SPECIAL REPORT: How Israel’s military became a hotbed for tech startups
Judah Taub, founder of Hetz Ventures, says over six years worth of capital has been invested into research and development of new products and services since 7 October
Startups that would usually take years to develop are being created within days by entrepreneurs working behind-the-scenes in the Israeli military says Judah Taub, the managing partner and co-founder of Hetz Ventures.
Taub, who founded Hetz Ventures – a $130 million international fund focusing on early-stage Israeli start-ups in 2018 – returned to the Israel Defense Forces for reserve duty on 7 October.
The father-of-four has spent around 200 days serving in an intelligence unit and is deeply embedded in the innovation taking place in the Israeli military.
Taub, tells Jewish News: “Normally in the military, things are developed quickly but not that quickly. But since 7 October, we have seen that if you have a good idea to create something that can save lives, you can do a test on Monday, a second on Tuesday, a more advanced test on Wednesday and potentially deployment on Thursday. Once upon a time this would have been a January to April time scale or sometimes even different years.
“We have developed things over a weekend that in a normal environment would have taken over a year.
“The speed just dramatically increased.” This is down to a combination of greater urgency, the Israeli “resilience” and unique skillset of experienced tech entrepreneurs working together to create solution.
What’s more, Taub says that the amount of capital invested into R&D since 7 October to foster such innovation has been “equivalent to the past 6.5 years.
“It’s all been condensed – there’s more liquid in the melting pot and the heat has been turned up.”
A Forbes recognised 30 under 30 in 2020, Taub was born in London before moving to Israel. He served as an officer in an elite classified IDF unit. At 23 he was awarded the IDF’s top Creative Thinking award for developing a new form of intelligence gathering. Before founding Hetz, Taub was based in the UK where he was head of data for Lansdowne Partners, a $20bn London-based Hedge Fund before returning to Israel.
A Forbes recognised 30 under 30 in 2020, Taub was born in London before moving to Israel. He served as an officer in an elite classified IDF unit.
Taub was one of over 300,000 Israelis to be drafted to reserve duty after the Hamas attacks – around 20 percent coming from the country’s vitally important high-tech sector, which accounts for 20 percent of the country’s economic output according to the Israel Innovation Authority (IIA).
“Technology is one of the areas that the reserves can most help with in the military,” explains Taub. “If you were a paratrooper [Taub started off as one] and you come back after 15 years, it’s hard to argue that you’re more accurate at shooting or fitter than you used to be – most are prob far from it compared to when they were 22. Whereas in the technology and intelligence units, it’s the opposite. When someone is called back to help in tech, say 15 years later and that person has been, for example, working at Google in the machine vision department, in Nvidia’s cloud infrastructure or leading tech departments, then you are able to pull together a team that is vastly superior in many ways.”
Taub is anticipating a major start-up boom after the war with “lots of commercial applications coming into the business world that have developed by reservists in the military over the past eight months.” Some are surfacing now. Hetz has made four investments since 7 October of which one was born out of an idea that came from the army.
“There’s no doubt that there will be a tech boom after the war because the tech is going to get much better, more mature and the founders are more capable.”
Taub acknowledges that there will be some pull back of funding, which has become more difficult as a result of the war, but says global funds are still willing to invest in Israeli technology. Hetz, which raises most of its capital abroad, has several UK partners including
Tesco, Sainsbury, Waitrose, BT, Sky and Barclays. Hetz has generated business for roughly 30 of the FTSE250 in Hetz portfolio companies.
Hetz has invested in over 35 early-stage startups to date and has nearly $300m assets under management across all funds.
Tesco, Sainsbury, Waitrose, BT, Sky and Barclays. Hetz has generated business for roughly 30 of the FTSE250 in Hetz portfolio companies.
Among the company’s portfolio are cybersecurity firm blink, e-commerce startup 8fig, Trigo, whose computer vision technology has been rolled out in Tesco stores and cloud resource management and optimisation company Granulate, which was acquired by Intel in 2022.
Hetz has already deployed more capital this year than it did in 2018 and Taub believes now is “a good time to invest in Israeli tech,” says Taub. “Valuations have changed over the past 12/18 months and I think that the next few years will have better returns than in previous years because the startups are better and there is less capital chasing the startups at an early stage.”
What’s more, companies have shown that they are able to “do more with less – as so many employees were called up to the reserves – but they still continued to deliver, which makes them more attractive.”
Does he worry that some startups won’t withstand the war? “As we saw with Covid, the good entrepreneurs and companies, regardless of what hits them, succeed and somehow manage to make bad things work for their advantage. It’s the Israeli mentality.”
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