“High-tech’s resilience is not a sectoral interest – it’s a national mission”

“Being a global industry, Israeli high-tech is obviously affected by both the global economic crisis and domestic instability. However, when looking at the annual data we see that while the U.S. and EU experienced a 30-40% year-over-year drop in the volume of investments, in Israel the drop was over 60%,” explained Adv. Hila Rom, Managing Partner at RUNI Ventures. “This gap indicates that our inner disagreements had a critical effect on the ability to draw foreign capital and that resolving them should be our top priority.”

The VC fund, which was only established last year, joined CTech for its new series exploring the trends and insights for 2024 as Israel and the world recover from war and challenging economic times.

“As Israel's tech sector generates over 25% of the state's tax revenues and 40% of its GDP, high-tech’s resilience is not a sectoral interest – it’s a national mission,” she added.

Hila Rom, RUNI Ventures

VC Fund ID
Name of the fund: RUNI Ventures
Total assets: $20m
Leading partners: Adv. Hila Rom
Latest investments in Israel: 1/24
Selected portfolio companies: PredicDO, Paylow, Localbird

From your perspective, was 2023 a ‘lost year’, or can the events that happened during it be seen as a springboard for opportunities in 2024?

2023 was definitely one of the most challenging years we have ever known as a country and as an industry. However, looking ahead, there is great room for optimism.

The war accelerated technological developments that normally would have taken years to mature, similar to the effect we saw during COVID-19. New AI capabilities are enabling startups to move much faster with less funding and smaller teams; defense-tech will naturally see a spike and generate dual-use solutions and new technologies emerging from the crisis will present exceptional opportunities in 2024.

What do you believe is more crucial to the state of Israeli tech: the influence of global processes and the global economy, or the local events ranging from the political protest to the war state?

Being a global industry, Israeli high-tech is obviously affected by both the global economic crisis and domestic instability. However, when looking at the annual data we see that while the U.S. and EU experienced a 30-40% year-over-year drop in the volume of investments, in Israel the drop was over 60%. This gap indicates that our inner disagreements had a critical effect on the ability to draw foreign capital and that resolving them should be our top priority.

As Israel's tech sector generates over 25% of the state's tax revenues and 40% of its GDP, high-tech’s resilience is not a sectoral interest – it’s a national mission.*

Has the prestige of Israeli high-tech been damaged, or are the protests and the war merely a 'small bump in the road' from which the sector can recover within months?

2023 exemplified Israeli high-tech's unmatched grit and ability to deliver under any pressure. Startups adapted quickly and continue to perform despite an unprecedented labor shortage of their workforce which was drafted to reserve duty, demonstrating incredible agility and commitment to maintaining business continuity.

Our partners worldwide expressed deep appreciation for our ability to prevail while coping with tremendous human tragedy.

How much effort was required of you to maintain the fund's status with your investors in 2023? What were their primary concerns and how did you address them?

Fortunately, our LPs are very confident in our fund’s "unfair" advantages as a university-based VC that leverages two of Israel's most valuable assets: exceptional human capital and world-class academia.

During these hard times, their primary concern was for our safety and well-being, reminding us of the importance of choosing the right partners.

How are you preparing for the most pessimistic scenarios, such as the continuation of the war in Gaza deep into 2024, the opening of another front in the north, or further reduction of government support for high-tech?

From the fund’s operational perspective, we are fully capable of making new investments and supporting our portfolio even in extraordinary circumstances.

As for the portfolio companies, each team built a realistic plan, taking into consideration the adjustments required to cope with the continued labor shortage. Knowing the people behind the companies, I'm positive that our entrepreneurs will wisely navigate this year and will achieve their milestones.

Did you raise fund money in 2023 for an existing fund or a new one? What are your expectations regarding this matter for 2024?

2023 was RUNI Ventures’ formation year, and we are proud that we have managed to raise most of our funds despite the immense crisis. We expect to bring on our last LPs during 2024 and announce the final closing.

In your view, will the amounts and/or the number of deals in 2024 be more like those of 2023 or 2021-22?

Prophecies are only given to fools and there are still many factors that could affect the way 2024 will evolve. However, from where I stand, early-stage investments are definitely picking up and we are optimistic it will accelerate even more later this year.

Which high-tech sectors will you focus on in the upcoming year? Which areas will maintain their prominence, and which ones appear less attractive?

We will continue to back companies that redefine their respective industries in various domains ranging from fintech to cyber, focusing on disruptive software.

AI will have a transformative impact on software development in 2024 making many solutions redundant on the one hand, and presenting amazing breakthroughs on the other hand, such that it will revolutionize the landscape of tech.

Which type of companies stand a better chance of garnering increased attention from VC funds this year - early-stage or advanced rounds?

The burst of the 2020-2021 tech bubble created realistic investors who lost patience with inflated valuations and fictional growth forecasts. Therefore, I believe that we are going through a "back to basic" process, which is ultimately a great thing.

The companies that will gain the attention of VCs will be those who will validate, at an early stage of the company's life, their product-market-fit and generate significant revenues that allow them to make substantial progress with minimal dependence on new funding.

What changes will you implement in your approach to evaluating investments in startups in the coming year, compared to the previous two years? What practices will you abandon, and what criteria will you now demand from founders?

Being an early-stage investor, the founders remain the most important factor when evaluating a company. While the product and strategy will change over time, there is no substitute for the founder's personality, values, relationship, and dedication.

In addition, we would prioritize companies that are focused on creating a clear technological competitive advantage and have sufficient runway to achieve major milestones.

Do you think it is likely we will witness encouraging IPOs, the emergence of unicorns, or remarkable exits in 2024?

In 2023, the major tech stocks achieved exceptional performance and contributed to the NASDAQ index skyrocketing by more than 40%, creating opportunities for the technology giants to shop for innovation at bargain prices.

That, combined with the attractive valuations of Israeli tech companies and the drop in global interest, may lead to a renewal of M&As and IPOs.

Offer 2-3 practical and current tips for founders planning upcoming money-raising efforts - focus on the current market environment and sentiments.

Even in a data-driven world, at the end of the day behind every investment decision lies the psychology of conviction, especially when it comes to early-stage startups when the available data is inherently limited.

Therefore, I recommend founders get to the meeting very prepared. This means gaining an in-depth understanding of their market and competitors and a clear explanation about their product uniqueness enabling them to draw a clear vision of where they want to get and how they are going to get there.

If possible, try to make as much progress as you can without raising funds, because presenting viability indications as soon as possible will strengthen your positioning in the fund-raising process.

Name two portfolio companies that you think will thrive in 2024:

PredicDO
Sector and description: Insurtech: Data driven financial lines risk assessment platform.
Funding: Pre-Seed by RUNI Ventures
Founded: Founded in 2021 by Prof. Zohar Yakhini, Shay Dubi, Eran Lazar, Eran Tal, and Ilan Gefen.

Why is this their year?
PredicDO is the first data-driven D&O Insurance Risk Assessment Platform, enabling the prediction of lawsuits and Securities Class Actions utilizing advanced bioinformatics methodologies, based on a proprietary database.

In Q4 2023, after 3 years of intensive research led by Prof. Zohar Yakhini, PredicDO demonstrated an unprecedented high correlation between PredicDO predictions and actual insurance risk. Based on these groundbreaking results, we are positive that 2024 will be a year of substantial business growth.

Paylow
Sector and description: Fintech - Optimizing people’s subscriptions with ease.
Funding: Pre-Seed by RUNI Ventures
Founded: Founded in 2022 by Sagi Avitan and Hanan Amar.

Why is this their year?
Paylow optimizes subscriptions, using an ML-powered autopilot that enables users to manage, compare, and improve recurrent payments with a click of a button and easily save money.

Paylow’s grit-loaded founders laid robust foundations – with proprietary algorithms, embeddable technology, and strategic market integrations – all merging to create a platform that provides a truly actionable solution.

In a time of rising cost of living and the evolution of Open Finance, Paylow’s intuitive platform equips consumers to control their recurring expenses effectively. This not only marks 2024 as a year of success for Paylow but ensures it is shared with their end-users, empowering them to navigate this crucial aspect of their finance with confidence.