefully select their investors and seek advice from past generations of founders. The ecosystem is more mature, making competition stronger and leading to larger funding rounds for companies that the market believes in. The key is finding the right partner—whether Israeli or foreign."
Do you have any advice for budding entrepreneurs in the coming year?
Sarit Firon: "Choose the right partner when fundraising and come prepared for meetings. I look at how an entrepreneur thinks about their idea, how they validate it, and how well the team complements one another. Great entrepreneurs manage to raise funds even in tough times, but they need to seek advice from experienced founders."
Barak Schoster: "The most important thing for any entrepreneur is to surround themselves with a strong support system—both at home and at work. Without it, the journey can be very lonely."
Gidi Shalom Bendor: "Entrepreneurs need to listen to many voices but ultimately make their own decisions. They should filter what’s relevant to them. Human resources are a key determinant of success or failure. Many founders make mistakes in distributing equity and making early strategic decisions, and these are difficult to correct later on."
