While I was in Tel Aviv last week to speak at Viola Group’s annual LP meeting, I took advantage of the opportunity to host a number of innovators for a roundtable discussion.
Together with my co-hosts Nir Netzer, Evyatar Natan and Tal Sharon from Equitech, I sat with a diverse set of Israel-based start-ups including Tipigo, Fingenom, Banking Network Cryptographics from the capital markets space; Salaryo and Lemonade from the Payments and InsurTech sectors; and BeeEye, Facetrom and Payzday wihch are focusing on credit scoring.
The TLV fintech scene makes a good impression
A few things stood out both about the Israeli fintech community and the opportunities it is embracing. Israel, with a land mass not much larger than the State of New Jersey and a population only slightly larger than my home state of Colorado, punches well above its weight class. The country’s 3.2 million strong workforce (ages 25-54) produces an enormous amount of technology and services for outside markets. Due to the small size of its own domestic marketplace, most Israeli startups are purpose-built for the US, Europe, China, or another large economy. This naturally compounds the perennial problems that arise between product development, engineering and marketing & sales teams, often creating cultural and geographical concerns on top of the functional divide.
Despite these obstacles – small population, insignificant local market, hostile relations with its immediate neighbors – there is no doubt that Israel is performing as a tech powerhouse. It has recently attracted $6.47 billion in VC and PE deployed capital, 73% of which comes from outside Israel. And in terms of exits, the country boasts 61 liquidity events just in the past 12 months. Pound for pound, Israel is a contender.
Israeli entrepreneurs are outward-facing optimists
So what concerns these entrepreneurs about the future? What opportunities do they see? It’s no surprise that their eyes are on the global markets. The group I was with was watching the China-US trade relationship with keen interest. This could be an opportunity for Israelis to establish themselves as a strong channel into the Chinese markets, if Sino-US relations further erode. Also, as the UK and Eurozone have their difficulties, Israel begins to look more stable in contrast. Some anticipate the Arab becoming dramatically more open to commerce with the West, and look forward to extending Israel’s merchant leadership in that emerging reality. Finally, all are watching with trepidation a hotly contested Parliamentary battle which will be decided on April 9.
I’ll be back… with friends!
Not only was the Israeli fintech scene impressive, but also I was delighted by the genuine warmth, openness and comradeship I felt on my first visit to Tel Aviv. I am already planning my next visit.