What does the coming year hold for Israel’s technology sector? While many sectors of society are fearful that the damage caused by the coronavirus pandemic will continue to get worse, the tech ecosystem is filled with a refreshing sense of optimism. The Jerusalem Post spoke with three of Israel’s most experienced investors, who gave their perspectives on the fundamental shifts taking place.
JON MEDVED, founder of global equity crowdfunding platform OurCrowd, is unphased by the uncertain outlook for the short term.
“The first thing to understand is that the only thing that is constant is the change itself,” he says. “The lesson of the past seven months is that anyone who thinks they can predict the future with any clarity is wrong.” That being said, Medved has a few rules that guide his understanding of how the world will move forward. “1) There is no ‘going back to the old normal.’ There is only a ‘new normal’ from now on. 2) Digital transformation is a constant in our lives and the pace of this transformation will only increase from here on.” That means that the areas of life that digital companies “conquered” during the pandemic are not going to be given back.
“So, for example, if you and I are doing this meeting on Zoom instead of in a cafe in Baka as we would have done previously, that’s the new reality we live in from now on.”
Medved sees a few trends that he expects to increase in a coronavirus world.
“Working from home is going to be increasingly important and useful, and there is going to be a lot of innovation around that, including in the field of home cybersecurity. Ditto for distance learning technology. Ed-tech used to be the least interesting thing an investor could hear, but now education has changed forever. The universities that think they can continue to charge $70,000 for a degree via Zoom don’t even understand yet what hit them. This is a huge change in that field.” 3) Remote medical technology, in the form of remote diagnostic testing and telemedicine, is “going through the roof. At our recent conference, the head of Johns Hopkins predicted that 30% of all doctors and hospital visits will now move to telemedicine. You can see what a huge opportunity that is.” Medved also mentions remote vehicle operation as an industry that will grow and create a whole new field of jobs and skills.
“One of our portfolio companies is building technology that will allow anyone to operate a vehicle remotely from anywhere. So you could have a base anywhere in the world where people can sit at a desk and drive a truck or deliver a pizza.” While many expect the delivery and transportation sector to be increasingly automated in the future, “you’ll always need human intervention, at least as a backup,” Medved says. “That type of technology isn’t going to take people’s jobs away, it’s going to create a whole new field of work.” All these shifts stand to improve Israel’s place in the world in a huge way, Medved notes.
“As physical presence becomes less of an issue, Israel becomes a favorite destination for investors. Israelis are the masters of digital- and virtual- everything, and most of our money already comes from abroad. So Israel benefits a lot from the nature of digital connectivity shrinking the world and the fact that we are virtuosos at these digital skills that we’ve mastered.”Earlier this summer, OurCrowd announced plans to raise $100 million to create a Pandemic Innovation Fund investing in urgent technological solutions for the medical, business, educational and social needs triggered by global pandemics. “We don’t believe that the current situation is just a one-shot deal. The pandemic is going to be with us for quite some time, and it probably will not be the last pandemic we experience. So this is a fund that will invest in medical and non-medical solutions to challenges like the ones we mentioned earlier.”
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Regarding Israel’s recent normalization with the United Arab Emirates, Medved sees great opportunity. “How can you not be excited about this? This is just such a great moment in history for Israel and the region. I’ve had calls about this every day, and we all look forward to building long-term relationships that build real value.”MICHAEL EISENBERG, General Partner at Aleph, an Israeli venture capital fund, says he sees three big trends evolving in Israel.
1) There will be an ongoing increase in private capital investment in Israel.
“There is already a lot of money flowing into Israeli startups,” he says. “We are seeing a number of giant fundraising rounds at a time when people can’t even get here.”
2) As the US dollar grows weaker and the world moves more toward remote work, Eisenberg expects that large international technology companies will hire fewer people in Israel. However, he says, that could be a good thing for the tech ecosystem.
“That will leave more talent available for local startups” that have trouble competing for good programmers and engineers.
3) Eisenberg expects to see Israeli entrepreneurs “double down on tackling important problems,” noting that “Israeli entrepreneurs in general tend to focus on impactful global problems.”Finally, Eisenberg, who is a longtime advocate for aliyah, and whose fund actively seeks to help talented professionals abroad find work in Israel, offers a message for society as a whole.
'We have to ask ourselves as a society, what are the values that are central to us that cause more people to move here and stay? At this period in time, that question is going to matter more than any other question, because the most important economic asset that any country has is its people. With the ability to work remotely becoming easier, we need to think about how to attract the best people, and that starts with values. We need to have a values-based discussion to enable and value freedom, prosperity and mutual responsibility for one another.”Overall, Eisenberg says, the long-term trend for Israel is very positive. "There will be many challenges, but I expect to see very meaningful outcomes in the coming years.”
AS I ASK serial entrepreneur Yossi Vardi to envision the future, he holds up a crystal ball and smiles as he waves his hands over it, seeking answers.
“We are facing a new world, and there is quite a lot of uncertainty,” Vardi says. “The coronavirus pandemic is the biggest inflection point the world has faced since the extinction of the dinosaurs. Our world is very interconnected, and we’ve never before had a situation where the entire world was put on hold.” Vardi expects that the pandemic will shift many of the paradigms of how people interact inside a company.
“Studies have shown that a major factor in the way people interact with each other is proximity. The farther away you are from a co-worker in the same building, the fewer interactions you are likely to have with them. If we are working from home, that is going to change the way people think about interactions.” That isn’t necessarily bad, but it requires new communication models of management.
“One of the features of the Zoom era is that we see all the faces of the people on the screen, which actually adds a new layer of communication that could create stronger interactions. As new needs come up, new products are created to solve them.” Vardi is most concerned about the tech sector’s response to the increasing social inequalities that the pandemic is causing.
“With the world in a state of crisis, Israel’s tech industry – its strongest socioeconomic sector – should take a role in helping make sure that the weaker parts of society don’t get left behind. The trend toward remote learning empowers the strong, while leaving the poor and tech-illiterate behind. We need to mobilize resources to make sure these people don’t get lost in the transition.” Increasing involvement in hi-tech by the haredi and Arab sectors is a trend that Vardi finds encouraging.
“People in these sectors are just as smart as anyone else. They just need a fair chance. The numbers in hi-tech are still small, but I hope the trend continues. The idea that people are excluded from this world is not sustainable.” Overall, Vardi is optimistic about Israel’s ability to weather the storm.
“An advantage of Israeli society is that we have a higher level of cooperation than other societies, because of the way we evolved through external threats and adversity. That’s an advantage for the technology ecosystem during regular times and essential during times of emergencies. The innovation that Israel is known for is a cultural phenomenon that is learned by working together at youth movements and in the army, not from any policy.”
