He built a billion-dollar tech empire. Now he’s bankrupt and still believes it’s temporary.
Moshe Yanai, the Infinidat founder who helped shape Israel’s data industry, insists his downfall is only “a light blow to the wing.” Creditors see it differently.
The encounter with Moshe Yanai is deceptive. To this day, in interviews and articles written about him over the decades, Yanai (76) has been described as a successful high-tech entrepreneur, one of the pioneers of Israel’s tech industry in the 1980s, a brilliant electrical engineer, one of the founders of the modern data storage industry, and a member of the Startup Nation aristocracy. Now, however, the conversation with him takes place under the dubious title of “bankrupt.” A man whose creditors are pursuing his assets and who knows they will never be repaid in full.
But the deception also lies in the words that come out of his mouth. Yanai speaks openly and unusually for a man in his situation, but his words are often contradictory. He vehemently denies the facts revealed so far. He dismisses with ease any mention of debt, any reference to the economic downfall he has suffered, or the naming of close friends who were harmed by it, responding with firm statements that it is not real, or that the debt will be repaid in full. Definitely. If not right now, then in the very near future. And the friends, according to Yanai, have not turned their backs on him either; they knew the risks in advance and know even today that they will get their money back. For a moment, a feeling creeps in that this man of great privilege, with his impressive record, is in fact detached from the reality he has found himself in, or at the very least refuses to internalize it in its full severity.
These are the facts: As early as the 1980s, Yanai was one of the developers of data storage technologies at EMC. Over the past two decades, he has initiated, invested in, and sold various technology companies, including to IBM, for hundreds of millions of dollars. Between 2007 and 2023, he reported to the Israeli Tax Authority a cumulative personal income of 790 million shekels, an average of about 46 million shekels per year. He is also a philanthropist who donated $12 million to the Technion, established a prize in his name, and owns luxury apartments in Boston, New York, Herzliya Pituach, and Tel Aviv. For good measure, he also owns a company that operates nine helicopters in the United States and Israel.
And these are also the facts: The legal proceedings initiated by his creditors in March of this year revealed that Yanai is insolvent. A few months ago, he claimed in court that his assets were worth about $1.1 billion, but according to court-appointed experts, they are worth at most $79 million, enough to cover only about two-thirds of his debts to banks, investment funds, credit institutions, and close friends. Last week, by court order, he was officially declared bankrupt.
Moshe, what went wrong?
“The biggest decline was in the last two years. There was just pressure. I was sure that in two or three months the war would be over. It always seemed like it would happen automatically, but it didn’t. And startups always need to be nurtured. They constantly need sources of money, and the market was dead. So I took out loans to keep the companies going. I kept putting in more and more money. I also invested in companies and startups in which my friends were also invested, to save them. But in the end, it took too long to sell.
“You treat the story as my obituary; some even said, ‘It’s Madoff’ (referring to the former Nasdaq chairman convicted of the largest fraud in history). But it’s less than a light blow to the wing. I believe that as far as the economic matter goes, it can be fixed.”
With all due respect, this is no small blow to the wing. Your debts are many times higher than your assets. You are bankrupt, and control of your assets is no longer in your hands. The keys have been handed over to creditors.
“At my age, I feel like I’m in the middle of life. I’ve invented things, and I will invent more. In a few months, everything will be back to normal.”
These companies are no longer yours. How will you repay the debts?
“The trustee appointed for my assets, in cooperation with me, is doing all sorts of things to help realize and repay all the debts. He sees what’s here.”
You already received two months from the court in August to find investors who would pay off the debts or take over the companies, and you didn’t find any.
“Because there was a lot of noise around it. In any case, we asked for 90 days, but they didn’t agree and gave him 60 days. If we had more time, it would have been resolved.
“I have a friend who had a bicycle accident, broke his spinal cord, and became paralyzed. When I talk to him, he says, ‘Listen, I’m experiencing what it’s like to be paralyzed now, but I know that in a few years, with the advancement of medicine, it will be fixed.’ To a certain extent, I identify with that. I’m not paralyzed, but I see myself as a victim of the war, dealing with a cash flow problem. And it will eventually be resolved with the realization of the assets. It’s only temporary.”
Even the game theory professors fell for the game
It’s hard not to be struck by the conversation with Yanai, the kid from the village of Kfar Yehezkel who became a multimillionaire. There is a vast chasm between his technological achievements and expertise in data storage, and the way he has conducted himself in business: loans that reflect excessive risk-taking, plans and expectations bordering on detachment from reality, and at the very least, carelessness and poor timing.
5 View gallery
From left: Prof. Avi Neuman, Prof. Yair Tauman, Yael Tauman Kalai
(Photos: Dana Quigley, Ula Wiener Rami Sinai)
Despite decades of experience in business, Yanai now speaks and behaves much like others who have gone bankrupt that we’ve encountered in the past. Just like them - no matter how much money they owe - he insists that if only he’d been given more time, if only people had been patient and not pressured him, everything would have worked out. It’s not easy for anyone, certainly not for Yanai, who has made many major deals and enjoyed great success, to look in the mirror and say: “I am to blame. I got carried away, I gambled, and I failed.”
But he won’t have much choice. The man who until recently was a technology entrepreneur, and who says he holds around 40 patents, is now, since last week, just another restricted bank customer, unable to withdraw money from an ATM, sell property, take a loan, or leave the country without approval from the court-appointed trustee. Zero financial independence.
And according to the order of priority among creditors, whatever the trustee manages to recover will first go to Yanai’s secured debts: Bank Leumi; the Shaked Partners fund of Roni Biram and Gil Deutsch; the Scintilla fund from the Cayman Islands, managed by Zack Keinan; followed by non-bank financing firms such as Ampa Capital (owned by Shlomi Fogel), and smaller lenders like Michman, B2B, Peninsula, and even a loan company from Kiryat Malachi called Green Ark. Yes, that’s how far Yanai went in his borrowing spree to keep financing his dreams.
“The ease of getting money influenced me,” Yanai admits, “but that’s no excuse. I’m not a child, I’m 76 years old. If you’re given something easily, even if they push money at you, you have to know how to say no. It’s my responsibility that I said yes. In retrospect, I shouldn’t have approached the brokerage firm that got me the non-bank financing. They took everything they could, as if we’d gone to an ATM. Because it was so easy, I kept going.”
Despite Yanai’s boundless optimism, when it comes to his most painful point, the debts to his close friends and their children, he speaks more cautiously. According to his court testimony in August, he owes his friends $10-20 million.
As a member, until recently, of the inner circle of Israeli high-tech entrepreneurs, it’s clear that more than money is at stake here - family, friendships, prestige, and ego. Yanai is the father-in-law of longtime angel investor Zohar Gillon (his son Itai is married to Gillon’s daughter, Michal). His late wife, Rachel, was chairwoman of the Friends of the Israel Museum. His close friends include economist Prof. Yair Tauman - co-author, with Nobel laureate Prof. Yisrael Aumann and Prof. Shmuel Zamir, of the book Game Theory - and mathematician Prof. Avi Neuman, also an expert in game theory at the Hebrew University. Together, Tauman and Neuman sold the British auction company QXL to the media group Naspers for $1.9 billion in 2008.
Last week, Calcalist revealed that Tauman’s four children, Michal, Amit, Tami, and Yael (a senior researcher at Microsoft and visiting lecturer at MIT) and their spouses, lent Yanai $7.5 million, including interest. Neuman also invested in Yanai’s ventures, though the amount is unknown. The loans were partly given based only on contractual promises, without liens on assets. “The reason for this was the relationship of trust between the parties, who therefore saw no need for a signed document,” the Tauman family wrote to the court as part of their request to join the bankruptcy proceedings. “Yanai made it clear time and again, despite the agreements with MII (Yanai’s holding company), that he personally stood behind everything as the borrower, explicitly stating: ‘The company is only for tax purposes, it’s actually me.’”
For this reason, Yanai’s friends will likely be the biggest victims of his debt settlement, forced to stand last in line among creditors and absorb significant losses.
The Taumans even told the court that Yanai ignored their repayment demands. “It became clear that Yanai took advantage of the trust placed in him by family members, deceived them, misrepresented the situation, stole their money for his own use, and has neither the intention nor the ability to fulfill the agreements,” they wrote. “It seems that Yanai defrauded them from the outset and has been ‘rolling’ other people’s money for years.”
Yanai, of course, rejects this outright. “‘He stole their money and has no intention of honoring the agreements’? Nonsense. I didn’t deceive anyone. Everyone had all the facts. I presented everything. All of it went into real ventures, with real business plans. Nobody gives money for nothing, it’s not like going to an ATM. You present a company, show data, explain the goals and expectations. If the expectations aren’t met, then they aren’t met. I want to remind you that during the war, deals that were supposed to move forward were stopped. Everything was postponed because of the war, and I had to mortgage my properties for liquidity.”
But it’s not only the Taumans who say their investment was based on trust. “I saw how enthusiastically everyone lent him money,” says one of his creditors. “I was on the investment committees. Everyone spoke highly of him, saying how good a man he was. For someone who wasn’t strict about collateral, it was very easy to fall for him. The question is whether he deceived others or himself. In my opinion, it doesn’t look good when the debts are this large and scattered.”
Bottom line, people lent you money because of your reputation.
“People gave loans after doing serious due diligence, for example, on Infinidat (a data storage company). They saw how well it performed and what it achieved, not just based on me.”
So everyone got burned because they didn’t check carefully enough?
“They did the right thing, and no one will get burned because everyone will get their money back. They’re still my friends. They all understand that any investment they made with me will ultimately be repaid, with a nice upside.”
How exactly?
“Infinidat will provide coverage for everything.”
"Infinidat is my 'Iron Dome'"
Time and again during the conversation, Yanai explains that he is pinning his hopes for the repayment of his debts on Infinidat, the data storage company he founded in 2011 and led as CEO until 2020. "It's a strong company with hundreds of employees and hundreds of millions of dollars in sales. It's my 'Iron Dome,'" he says.
But here too, the story Yanai tells overlooks the reality on the ground. Earlier this year, Infinidat signed a sale agreement with the Chinese company Lenovo for an undisclosed amount. Since $350 million has been invested in the company over the years, it is estimated that this is the minimum valuation at which it was sold. Either way, according to the person overseeing MII’s assets, Yanai’s proceeds from the sale amount to just $3.5 million.
How did it happen that the founder’s shares are worth so little? In each of the company’s many funding rounds, preferred shares were issued to new investors who provided capital. As a result, in the event of an exit, under what is known as the “exit waterfall”, these preferred shareholders are entitled to repayment before Yanai receives anything. Thus, to his regret, he is among the last in line to see any money. In any case, all of his rights in Infinidat are now pledged to his primary creditor, the Scintilla fund.
Yet Yanai does not see this sale as a done deal, even though the agreement has been signed and is scheduled to take effect in four months. "I'm sure the deal with Lenovo will fall through and a large IPO will take its place," he insists. "Infinidat should be similar to Vast Data (an Israeli data storage company that, according to reports, Nvidia and Google are in talks to invest in at a valuation of $30 billion)."
According to testimony by Boaz Toshav, the person responsible for MII’s assets, your proceeds from the Infinidat sale are negligible compared to your debts.
"Boaz doesn't understand. You have to read the newspapers properly to see what Infinidat is doing. This deal won't go through, and then either the company will be sold for much more money or it will go public."
Infinidat, with a signed contract in place, will cancel the deal, be sold, or go public, and everything will work out? How is that even realistic?
"The two processes I mentioned can take up to two years. Therefore, there’s a path where people might agree to put up money to cover the debt to Scintilla, for example, in exchange for a small percentage of the shares."
None of the creditors will wait two years for you; they want their money.
"In a scenario where the deal falls through and there’s an IPO, no one will have to wait two years."
There is a signed deal with Lenovo, and it is worth only $3.5 million to you. These are the facts.
"I believe the deal won't happen."
Where does this confidence come from? Back in 2018, you told Calcalist that within two to three years, Infinidat would go public.
"There is no other option. It’s one of two things, a sale for a higher amount or an IPO."
In any case, this won’t affect the trustees, because all your shares in Infinidat are pledged to Scintilla.
"The trustee will manage things, and everyone will receive much more."
"I didn't know the war would last so long"
In recent weeks, Yanai tried to sell his luxury penthouse at 7 Antekolski Street in Tel Aviv for NIS 58 million (approximately $18M), but failed. "Houses were my late wife's hobby," he says. "She passed away four months ago. She was an interior designer, and she took care of the houses so beautifully, even in the United States."
Yanai’s Tel Aviv penthouse, which spans more than 2,000 square meters, was designed by leading architect Pitsou Kedem. It occupies the entire eighth floor of a luxury building and includes a swimming pool on the balcony overlooking the sea and a private elevator. The property is valued at approximately NIS 52 million, according to an appraisal submitted to the court this week by the Ampa fund. Meanwhile, the villa in Herzliya Pituach, where Yanai currently lives, sits on an acre of land and features three levels, a large yard, a swimming pool, and a gym. Its value is estimated at NIS 36.5 million ($11M).
Even if Yanai had succeeded in selling his two homes, it would not have benefited the smaller creditors, as both properties are encumbered by Leumi and Ampa Capital. "According to the data," Ampa Capital wrote to the court, "after realizing the assets, paying the debts to Leumi and Ampa Capital, settling taxes, and covering procedural expenses including receiver fees, no significant balance would remain for the benefit of the other creditors, if any."
Moshe, the bottom line is that your mistake is clear, you borrowed far beyond your means. Do you have remorse?
"I have a very modest lifestyle overall. All the money I borrowed was for business purposes only. I always thought it was a worthwhile risk. I didn't know the war would last so long. In retrospect, I should have stopped earlier, turned off the tap, and said ‘enough.’ If I had shut it down in October two years ago, I would have avoided this situation. But then, many people would be unemployed today."
Is your lifestyle modest? You have two apartments in the United States, a villa in Herzliya, a penthouse in Tel Aviv, and a 2024 Audi worth NIS 350,000.
"I’ve been driving a Tesla since 2021. We’ll sell my late wife Rachel’s Audi, and that will bring in some money. My living expenses are modest. We didn’t buy any houses during this period of loans, everything for sale today is what my wife and I acquired 20 years ago."
How can an electrical engineer, someone supposed to be rational, take on more and more loans and such risks?
"I’m an entrepreneur at heart. A ‘those who dare, win’ type. That means getting into things others wouldn’t dare to try. And sometimes, you fall."
Your investments aren’t always logical. You’re a cloud and engineering guy, those areas make sense. But what about helicopters? Why invest millions of dollars in companies that fly VIPs?
"It started as a hobby. Then it became something charitable. Senators and congressmen would visit Israel, and people would take them on beautiful tours around the country. It was also profitable over the years."
Is there anything you would have done differently?
"Around 2000, I met with one of the richest people in the world today, Larry Ellison (co-founder of the software giant Oracle). I sat with him at his house in San Francisco for a Japanese lunch. He has a Japanese-style house, everything was Japanese, even the people who served us. At the time, I was a manager at EMC and held 40 patents. The meeting was about a job opportunity for me at Oracle or a small collaboration between Oracle and EMC. But I decided, together with my family, to leave EMC and return to Israel, to my family and friends.
“The irony of fate is that if I had stayed with him, I might be at the top of a company worth nearly a trillion dollars, not at the bottom. One small decision at that crossroads, and I would be with Larry Ellison today."
