Opinion
The gap between Israeli and American founders isn't tech, it's the first line of the budget
"The technology is already here," writes Guy Fighel, a Partner and Head of Data Program at Hetz Ventures, "what's needed is to update the playbook around it."
I spent most of June and July in San Francisco. Close to two months of meetings with investors, founders, and senior people at the companies currently setting direction in data and AI. I make the trip regularly. I invest in data and AI infrastructure at seed out of Tel Aviv, which means my job is to read the Bay Area bar accurately before the founders I back walk into a room there.
I know cycles. I lived in the Valley before covid, during it, and after. There have been highly energetic periods there, especially the pre-covid run up, but what's happening now doesn't resemble any of them. The intensity is greater by orders of magnitude.
That part is easy to say and hard to make useful. Every Israeli founder already knows the Valley is loud. What's worth reporting back is narrower: one specific, almost technical difference in how founders allocate the first money they raise, there versus here. Most of what Israeli founders are hitting downstream, the harder second rounds, the meetings that don't convert, the sense that the same pitch stopped working, traces back to it.
The Israeli playbook is familiar. Raise a seed, hire ten to fifteen excellent engineers from top units and your immediate circle, build a product for a year, then start thinking about marketing and sales. That playbook produced excellent companies for two decades. In this cycle it has become a disadvantage.
The founder in the Bay Area in the same space does the opposite. The first hires after the founding team are go-to-market: devrel, marketing, someone who owns the message. Two or three engineers, not fifteen. The rest of the budget goes to tools and tokens. The assumption is that a good engineer who can run AI tooling end to end replaces several, and that the bottleneck is no longer building but being noticed.
This isn't ideology, it's a response to a bar that moved. What looked reasonable a year or two ago, half a million to a million dollars in the first year, no longer holds. The reference point is moving toward $2.5M after a year. When an investor can choose between a company at half a million and one moving far faster, the next round is no longer guaranteed.
The second bar is attention. In every cafe in the Valley people are talking about agents, including on Saturdays. Which means your positioning has to be sharp from the first sentence. The Israeli founder tends to open with tech. The founder in the Valley opens with the problem and the category. Where the tech is already taken for granted, whoever holds the category wins the room.
There is also a layer of decision makers most Israeli founders don't yet know exists. Not the senior leadership and not the developers, but the AI engineers. They are the ones who decide whether your POC moves forward or dies, and the conferences where they sit are where the mindshare is. And if you're building in AI or inference, you need to sit in San Francisco. New York works only if your entire vertical is there. The answer to when you should move is earlier than is comfortable, not build here for two years and then relocate.
A three or four day conference trip isn't enough. Founders come back from a week like that feeling they understood the picture. You don't, until you've sat in a cafe in Palo Alto on a Saturday afternoon and watched people walking out of the offices, because they were working. You don't read that in the papers here.
Let me be precise about what I'm not saying. There is no verdict here on the Israeli founder. The technical depth is real, and the systems thinking that comes out of the technology units is an asset few places produce. Israeli cyber is still among the strongest anywhere. What changed is that being Israeli is no longer an automatic premium. It's a good starting point, not a differentiator.
And here is the good news: allocation is a decision, not a capability. A founder can change their cost structure this quarter. First five hires weighted toward go-to-market, a small sharp engineering team, real money on tools, real money on people who tighten the message. It doesn't require a different founder or different technology.
One practical step before getting on the plane: pressure-test your positioning and differentiation with Israeli investors who know the current bar over there. Many founders burn their first impression with an American seed fund on a pitch that one conversation here would have fixed. You don't get a first meeting twice.
The technology is already here. What's needed is to update the playbook around it. Fortunately, that's the easier of the two tasks.
Guy Fighel is a Partner & Head of Data Program (SPARQL) at Hetz Ventures.
