Insight Partners: “AI-nativeness exists on a spectrum; the underlying criteria for a strong business do not.”
Teddie Wardi, Insight Partners Managing Director, joined CTech for its 2026 International VC Survey.
“Israel has navigated geopolitical tension before, and throughout those periods, the companies we have worked with have continued to operate with a clear focus on business continuity. We’ve observed incredible resilience in these teams and an ability to execute consistently regardless of regional conditions, which factors meaningfully into how we think about risk,” said Teddie Wardi, Insight Partners Managing Director, when asked how the VC is currently pricing geopolitical and operational risk when evaluating Israeli companies.
“That track record gives us confidence in the operational durability of Israeli companies, even when the external environment is difficult.”
CTech reached out to Insight Partners to explore the evolving "remote" VC-founder relationship and the specific strategic markers that attract global giants to the Israeli market in 2026.
You can read the entire interview below.
Fund ID
Fund Name: Insight Partners
Total Assets Under Management: $90B
Notable Portfolio Companies/Exits: Wiz, Monday.com, Deci
As we move through 2026, are you seeing early signs of the IPO window reopening for Israeli tech, or does M&A remain the more realistic exit path in the near term? What indicators are you watching most closely?
The IPO window is open. For companies with the right growth profile, a credible path to free cash flow and a clear position within their category, going public is a viable option today. If I look at what we've done at Insight, we helped to take companies public over the last year despite a relatively closed IPO window. We're still seeing IPOs happen.
Valuation expectations are also important. For some companies, listing at a lower valuation than originally anticipated and continuing to execute in the public markets may be a sound long-term path. It requires discipline, but it is not a concession; it is a strategic choice.
While the headlines are dominated by the wave of mega-IPOs, the market is there. It’s up to the judgement of founders and boards to take these companies public. And none of this is Israel-specific. It's about having the right growth rates and numbers, and increasingly about speaking the public-investor language. Focus on free cash flow and be thoughtful about stock-based comp. Founders and boards that understand what public investors are looking for, and can communicate against those expectations clearly, are well positioned to make that transition successfully.
Post-market correction, which performance metric is actually driving conviction in Israeli companies right now? Are investors prioritizing something specific to the current cycle?
Growth remains the primary focus. Specifically, what the market is calling "AI revenue." The definition varies by company: for an established software business, it might mean launching a new AI-native product module; for another, it might mean restructuring the business around an AI-native model. The concept is still evolving, but it reflects what investors are prioritizing.
The fundamental metrics for evaluating software businesses have not changed materially. Whether a company is fully AI-native, partially, or somewhere in between, investors are looking for the same things: sustained revenue growth over a long period, and the ability to reach high free cash flow margins. AI-nativeness exists on a spectrum; the underlying criteria for a strong business do not.
With AI shifting from copilots toward more autonomous systems, where do you see Israeli startups establishing a defensible edge today?
On the research side, building from the bottom up is difficult outside the core hubs where that work is concentrated, particularly in Israel. The bigger opportunity is in building agent systems, horizontal or vertical, that are close to the customer and solve concrete problems like productivity, labor, speed, or performance improvement.
This is where Israeli founders have the advantage. It comes down to iteration speed and the ability to change direction quickly by identifying what works and compounding on it fast. As the marginal cost of writing code approaches zero, defensibility shifts away from the software itself and toward the team's capacity to stay agile and continuously identify and solve customer problems. That is an area where, we believe, Israeli founders consistently rank among the strongest globally.
For foreign investors specifically, what has been the most persistent friction point when deploying capital into Israel recently? Is it regulatory clarity, talent mobility, capital structure, or something else?
The most persistent friction point is talent. Israel has an exceptionally skilled workforce, but it is a smaller market, and the talent pool goes through cycles. What we are seeing now mirrors the COVID-era run-up: the market is tight, the right people are difficult to find, and salary inflation is elevated. Shekel appreciation adds further cost pressure for foreign investors deploying capital in dollar terms.
The demand side has intensified this dynamic. As AI development accelerates, competition for engineers and technical talent with relevant experience has increased globally, and Israel is not insulated from that. The ability to hire at the right level and at scale remains the most constrained part of the ecosystem.
Israeli founders are often associated with speed and adaptability. In the current environment, does that still translate into an advantage, or are you seeing stronger outcomes from teams that skew toward operational discipline and predictability?
The adaptability that characterizes Israeli founders remains an advantage. In the current environment, that is particularly relevant. Building effective AI agent systems, whether vertical or functional, requires being close to the customer problem: understanding how large enterprises operate, and identifying where a process can be made faster, more cost-efficient, or more effective. The capacity to iterate quickly and respond to customer needs is directly applicable.
The structural challenge is proximity. The target customers, namely those large enterprises across Europe and the US, are not co-located with these teams. Closing that gap requires Israeli companies to organize deliberately around customer engagement: embedding with clients, co-developing solutions, and maintaining the same level of customer intimacy that their global competitors can achieve through physical presence. The adaptability is there; the discipline to direct it toward the customer, consistently and at a distance, is what separates the strongest teams.
Looking at deal flow today, where do you see the largest disconnect between perceived risk and actual opportunity in the Israeli market?
An area that represents a clear disconnect between perceived and actual opportunity is research-led applied AI. Not foundational model development, but companies building applied AI systems with genuine technical depth — fine-tuning models, developing new methods for multi-agent architectures, reinforcement learning. That profile is distinct from products that are largely thin layers on top of existing APIs, and it is a more durable source of defensibility. We are seeing more of this in Israel over the past several months, and it is where we see the most compelling long-term opportunity.
Cybersecurity is a large category, but it is also heavily saturated. That volume of entrants makes it an intensely competitive landscape, and the risk-adjusted opportunity is weaker relative to other areas. For teams with the talent to compete, vertical AI agents and other applied AI categories offer more open ground.
