American venture capitalists say now is the time to bet big on Israel, even as the country faces multi-pronged wars with Iranian-backed terrorists in Gaza and Lebanon.
Aaron Kaplowitz, who founded 1948 Ventures just days after the deadly Oct. 7 Hamast terrorist attack, became one of Israel's early stage dual-use companies – companies that develop technology with both defense and civilian applications. are investing.
“When life-saving solutions have to be found in real time, the battlefield becomes the ultimate sandbox for innovation,” he said of a state incentive program previously focused on attracting international companies to New York. said Mr. Kaplowitz, who was running it.
As the Post previously reported, Mr. Kaplowitz's faith in Israel comes as some tech entrepreneurs and investors from so-called “start-up nations” consider moving to the U.S. as funding dries up in the aftermath of the genocide. It comes from the fact that Other people who had previously planned to travel to Israel's high-tech region known as “Silicon Wadi” also canceled their visits, officials said.
“A lot of talented entrepreneurs don't admit it to most people, but they're thinking about retiring,” one shady venture capitalist told the Post just two weeks after the attack.
But Kaplowitz cited the recent success of the U.S.-funded, Israeli-developed Iron Dome, a missile defense system that incorporates dual-use technology, as “a lot of validation” for his decision to funnel money into Israeli companies. He pointed out that it is one of the A time when most people retired.
Iron Dome almost completely shot down 99% of the approximately 300 missiles and drones launched by Iran towards Israel on April 13th.
“The same predictive technology that determines whether and when to launch interceptors at incoming enemy missiles is now being used to predict wildfires in Oregon and reduce energy costs in low-income areas of California,” Kaplowitz said. , and is being used to prevent power outages across New York.” has been involved in early stage investments since 2015.
“Many of these companies will continue to save American lives, protect critical infrastructure and create local jobs.”
Israel could greatly benefit from an infusion of cash. The country's economy has been hit hard by the war, with GDP falling by 19.4% in the fourth quarter of 2023.
Israel's vibrant technology sector accounts for nearly 20% of this figure. According to PitchBook, Israel has more venture capital firms per capita than anywhere else in the world, and most investments in Israeli startups include US-based investors.
The country also has a track record of quickly recovering after conflict.
After the 2014 Gaza War, Israel's economic growth rate was 4% (twice the OECD average). And after the 2006 war with Hezbollah, the Jewish state saw a significant increase in outside investment, some of which contributed to the birth of several innovative companies.
“I have great faith in the power of Israeli startups and predict a 'startup boom' is coming,” said Avi Hasson, CEO of Startup Nation Central, at a conference in Tel Aviv earlier this month. spoke at the conference.
After visiting the still-smoldering southern towns and kibbutzim on Oct. 18, Kaplowitz quickly understood the need to inject capital into Israel's startup ecosystem, which he calls “the beating heart of the Israeli economy.” said.
His other company, the U.S.-Israel Business Alliance, an organization that specializes in bringing governors to Israel, arranged for Governor Hochul's solidarity mission to the region.
“Especially in the early days of the war, the Israeli economy was in trouble,” he said. “In an instant, it felt like every employee at a tech company turned on their out-of-office notifications, closed their computers, and rushed to the front lines to protect their communities.”
Seizing the opportunity to invest in time-tested technology at a time of declining valuations was one of the main reasons Kaplowitz decided to launch Miami-based 1948 Ventures, a nod to the year Israel was founded. said.
After making two initial investments, 1948 Ventures is currently raising $10 million to invest in 10 additional companies that have undergone thorough due diligence.
Kaplowitz argued that each of the companies targeted by VCs has “potential to be a game changer” in both the defense and commercial markets.
Kaplowitz said Hamas flew drones to drop grenades on Israeli military surveillance and communication systems on October 7, allowing thousands of Gaza terrorists and civilians to cross the border without hesitation. The company said it has begun investigating the underlying vulnerability that was exploited.
He felt that this “catastrophic security failure” opened the door to more effective perimeter protection solutions, with his first investment in “1948” using destructive software to detect radio signals. Decided to go to a start-up company.
The IDF is now integrating the company's technology to detect, classify, and locate drones.
“I believe that on the other side of this punitive existential war, Israel will emerge as a world leader in defense technology for decades to come,” he said.
