Cardumen Raised $120M for Israeli’s Deep Tech

Photo above: The Cardumen Capital team

Israeli-European venture capital firm Cardumen Capital has raised $120M for its second Deep Tech Fund focused on early-stage Israeli startups. Up to now, Cardumen Capital has invested in 32 Israeli companies in AI, Cybersecurity, Big Data, and Information Communication Technologies (ICT). It said it will continue investing in pre-seed and seed Israeli software and hardware companies.

Cardumen Capital supports and works closely with entrepreneurs in anything from business development to fundraising. It’s portfolio of exceptional entrepreneurs has a strong co-investor base such us as SaaS cybersecurity platform DoControl (backed by Insight Partners and Crowdstrike), Big Data B2G platform IVIX (backed by Insight Partners and Citi Ventures) or NeuReality (backed by Samsung and SK Hynix).

“Israeli entrepreneurs rise to the occasion under adversity”, said Cardumen’s Co-Founder and General Partner, Gonzalo Martínez de Azagra. “It’s in tough times when great companies are built. Our commitment to Israeli tech is stronger than ever. As a team of Israelis and Europeans, heavily connected with the US and Asian markets, we are well-positioned to give our startups access to worldwide markets.”

Cardumen Capital is a Venture Capital firm with offices in Tel Aviv and Madrid. Chaired by Gil Gidron and founded in 2018 together with Gonzalo Martínez de Azagra and Igor de la Sota, the company invests in early-stage DeepTech companies. Cardumen Capital has more than $225M under management and a team of professionals with a solid track record and more than a decade of experience investing in tech companies worldwide.

One of its portfolio companies, Nagish, which uses AI to make communication accessible for deaf and hard of hearing individuals, has been lately certified by the Federal Communications Commission (FCC) to provide telecommunication relay services. The certification makes Nagish one of the very few certified providers. Nagish provides speech-to-text and text-to-speech solutions via a real-time captioning engine that makes calls more accessible for people who are deaf or hard of hearing while keeping calls private and secure.

Israel Resilience Fund started first investments

Photo above (left to right): Jeff Kupietzky, Jon Medved, Noam Kaiser and Liat Sverdlov

The digital investment platform,  OurCrowd, announced the first close of its $50 million Israel Resilience Fund, with more than $13 million in capital commitments, and approved the first 8 investments from the fund. OurCrowd will waive all management fees and carried interest as a contribution to Israel’s current wartime emergency.  The fund, which was first announced just 40 days ago, becomes one of the fastest-closing venture funds ever to go from conception to closure and to make actual investments.

Jon Medved, OurCrowd Founder and CEO, said, “Many venture-backed companies in Israel are already struggling due to the global venture slowdown and now face even more serious obstacles due to the war in Gaza. The Israel Resilience Fund will seek to create outsized returns for investors by taking advantage of discounted valuations in the current market, while supporting Israeli companies to survive the crisis and flourish in the long run.”

The Israel Resilience Fund aims to focus on 50+ startups directly affected by the crisis. It is managed by Jeff Kupietzky, a seasoned operator with over 15 years’ experience as a high-tech CEO in the US and Israel. Kupietzky recently sold his company Jeeng to OpenWeb for $100 million. Kupietzky is accompanied by expert investment partners including Noam Kaiser, a former Partner at Intel Capital, and investor at Gemini Israel Ventures and Offer Hi Tech; and Liat Sverdlov, a Partner with the OurCrowd Investments Team.

Eight startup companies were selected to receive investments this month. Recipients include: 

  • BlueTree, which has developed proprietary technology to reduce sugar in natural beverages. The company was recently evacuated from its facility in Kiryat Shmona near the Lebanon border;
  • Carrarexperts in EV battery thermal management systems. The company was forced to relocate from its headquarters in Sderot near Gaza;
  • Edgybeesutilizing satellite and motion imagery to deliver actionable insights currently in use to save lives;
  • Veroboticsutilizing an autonomous robot for building exterior upkeep and proactive maintenance, whose key staff are serving in the reserves.

OurCrowd is a global investing platform that empowers institutions and individuals to invest in emerging technology companies at an early stage. Acclaimed by PitchBook as the most active venture investor in Israel every year since 2013, OurCrowd vets and selects companies across all sectors and stages, invests its own capital, and provides its global platform of over 225,000 registered members from 195 countries with unparalleled access and freedom to co-invest from as little as $10,000 in the companies of their choice.

Jon Medved: “After the War, We’ll See a Sharp Rise in Investments”

In a conversation with Jon Medved, the driving force behind the OurCrowd capital raising and investment platform, it’s clear that he is deeply involved in the war effort. “This generation is unlike any other in terms of courage and dedication. Our children are on the front lines, and our role is to safeguard the economy.” Born in the United States, Medved communicates the Israeli story to leading global media outlets and maintains daily and close contact with venture capital firms and international partners to show them how the Israeli industry continues to operate and expand even during wartime.

In an interview with Techtime, he explains that the response in the financial world is very positive and discusses his anticipation of renewed growth in the Israeli tech industry after “the victory and the end of the war.” Medved noted, “War is always a bad sign for investments. When the cannons roar, investors do not sign checks. But if you look at the Israeli economy over the past 25 years, you’ll see that after every war, there is an increase in investment volume. Wars do not deter the overall growth of Israel’s gross domestic product. This is also evident in the Tel Aviv Stock Exchange data: sharp declines when the war breaks out, followed by a significant upswing when it ends.”

Private Investors in the Masses

Jon Medved founded the OurCrowd platform in 2013, and it has become one of the prominent investment platforms in the tech sector. Today, it includes over 225,000 registered investors who have invested in approximately 425 companies, with a total investment volume of around $2.2 billion. This platform is considered the most active tech investor in Israel, with 63 successful exits to its name. It has led to investments in numerous electronics companies, such as NeuReality, Hailo, Celeno (which was sold to Renesas), Core Photonics (sold to Samsung), Argus (sold to Continental), and more.

“We built a platform that allows individual investors to select companies for investment after passing a comprehensive review by us and being selected by our investment committee. We also raise capital and investments from our partners (50 international firms like SoftBank, Stifel and Orix). For these investments, we invite the masses – currently, there are around quarter of a million investors from 195 countries.” OurCrowd employs about 200 people, with 150 in Israel and the rest in 15 offices worldwide. The platform expanded its activity beyond the Israeli market to global territories, including the United States, the United Kingdom, Spain, Singapore, the United Arab Emirates, and more.

How is the industry responding to the war?

“Everyone is fighting on multiple fronts simultaneously. It starts with employees being called up to the reserves, and companies are dealing with a shortage of human resources. According to our estimates, 10%-20% of the workforce has been called up to the reserves. Those remaining in civilian life work harder and perform many more tasks. Companies need to retain their customers and convince them that they can continue to operate and even develop under wartime constraints. The second front is the investment front, where some companies manage to secure investments and even raise capital. Now, government assistance is coming as well: the Israeli Innovation Authority announced a fund of 400 million shekels, and I believe that this amount will increase significantly.

“We are also engaged in the war effort. We have invested in mPrest, the company that developed the Iron Dome control and command system, in Cyabra, which is making strides in the fight against fake news, and in a company that provides cyber protection for Israel’s electric and water systems. We have companies like UAV developers, an incubator in Kiryat Shmona, and companies operating from Sderot, just one kilometer away from the Gaza border. So, as a company, we are involved in the war effort from all directions.”

The U.S. Government’s Mobilization Sends a Message to the Markets

“We are preparing for a protracted war. The army is preparing the people for a war that will last months, not weeks, and we need to provide our companies with the tools to deal with such a situation. To continue raising capital and benefit from the sense of partnership within the nation. Fortunately, investors respond to our calls and provide support, which I hope will not only continue but also increase. While institutional investors hesitate, there is a massive awakening of entities friendly to Israel. The U.S. government’s mobilization sends a significant message to the markets.

“We have never seen such donation efforts as we are seeing now. A lot of money is coming to Israel from overseas donors. We estimate that significant funding will be directed to academia and hospitals. The tech sector needs to ensure that this awakening reaches it as well. We need to continue channeling funding to companies that are the heart of the tech sector. This heart primarily thrives on foreign capital: 80% of the capital invested in Israeli tech comes from abroad. I believe this will continue. Investors are reaching out to us and asking how they can help.”

Judicial reforms weaken Israel’s Technology Ecosystem

photo above: Anti-government demonstration in Tel aviv last month. Photo: Techtime

A major judicial reform planned by the elected government to reduce the power of the supreme court, and widespread civil resistance to this reform, are shaking social stability in Israel. Now it begins to take its toll on the local technology sector, the acclaimed jewel in the crown of Israel’s econoy. A new report published by Start-Up Nation Central, reveals the scope of the crisis in the Israeli High Tech sector.

The July 2023 survey questionnaire was completed by 734 professionals, representing 521 companies: 119 investors and 615 respondents from Startup/tech companies. The findings are dramatic especially when it comes to relocation plans: 68% of Israeli startup companies have begun taking active legal and financial steps, like withdrawing cash reserves, changing HQ location outside Israel, relocation of employees and conducting layoffs. Among them, 22% of companies have alredy diversified cash reserves outside Israel and 37% of investors say companies in their portfolios have withdrawn some of their cash reserves and moved them abroad.
Relocation is a serious and slow process: 8% of companies report that they have already begun the process of changing HQ locations, and 29% reported their intention to do so in the near future. 20% of investors note that companies in their portfolios have begun changing HQ location and 69% of investors noted that companies in their portfolios intend to do this in the future.

Looking for recovery signs

The current political instability is also shaking the local VC industry: Investments outside Israel are growing as a component in Israeli VC investment strategy, and. 67% of investors are investing or are considering to invest in foreign companies. While 65% of investors already see signs of recovery in the US venture capital market or believe they will see them in the coming six months, only 12% of investors in Israel, observe this trend.

Ireversible process

The report is troubleing because tecnology is the leading and most important sector of the Israeli economy. The CEO of Start-Up Nation Central, Avi Hasson, said: “Companies and investors are taking active steps to move activity away from Israel and this behavior has increased significantly over the past three months.” He said that the damage may deep and hard to recover: “Concerning trends like registering a company abroad or launching new start-ups outside Israel will be hard to reverse.”


Elron Ventures to Launch CyberFuture to engage CISOs in VC decision-making

Elron Ventures, investors in early-stage tech startups in the cybersecurity and B2B software space, announced the CyberFuture alliance that brings investors and prominent CISOs from leading brands to entrepreneurs in a unique way. 

Backed by Elron Ventures, the alliance empowers security practitioners to vet and influence investment decisions, as well as support the selected early-stage companies. CyberFuture Alliance members represent a wide range of industries across the globe, such as banking, tech, retail, travel, healthcare, pharma, and more. Alliance members include Vijaya Kaza, Chief Security Officer, Head of Engineering for Trust & Safety at Airbnb, Gerhard Eschelbeck, former CISO at Google, Jairo Orea, Global CISO for Royal Caribbean Group, Al Ghous, CISO for Snapdocs, Yaron Levi, CISO for Dolby Laboratories and Ilan Abadi, Global CISO at Teva Pharmaceuticals.

For entrepreneurs, direct access to CISOs immediately translates into real-world market insights, accelerating the time to product-market fit and sharpening product focus. CyberFuture facilitates the matching of the relevant cybersecurity leaders with the selected startups, to benefit from such insights.

With CyberFuture, companies can continue forward without having to compete with other companies who are vying for CISO attention. Elik Etzion, Managing Partner at Elron and former Global CISO for Israel’s largest financial institution, Hapoalim Bank, is familiar with the CISO-to-investor gap. “We intentionally kept this alliance to a smaller, high-quality group, allowing each involved CISO to be active in decisions and work as a team,” said Etzion. “At Elron Ventures, we are not only financial backers but fellow practitioners who want to see today’s most viable early-stage solutions succeed.” Elik believes that the alliance will generate a unique value for the supported startups by crystallizing the product offering, networking, and design partnership opportunities, and navigating the go-to-market motion in global markets.

“The CyberFuture initiative is a win-win for both security leaders and entrepreneurs,” said Vijaya Kaza, Chief Security Officer, Head of Engineering for Trust & Safety at Airbnb. “It gives security leaders the opportunity to influence investment decisions and shape the future of cybersecurity, helping to stay ahead of emerging threats. At the same time, entrepreneurs leading the charge in cutting-edge innovation can benefit from the real-world expertise and guidance of security leaders who are on the front lines every day.”

Elron acts as the back office, bringing the expertise of professional investments in early-stage startups. “Sitting in the seat of ‘CISO as an Investor’ gives a new perspective on what is possible,” said Gerhard Eschelbeck, former CISO at Google. “Traditionally, we as CISOs wait to see if new tools are developed for our specific needs. Here, we get to find those special ideas while they are incubating and help create a stable foundation to address critical wide-scale challenges.”


Record Number of Investments in Israeli Start-ups

During January 2021, the month that COVID-19 reached its peak in Israel, local Start-ups raised $1.44B – a record amount of investments in Israel during a single month. Six start-ups raised more than $100M each (mega rounds) during the month. According to Start-Up Nation Central (SNC) the mega-rounds in January 2021 alone, equal close to 30% of the total number of mega-rounds in the entire year of 2020.

It is the highest number of both mega-round and general investments made during a single month in Israeli start-ups. The year 2020 witnessed 21 ‘mega-round’ investments during the whole of 2020, equivalent to 33% of capital raised. As a monthly comparison, there were three ‘mega-rounds’ in January 2020, none in January 2019 or January 2018. The mega-rounds in January were led by US investors.

Fintech was the dominant sector with two ‘mega-rounds’ and $413M raised. It is a continuation of Fintech’s strong performance since September 2020 with $1.4B in investments compared to only $340M raised in the first eight months of 2020. Director of Research at(SNC), Meir Valman, said that the record level of fundraising is driven by the increasing maturity of the Israeli tech ecosystem, when rapidly growing startups are able to raise much larger rounds.

The six ‘mega-rounds’ which were announced during January 2021 were: Rapyd Financial Network (Fintech, $300M), Drivenets (Network Infrastructure, $208M), OwnBackup (Enterprise solutions, $167.5M), K Health (Digital health, $132M), Resident Home (Ecommerce, $130M) and Melio (Fintech, $110M).

Start-Up Nation Central is a non-profit organization that helps tackle global challenges by connecting Israeli technologies with multinational corporations, governments, investors, as well as NGO’s from around the world.

Startups raisings in Israel: $1.2 billion in September 2020

Israeli startups raised a record $1.2 billion in September 2020, the largest amount raised in a single month, according to data from the Start-Up Nation Finder. It was also the first time that more than $1 billion was raised in one month. Year to date, the total for three quarters has reached $7.2 billion, nearing last year’s record full-year total of $7.6 billion.

The record equity raised in September 2020 was led by two mega-rounds: InsurTech company Next Insurance raised $250 million in a series D round, following the company’s C Round in October 2019, which also totaled $250 million; the second-largest sum, $200 million, was raised by open-source security platform Snyk, also in a series D. This follows the company’s $150 million round earlier this year.

The month of September 2020 represents a huge turnaround from the lows of May 2020, when just $421 million was raised at the height of concerns that the COVID-19 pandemic would halt future growth in the technology sector. While equity rounds exceeded $600 million in every month from June through August, it was only in September that they once again reached – and, in fact, exceeded – the previous high recorded in April, when $970 million was raised.

However, while the total amount raised in September hit an all-time record for a single month, the actual number of rounds is still below previous peaks. Only 50 rounds were raised in September, compared to the peak of 121 rounds recorded in January 2018. It should be noted that there is a time lag in the reporting of many rounds, especially those raised by early-stage startups, so this number is likely to be revised upward in the future.