“Even if the Google-Wiz deal doesn’t close, Wiz is a terrific independent business”

Shardul Shah, partner at Index Ventures, is on the cusp of venture capital immortality. If Google completes its $32 billion acquisition of Israeli cybersecurity giant Wiz, Shah will be remembered as one of the savviest investors in VC history.

His connection to Wiz is deep and long-standing. Shah was the first institutional investor in Adallom, an Israeli startup led by Assaf Rappaport and co-founders, which Microsoft acquired in 2015. When Rappaport and the same team launched a new venture in March 2020, initially named Beyond Networks, they once again turned to Shah. He became the first significant investor in what would become Wiz.

In a wide-ranging interview with Calcalist, Shah reflected on the upcoming Wiz deal, the evolving role of venture capital, and Israel’s potential in AI beyond cybersecurity.

Shardul Shah.

You were the first investor in Wiz. As this huge deal nears completion, what do you think about it?

“This is not a closed deal. It’s currently in regulatory review. From Index’s perspective, we see such moments as beginnings, not endings. We don’t really frame these questions in terms of ‘right or wrong,’ or beginning or end. Datadog received several acquisition offers and proceeded to IPO. We’ll continue to closely monitor the transaction; I meet with the Wiz team frequently. The regulatory process will become clearer – it’s not under our control. If the deal closes, I believe Google will accelerate Wiz’s ambition to impact customers globally. And if not – then both companies are outstanding, independent businesses on their own merit. Honestly, I’m not thinking in terms of right and wrong.”

Were you surprised by the $32 billion valuation Google offered?

“Yes. Assuming the deal goes through, it will be the largest M&A deal ever in tech. And to be the largest investor in it is great. There is so much to learn from Assaf (Rappaport, Wiz founder and CEO), right? Starting with the way he surrounds himself with talent – it’s been a pleasure to watch him grow over the last decade, both at Adallom and Wiz – but the team beyond Assaf is simply amazing. Yinon Costica invests a lot of time with customers; Ami Luttwak is the technological visionary; and Roy Reznik is such an excellent executor. The way they all connect and the trust between them is wonderful. How they work together and learn from one another is incredible.

“Second, as you surely know, even back when Wiz was still Beyond Networks, many things changed – some in unexpected ways – but it was already clear they were building a global company. So the company was essentially born global. For three decades Index has invested globally, including in Israel: Wiz, Datadog, Robinhood, Adyen, Roblox. Some are somewhat similar, characterized by creative teams making bold decisions. That helps them reach amazing milestones quickly – even as they operate in completely different categories.”

Is Israel now just a cyber-nation? There may be some AI here, but is Israel going to be focused solely on cyber?

“In the last three years we’ve invested around $300 million in Israel. Beyond Wiz, Fireblocks, Dazz and several other cyber companies, we’ve also invested in Empathy, that’s building a product that is a derivative of insurance. Only recently we announced an investment in Wonderful, an AI-based customer service company. And there’s another investment from about a month ago, not yet announced, in an AI company. So there is much more than just cyber in Israel.”

We're seeing a trend in the U.S. of "evergreen" funds that aren't bound by timelines or rounds. How do you view this? Will it affect Index and the broader VC world?

“We’ll see more and more entrepreneurs building significant companies faster and with less capital. If that’s true, one can also expect capital to flow toward such opportunities. In my view, the structure of capital will change accordingly. We’ll continue to see specialist investors, who focus on a specific region or domain. We’ll also see solo investors, as well as seed and multi-stage funds. And then, as you said, we’ll see a new type of investors – or rather a return to those huge capital pools, like SoftBank or Tiger Global.

“For me, an evergreen capital pool is a variant of those big pools – ones that operate statistically across the industry, mainly at later stages. So for a multi-stage fund seeking to be the largest and most significant investor in category-defining companies, suchcapital pool (an evergreen fund) can serve as an exit option for startup employees or for us in the future. And that’s great – it fuels wealth creation in the industry.”

Wiz founders.

Some evergreen funds are entering early stages too, like Andreessen Horowitz. Is that a threat to you?

“I don’t know – you’d have to ask Andreessen. If they have hundreds of billions, is that considered evergreen? And what do they consider “pocket money”? I can tell you I don’t think about such semantics. When we invested in Wiz, we shook hands on my birthday before the company was even registered. Similarly with the stealth-mode AI company I just mentioned – we secured the investment before the company technically existed. So conventionally it might count as pre-seed, but it involves strong belief, a time and capital commitment to people.

“With that said, as I described, I do believe there will be some investors playing statistically. And you can play that at any stage. But when I think about how the world will work, I believe it makes most sense to play this game with large capital pools at later stages. In any case, I think the real, more significant change is happening at the entrepreneur level. Today’s entrepreneurs have the ability, the ambition, to build bigger, better, more efficient companies in less time.”

Is that thanks to AI? That you need fewer software engineers?

“It’s a combination: ambition levels have changed. What’s considered possible has changed. The bar has been raised, so people’s belief systems have changed too. And the second thing: today there’s much higher concentration of talent – people with experience in scaling, in building business models, gaining market traction, solving customer pain points. That experience accumulates over time and can support much better decisions in the future. There are also technological innovations, especially in AI, changing almost weekly, which allow people to be far more productive.”

Will we soon see a new generation of small companies that grow incredibly fast?

“I don’t believe in some myth of a five-person company generating $100 million ARR. Look, it’s true I saw one company grow from zero to $40 million revenue in 30 days. So yes, the growth curve can be almost vertical. But the team you build reflects the scale of the market opportunity. Typically, the steepest growth happens in very large markets – and that usually demands significant resources. Some functions may become more efficient, but they still have a role. And it also depends on the nature of the market you’re serving. That said, to answer your question: we are definitely doubling down. We made 14 investments in the last three years in Israel, and six this year alone. So yes, we’re very excited about the opportunity.”

Some say Israel is missing out on AI. Can Israel be more than an AI application hub? Can it build foundational AI firms like LLM companies?

“All the ingredients are already there. We're not investing in this company, but much of the research team at SSI (Ilya Sutskever’s company) is in Israel, and many geniuses – truly mathematical geniuses – from Gemini are there. As you know, there are IDF units perfectly suited to this domain, beyond just the application layer. In AI applications, Wonderful is a great example of a software company that is ‘AI-native,’ meaning it was born in the AI world.

“But beyond that, the talent, ambition, and resources are there. And although Israel is sometimes portrayed as a niche market, it truly isn’t small. The strongest entrepreneurs in Israel run some of the most competitive funding rounds globally. One company – not yet announced –had its founder receive seven term sheets from top global firms and West Coast-based partners. So the opportunity has become far more competitively global. Even if we sometimes think of Israel as niche, the best entrepreneurs here are born with global awareness.”

When an entrepreneur has seven offers, they might not choose you.

“That’s great – they should have choice. And it circles back to my roots at the University of Chicago. I believe in free markets – so that’s wonderful in my eyes. And I believe entrepreneurs will have even more of a choice in the future. We have all the things a big platform like ours can offer as part of the company building process. For example, we were heavily involved in Wiz’s early stages. Half of their first ten customers came via our warm introduction. These are not people we pay – simply people whom Wiz can help. And sometimes, through all that involvement and activity, you create a company that defines a whole category – and which loves working with Index. When Assaf became such a central figure in Israel, that influenced how other founders perceive Index.

"We're not the right fit for everyone, but often the best founders would reach out to Assaf, or to Costica, Reznik, or Ami, and ask: what do you think about Index? And they share their genuine experience. That really helps us connect with the best entrepreneurs and convince some of them that we might be the right business partner for them. Then we go back to the hard work, hoping to be worthy of that recommendation.”

The Wiz acquisition will make many Israelis millionaires.

“I think everyone at Wiz will benefit first and foremost from the experience. Let’s start with the experience: the Adallom founders succeeded when it was acquired. And for some people, that experience of then building a function inside the acquirer, Microsoft, was hugely beneficial to building Wiz. To think with a platform mindset, to be enterprise-first, recruit top people and execute at a pace no one has seen before. The team also enjoyed some equity, which positively influenced them – they felt less constrained and more open to take risks and go all the way with their ambitions at Wiz. Some people have a different relationship with money – and sometimes even a modest amount can shift priorities. To me, the most important thing is thinking about the experience – and how to share it with the ecosystem.”