“We experienced a crisis, now we expect a boom”
lool Ventures co-founders believe that good things are ahead for the Israeli tech industry, but warn that “it is important to keep the success in Israel”
“Education is an infrastructure just like high-speed internet, and the state should push for these things,” said Avichay Nissenbaum of lool Ventures. “It is important to keep the success in Israel,” his partner, Yaniv Golan added.
Both Nissenbaum and Golan hold the same title - lool co-founders and general partners, which seems fitting for the two entrepreneurs turned investors who have been working together for so long. In 2007, they sold their startup Yedda to AOL almost a decade after they sold SmarTeam Corporation, a product lifecycle management (PLM) solutions provider, to Dassault Systèmes. So when the two discuss what policies and solutions they would like to see enacted in the local ecosystem, they speak from experience.
lool Ventures co-founders Yaniv Golan (left) and Avichay Nissenbaum Photos: Yoam Reshef
“What takes success away from Israel? Many things,” Golan continued. “One is the fact there are fewer companies here, many companies register as American, why does it happen? Because it is easier, more efficient to form a company this way and it is easier to raise money as an American company. Those are all things we can solve even partially, but it does not happen. There is the issue of human capital, if we will not ensure an Israeli human capital then other countries will reap the rewards of Israeli high tech. There is also an issue with Israeli funds. We know that big portions of the funds generated here went into American pension funds.”
”Another thing is regulation, which needs to be more accommodating for autonomous vehicles, smart roads, fintech, etc. We have an opportunity to become a leader in overcoming regulations. If Bennett (Prime Minister Naftali Bennett) says he wants to increase the tech workforce by 50%, I think it is a nice statement but I think we have to care for the infrastructure and the other aspects as well,” Nissenbaum added.
Even though the two have some criticism on the way certain things are handled, they are still big believers in the local industry and the people who keep it running. A recent report from Israel’s Innovation Authority pointed to a major drop in the number of new startups founded in Israel - from more than 1,400 in 2014 to only 520 in 2020. This figure has been occupying the minds of several industry leaders, however, Golan and Nissenbaum are not extremely concerned.
“The industry is maturing, if we look at 2014 when the number of startups was at a record of about 1,800 companies, we can say that many of them were not significant,” Golan said. “What you see now, you see maturity, you see fewer companies, but still enough to keep our days filled with interesting, even inspiring appointments. The entrepreneurs themselves have matured, in age, and in their vision.“
“Quality is much more important than quantity,” Golan went on. “And I will also say that every crisis births new opportunities and creativity, we saw it in 2001 and 2008, and I think most companies who reach IPO levels these days rose from those post-crisis days. We experienced a crisis, now we expect a boom of creativity and ideas, and you can see it beginning to come, and hopefully, it will have quality and quantity. The current wave of up-and-coming companies will be mega-unicorns in a decade or so.”
The crisis Golan is referring to is of course the global pandemic that hit last year. When exploring the deeper effects Covid might have on the industry, Golan focused on the positive. “People were home for a long time frustrated, they had time to flash out their ideas, companies changed their practices, they let go of some of their talents, things shifted and when you stir the pot it results in good things.”
“At the industry sustainability level, there is still much to do, we see the impact of some of the issues now and we will see the rest down the road but as an industry, it is very healthy and strong,” he concluded, with Nissenbaum adding that “we are before the next big wave. Those who were bitten by the entrepreneurship bug, and it does not matter if they sat at home for two years now or work for a big company, these are people with ideas and always looking for the next big thing.”
Nissenbaum and Golan founded lool in 2012, focused on early-stage investments with a diverse portfolio that includes companies such as BEEWISE, which invented an autonomous beehive utilizing robotics, computer vision, and AI to save the global bee population. Lightico, which offers companies to do business using a mobile platform for e-documents, e-signatures and other services. And Medtech company Medisafe, which created a digital patient engagement platform.
“As a venture capital firm, we look for mission-driven entrepreneurs who seek to build global-category leading companies, which bring digital transformation to verticals and do good for the world and humanity,” Nissenbaum said. “Our vision, as ‘founders to founders’, is that we try to be helpful and assist companies in producing assets quickly.”
“At the end of the day, the journey entrepreneurs take is a very hard one, it is even hard to explain,” Golan said about the move from founders to investors. “I think that the fact that we lived through it gives us, first, empathy and understanding towards the entrepreneur, knowing where to press hard and where to let go. Second, is the fact that ‘we have been there and done that,’ meaning we have the experience to help others overcome obstacles we have already overcome ourselves.”