The Venture Capitalist club that seeks to boost trade between Britain and Israel

Last year was a record one for Israeli start-ups, breaking ground in investment, new unicorns and exits. More than £18 billion ($25bn) was raised amid a rise in technology investments, to beat the previous record.

And the UK massively stepped up its stake in the ecosystem, with further growth expected this year through the help of the exclusive Venture Capitalist (VC) Club.

Launched a few months ago as a collaboration between the British Embassy in Israel’s UK Israel Tech Hub and law firm Taylor Wessing, the invite-only club could help the UK more than double its investment in Israeli tech in the next few years. The platform aims to create opportunities for VCs across the UK and Israel to discover new innovation trends and technologies, boosting bilateral trade between VCs and investors from both countries.

VC Club member Toby Coppel, co-founder and partner at Mosaic Ventures (UK VC) and Idan Fisher, director of the UK Israel Tech Hub at British Embassy Israel, describe how the trade relationship between the two nations is changing for the better, with UK investors pushing to get to the Israeli deals first.

Q. Why do you think 2021 was such a great year for investment into Israeli start-ups?

A. Idan Fisher, UK Israel Tech Hub

Idan Fisher

The year 2021 was a great year for tech. As the pandemic progressed, it became apparent that tech was an extremely resilient investment. In many places, tech went from a ‘nice to have’ to an absolute necessity.

Areas such as telemedicine, which have been stagnant for years, jumped forward, simply because people wouldn’t, or couldn’t, attend clinics or hospitals.

The number one beneficiary of the tech segment is cybersecurity – not only are attackers becoming more sophisticated, but the fact that everything has moved online means attackers have many more vectors, and we have a lot more to protect.

Another area seeing a surge is within sustainability (food, energy and water). The climate crisis is here to stay – and the tech world is responding there aswell.

There is definitely an uptick in UK investment in Israel, and a strong appetite among UK investors to get more involved – in many cases it’s about who gets to the good deals first.

UK investors have massively improved their position over the past year, but we see potential for this stake to double over the
following years.”

Q: In what areas of Israeli tech do you see the big opportunities for UK investment?

A. Toby Coppel, Mosaic Ventures

Israel has historically had tremendous success in a broad range of sectors from semiconductors and medical devices to enterprise and consumer software. From Mobileye to Lemonade to Waze to Forescout, the range and types of innovation is truly impressive.

Toby Coppel

In terms of the UK, I usually prefer to take the perspective of the founder and why would they want to choose a UK investor – as a founder targeting the UK market, the most interesting sectors are likely to be fintech, healthcare and life sciences and enterprise software. If you look at recent early-stage investments by UK-based investors in Israel, there has been a strong trend in cybersecurity, machine intelligence tools and modern enterprise software, and I would expect this to continue, with companies
such as AppsFlyer, Gong, SentinelOne, Snyk, Pagaya (fintech) and BioCatch.

Q. How do you see 2022 in terms of investment from the UK to Israeli start-ups?

A. Idan Fisher, UK Israel Tech Hub

I see investment increasing. With the amount of capital residing in the UK, and the growth the UK ecosystem is showing itself, I believe UK investors can and should hold an eight to 10 percent share of the pie.

Q: How do UK and Israeli tech ecosystems complement each other?

A. Toby Coppel, Mosaic Ventures

Both countries are very open economies with a global outlook on the world which is very compatible and complementary. The UK hosts a large number of international investment firms with deep experience in supporting founders and helping them to scale across the world. It also has a deep pool of senior leadership talent in tech and is an attractive place to source experienced C-level and VP-level executives for Israeli start-ups. Tel Aviv is a vibrant tech ecosystem with incredible entrepreneurial talent and tremendous technical skills, with the IDF as a strong training ground. It’s a match made in heaven.

Q. What can UK and Israeli entrepreneurs learn from each other? How do they differ?

A. Idan Fisher, UK Israel Tech Hub

Traditionally, UK investors are deemed by Israelis to be more conservative, slower to move and more focused on market disruption vs tech disruption. This is massively changing, also owing to substantial foreign investment coming into the UK tech ecosystem. The UK is now the start-up hub of Europe – with 63 percent of money coming from outside, meaning UK investors are being influenced by their foreign counterparts. They are investing a lot more in deep-tech, and they are investing at higher valuations.

Israeli investors are generally more prone to risk taking. Strong points are deep-tech investing – with AI [artificial intelligence] investments encompassing half of all investments in Israel. Israeli investors are experienced in investing in deep-tech companies at early stages, placing lower emphasis on short-term profits and company balance sheets. They are also known for being extremely active in their portfolios’ business development.

What we are seeing over the past couple of years is that UK investors are becoming a bit more Israeli and Israeli investors are becoming more British.

www.ukisraelhub.com/the-vc-club

Statistics about investment in Israeli start-ups, according to a report by Start-Up Nation Central

Start-ups raised £18 billion in funding between January – November.
In 2021, 33 privately-held technology companies joined the billion-dollar club, reaching a total of 53 Israeli unicorns.
The value of capital investments rose by 136 percent in equity funding over 2020, itself a record year with more than £7bn ($10bn) capital raised.
Funding in Israeli start-ups and companies was 71 percent more than the global average, and 78 percent more than in US companies.
The VC Club facilitates bilateral relationships between VCs and investors from both countries. There are over 40 members.

UK VCs include:

• Playfair Capital

• HSBC Ventures

• Mosaic Ventures

• Seedcamp

• LocalGlobe

• AXA Venture Partners

Israel VCs include:

• Hetz Ventures

• Entrée Capital

• Rhodium

• Jerusalem Venture Partners