IL Tech in NY
“Too many AI companies have no pathway to profitability”
Joule Ventures joined CTech as part of its IL Tech in NY series in collaboration with Israeli Mapped in NY.
“Being a good business never goes out of style,” says Daniel Frankenstein, Co-Founder and Partner at Joule Ventures, adding that “great companies can always raise capital.” He notes that in the current market climate, for example, “too many AI companies have no pathway to profitability.”
Joule Ventures joined CTech as part of its IL Tech in NY series in collaboration with Israeli Mapped in NY, a project spotlighting New York-based VCs and their perspectives on the Israeli tech ecosystem. Operating since 2010, the early-stage fund opened its New York doors in 2017 to serve as a seed specialist, helping Israeli startups in their earliest days build their go-to-market presence in the United States.
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Daniel Frankenstein, co-founder & partner, Joule Ventures
(Photo: Ella Sverdlov-Keren)
According to Frankenstein, “There is no doubt the stock of the Israeli entrepreneur has gone up dramatically as investors see the resilience of founders navigating a very difficult environment.” Still, he highlights a common point of friction, in that “many NY VCs have a hard time understanding the Israeli founder journey (tending to undervalue the network, army experience, and non-US customer base) and Israeli founders tend to misunderstand the feedback from NY VCs (speaking perfect English but not a word of American).”
You can read the entire interview below.
Fund ID
Name and type of VC: Joule Ventures - Early stage, lead investor
Main sectors of investment: B2B software, security, data, AI, enterprise infrastructure, digitization of legacy infrastructure
Names of managing partners: Daniel Frankenstein (Co-Founder & Partner, New York), Brian Rosenzweig (Co-Founder & Partner, Atlanta), Dafna Winocur Biran (Partner, Tel Aviv)
Year of founding/start of NY operations: Fund founded in 2010, New York operation started in 2017
Total assets under management: $250M
Notable portfolio companies: BioCatch, Coralogix, Reeco, Arnica, AcSense
General background on the VC, its managers, founders and partners:
Joule Ventures was founded in 2010 with the vision that a larger and more sophisticated cross-section of US-based investors wanted access to Israel's emerging technology ecosystem and that Israeli founders needed a seed specialist at their earliest days to assist with go-to-market in the United States.
The VC Vision:
Today, Joule is an institutional early stage investor backing the best founders coming out of the Israeli ecosystem and using a best-in-class validation engine to ensure early product-market fit and scalability.
Following the turbulence of recent years and the stabilization of 2025, the Israeli ecosystem is entering a new era: The Evolutionary Leap. For the "Israel Tech in NY 2026 project” CTech is challenging top investors to identify the critical leaps ahead – financial, technological, and mental – as we create a roadmap for a matured innovation hub, ready to redefine its impact on the global stage.
After a period defined by cash preservation, will 2026 see the reopening of the IPO window for Israeli tech, or will M&A remain the sole viable liquidity event?
The venture capital ecosystem tends to view liquidity as a function of the stage of their fund lifecycle. We at Joule see the opposite. Liquidity windows open for all types of exit events (be it M&A or IPO) regardless of a fund's maturity. Sometimes those windows hit a fund at a mature time and sometimes it's early. But it's critical for GP's to take advantage. It's also one of the primary drivers of an LP multi-vintage approach. Furthermore, Joule is a high-concentration, early stage investor that uses the secondary market in growth rounds to balance the sizing of individual positions and generate cash.
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Moving past the market correction, what is the single most critical metric (e.g. EBITDA, NRR, Rule of 40) that will drive premium valuations in 2026?
Being a good business never goes out of style. While certain cycles prioritize certain metrics (during bubbles or periods that approach a bubble, investors tend to pay higher premiums for growth; during more contractionary periods investors pay for margin and efficiency). In the new world of AI, we are looking at whether companies can deliver product at a margin. Too many AI companies have no pathway to profitability. We pay for good businesses that can be tested by each aspect of the cycle. After all, in a 10 year fund you'd expect to experience diverse macro conditions. When investors are paying for growth, that's our signal at Joule to start considering options in the secondary market.
How is the 'Israeli Tech' asset class being effectively rebranded to global LPs in 2026? Are we shifting the narrative from 'Innovation' to 'Extreme Resilience'?
We work with a wide range of LP that are driven by purely economic interest. Geopolitical risk is considered a risk factor and has been the subject of LP discussions over the past two years. There is no doubt the stock of the Israeli entrepreneur has gone up dramatically as investors see the resilience of founders navigating a very difficult environment. While the events of the past two years have motivated some investors to double down on the Israeli ecosystem, there are LPs that are cautious. Worth noting as well is that investments in the Israeli ecosystem largely track the global investor trends. The narrative that Israeli investments were down because of the war in 2023 didn't take into account the fact that the ecosystem was overfunded in 2021 and 2022 (as it was in the rest of the world) and investments were down everywhere. Great companies can always raise capital.
As we transition from 'Copilots' to autonomous 'Agents,' which specific vertical will be the first to fully trust AI with independent decision-making and execution?
I don't believe it's going to be one industry but a few outliers in different industries, specifically where the cost savings are too substantial to ignore. Our enterprise focus gives us significant exposure to corporate decision making and attitudes around adoption of AI. There is skepticism. We see the adoption curve more substantially on the "data inputs" side than "decision making". There's significant impact of this technological leap on the VC ecosystem: Companies can raise fewer dollars, hire fewer people, yet have a better product and generate more revenue in a shorter period of time. That means VCs can make some additional investments, have greater reserves for follow-on, and have better look-through for follow-on decision making.
