Assaf Wahrhaft, UpWest: Cloud adoption creates a huge opportunity for new startups

“There is a significant acceleration in technology adoption in healthcare. The Covid-19 pandemic made it clear that remote monitoring of patients and telehealth will remain a strong solution in the future. In addition, digital health solutions will revolve around data and AI and our ability to create more efficient and agile health organizations,” says Assaf Wahrhaft, Partner at UpWest Ventures.

Wahrhaft shared his views in CTech’s exclusive investor survey conducted with participants of the Poalim Hi-Tech and Calcalist Road Show event. The event brought together dozens of startups who pitched their venture to more than 20 leading Israeli investment groups and investors.

What trends are you most excited about investing in?

UpWest Ventures is a cross-border (U.S. and Israel) seed fund investing in a wide variety of sectors but with an emphasis on B2B software companies. We are most excited about finding the best founders, backing them as early as the first check, helping them build their companies and most importantly, helping them break into the U.S. market early.

What’s your latest, most exciting investment?

Most of our recent investments are still in stealth mode but a couple we can discuss include Blance, a fintech company providing B2B marketplaces and online merchants with a set of checkout solutions such as payments and lending tools. Another company is Zenity, providing a cybersecurity platform for Low-Code/No-Code applications.

Which industries seem well-positioned to thrive long term? What companies are you excited about (whether in your portfolio or not), which founders?

Cloud adoption is evolving and represents a huge market opportunity for new startups. Many traditional industries with legacy infrastructures such as industry and manufacturing are yet to migrate to the cloud and Covid-19 was a pivotal opportunity for them to notice the gaps they have in driving efficiency and innovation. Other industries such as the financial and insurance sectors have begun such transformations but still present huge opportunities for digitalization and optimization.

In addition, we believe that there is a significant acceleration in technology adoption in healthcare. The Covid-19 pandemic made it clear that remote monitoring of patients and telehealth will remain a strong solution in the future. In addition, digital health solutions will revolve around data and AI and our ability to create more efficient and agile health organizations. Tracking human performance, mental health, and wellness have become a consumer priority and will continue to drive consumer interest.

What areas are either oversaturated or would be too hard to compete in at this point for a new startup?

These days, certain areas have become crowded and investors must be quite knowledgeable and specific to bet on the right trends and teams. To some extent, these areas include, for example, cybersecurity and development tools.

As you can see from the success of many companies in these sectors, competition doesn't necessarily mean that great companies can’t emerge there or that founders don’t have big opportunities in such sectors.

What are you - as an investor - looking for in an entrepreneur or a startup?

As we are early stage investors, we place the most emphasis on the strength of the team, including their ability to execute on the company’s vision and a large market opportunity. The connection between the founders and the market opportunity is of particular importance to us. I.e., do the founders have interesting/unique insights on this market they are targeting.

What is your approach to VC involvement in the management of the companies they invested in?

Our goal is to support our founders in whatever they need. Sometimes it is via a board seat, but in many cases, we can help even without being on the board: We are their go-to person as issues come up, always on call, ready to serve as a sounding board, provide guidance and let our CEOs “manage” their own companies on a day-to-day basis. As necessary, we help with team building (including help in screen/interview candidates) and introductions to customers.

What should be the level of a fund's involvement in solving a company's HR problems?

We have a wide network of tech talent and often work with our founders to help on management, staffing and recruitment strategy as well as occasionally actively involved in the hiring process and interviewing of candidates. Given our strong U.S. foothold, this is particularly true when founders are ramping up their presence in the US. We have also helped with media and connections to HR specialists.

Where will the solution to the HR crisis come from?

The current crunch in talent goes beyond just engineering. Companies are struggling to hire professionals in the marketing, product management, and financial areas. This has obviously increased the importance of HR managers responsible for recruiting but has also given rise to the emergence of employee experience/wellbeing management teams that devote huge resources to employee retention.

There are no simple answers to this question. Using outsourcing or bringing foreign workers to Israel are just short term solutions that come with challenges in management, cultural alignment and employee turnover. Longer term solutions will have to tap into sectors in Israel that have traditionally stayed out of the technology sector. These include people from the geographical periphery now more easily able to connect with remote teams post Covid and the continued inclusion of the orthodox and Arab communities. Another important factor to mention is that women continue to be under-represented in the sector and especially in management roles - including them is also crucial.

Share with us your golden tip for an entrepreneur presenting a pitch.

We believe that founders should make sure they highlight the unique or interesting insights they have on the market that are contrary to common beliefs (or not commonly thought of). The way founders outline how and why they will win given existing competition, often leads to a meaningful discussion that shines a bright light on their different way of thinking -- which tells much more than other parts of the pitch.