VC AI Survey
“The future belongs to those who see through the noise and bet on our enduring talent”
Dorin Baniel, Principal & Head of EMEA Office at NightDragon, joined CTech for its new “VC AI Survey” to share what the investment space may look like following the war with Iran.
“Exciting times lie ahead! Even in Israel’s most difficult periods, its innovation ecosystem proves remarkably resilient,” said Dorin Baniel, Principal & Head of EMEA Office at NightDragon. “Even during this past week's war with Iran, we saw one of the most incredible exits in history - Base44 being acquired for $80M after just 6 months.”
Baniel joined CTech for its new “VC AI Survey”, which offers some of Israel’s leading investing teams share how artificial intelligence has impacted their work and process. Specifically these days, coming off a 12-day war with Iran, understanding how the landscape will change is paramount for those who wish to stay ahead of the race.
“Israeli technology continues to lead globally in cybersecurity, AI, and beyond. Those doubling down on Israel today aren’t just showing conviction—they're positioning themselves ahead of the curve,” she added. “The future belongs to those who see through the noise and bet on our enduring talent and resilience.”
You can read more below:
Fund ID
Name and Title: Dorin Baniel, Principal & Head of EMEA Office
Fund Name: NightDragon
Founding Team: Dave DeWalt, multi-time CEO of McAfee, Documentum, FireEye and more.
Founding Year: 2019
Investment Stage: Growth
Investment Sectors: AI, Cyber
On a scale of 1 to 10, how has AI impacted your fund’s operations over the past year - specifically in terms of the day-to-day work of the fund's partners and team members?
10 - I rely heavily on ChatGPT for many day-to-day items, from drafting emails and parts of investment memos to performing financial analysis. It’s like having an always-on thought partner: I can bounce ideas off it, have it review my work, explain complex topics, or run quick calculations. It’s truly transformative, especially in my role where I operate quite independently and need to ramp up on new topics quickly. ChatGPT is an indispensable part of that process. I even used ChatGPT to polish this answer.
Have you already had any significant exits from AI companies? If so, what were the key characteristics of those companies?
All of our companies have AI incorporated in their technologies. I think the key characteristics of AI-first startups is the company built on technology that can adapt and scale as needed. This is the most important aspect of startups being built now, because tomorrow's technology is already so much more advanced than today's.
Is identifying promising AI startups different from evaluating companies in your more traditional investment domains? If so, how does that difference manifest?
Based on what we have seen over the last 6 months, it seems that there is a big premium on AI-first startups. In other words, acquirers are paying a lot more for them as compared to non-AI-first companies. Look at ProtectAI, Robust Intelligence, or Apex. These were some of the bigger exit multiples we have seen, especially Apex, which was acquired for more than $100M after two years alone - half the time it typically takes an Israeli cyber startup to get bought.
What specific financial performance indicators (KPIs) do you examine when assessing a potential AI company? Are there any AI-specific metrics you consider particularly important?
KPIs are similar, but benchmarks are different. For example, a successful startup no longer needs to hire people so fast. AI is replacing engineering manpower and SDR capabilities, so companies today that are using AI optimally should be much more efficient than companies built one year ago.
How do you approach the valuation of early-stage AI startups, which often lack significant revenues but possess strong technological potential?
This is a tough one - I don't have a clear answer yet, as it's going to change significantly this year. The security-for-AI startups that have been acquired so far have been acquired at an average valuation of $435M. This is twice as high as the average of non-AI-first startups. If exit prices are higher, the first thing that will change is valuations at seed. If those become higher, valuations at growth stages will become higher.
On the other side of this, we have one-man-show founders like Maor Shlomo of Base44, who got to an $80M exit in 6 months without a co-founder and without VC funding. This will probably raise valuations even more - because VCs want to get "in", and if founders have the power, VCs may offer higher valuations to win the deals.
What financial risks do you associate with investing in AI companies, beyond the usual technological risks?
High infrastructure costs are certainly a key concern, particularly expenses related to compute, GPUs, and storage. Additional risks include data dependencies, security vulnerabilities in LLM applications, overreliance on a single LLM provider, LLM accuracy limitations, and regulatory uncertainty. One of the most significant risks beyond cost is the operational reliance on third-party LLMs; if an issue arises—such as downtime, pricing changes, or policy shifts—it could severely disrupt product functionality and revenue. LLM accuracy is also a major consideration—models are only as good as the data they’re trained on, and poor data quality can lead to unreliable outputs and unintended consequences.
Do you focus on particular subdomains within AI?
GenAI - but to be honest, cyber hasn't gotten to the level where there is a different cyber vendor for each of those.
How do you view AI’s impact on traditional industries? Are there specific AI technologies you believe will be especially transformative in certain sectors?
Definitely - software development, optimization (logistics, travel, supply chain, critical infrastructure), military and defense, pharma and medical, and of course, cyber. As long as AI advances, our attack surface grows, and as long as the attack surface grows, cybersecurity for that attack surface must grow with it.
What specific AI trends in Israel do you see as having strong exit potential in the next five years? Are there niches where you believe Israeli startups particularly excel?
Securing AI and AI for security. Specifically within cyber, many areas need to be enhanced by AI. For example, pen-testing. SecOps / the SOC, application security, and more.
Are there gaps or missing segments in the Israeli AI landscape that you’ve identified? What types of AI founders are you especially looking to back right now in Israel?
Go-getters; those that are independent enough to make huge strides using the technology out there (instead of hiring a lot of people), and also those that know how to make the marketing noise when relevant.
