Davor Hebel, managing partner and head of Europe at Fidelity-backed venture capital firm Eight Roads recently revealed plans to invest $500 million in Israel over the next few years.
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Eight Roads manages $11 billion across multiple funds globally and currently has around 10 active investments in Israel. Some of its notable investments in the country include HiBob, AppsFlyer, Fireblocks, Eleos Health, Noogata and Gloat.
During a meeting with local technology firms at HiBob's headquarters in Tel Aviv, Hebel, who oversees Eight Roads' activities in Europe and Israel, announced the investment commitment. He also mentioned that the firm is organizing a series of events across Europe to connect with successful founders.
Hebel expressed enthusiasm for Israel's thriving tech ecosystem, highlighting the achievements of their portfolio companies. Notably, three of their Israeli investments, namely AppsFlyer, HiBob, and Fireblocks, have already surpassed $100 million in annual revenue.
Davor Hebel, a frequent visitor to Israel, has a strong belief in the entrepreneurial spirit of the country and expressed his intention to increase investments in the local market. He emphasized that they have already invested hundreds of millions of dollars in recent years and have plans to invest half a billion dollars in Israel in the coming years.
Hebel sees the current year as an opportune time for investments, highlighting that challenging times can provide an excellent opportunity to build large companies. He drew parallels to Google, which emerged successfully after the financial chaos of 2001, suggesting that this is another favorable period for building remarkable ventures.
Addressing concerns about investing in the current state of the economy, Hebel acknowledged that while there might be some discomfort due to the stock market's decline from its 2021 peak, the fundamental aspects remain intact. He emphasized that good companies still exist, and what has changed are the values that may have hindered their growth. According to Hebel, the values prevalent in 2021 were not sustainable.
Hebel also emphasized the importance of finding the right partner for entrepreneurs. He believes that value is not the sole consideration, but rather finding people who can contribute to building a company.
He highlighted that their fund offers assistance in establishing remarkable and successful companies that will have a lasting impact. Hebel emphasized that the primary focus should not solely be on value during funding rounds, but rather on what companies do with the funds. He noted that companies need time to grow their value, which may take a couple of years.
If they face challenges, they will need to make strategic decisions for their future. Some options they may explore include refinancing employee stock options to motivate them to stay or considering mergers as alternatives to potential failure.
When questioned about the potential impact of the Israeli government's controversial judicial reform proposal on investment decisions, Hebel expressed optimism a resolution will be achieved. Despite the circumstances, he stressed that their investment in Israel would significantly increase in the coming years.
Discussing the role of artificial intelligence and generative technology, Hebel mentioned the partnerships Eight Roads has established with companies like Eleos Health, Gloat, and Noogata, all of which incorporate AI technology in their products.
Hebel believes that Israel is well-positioned to benefit from the AI wave, particularly in the field of generative AI. He stated that generative AI is still in its early stages but has shown impressive progress. He sees Israel as one of the hubs that will thrive in this wave of AI and generative AI.
When asked about the possibility of a new bubble, Hebel noted that it is difficult to predict and that only time will tell. He drew a comparison to the revolution brought by the introduction of the iPhone in 2007, which transformed commerce and our reliance on technology and mobile phones. He highlighted how market dynamics can shift dramatically within a decade, citing the decline of Nokia and the rise of Apple.
Explaining their investment criteria, Hebel emphasized that they seek exceptional teams that build quality products in attractive markets. He gave an example of their investment in HiBob in 2017 when the product was in its early stages. He highlighted how HiBob has since become a global leader, generating over $100 million in revenue and operating in numerous countries. Hebel expressed their aim to find more companies with similar growth potential.
Regarding market recovery, Hebel expressed optimism, stating his belief that the market will begin to recover in the second half of the year. He observed that good companies are considering raising capital, and they expect to see a recovery and increased capital raising in the following year.
With inflation and interest rates peaking, Hebel said he sees a sense of stabilization and gradual market rebound. When asked about the potential return of a bubble, Hebel acknowledged the possibility but stated that it is unlikely to occur in the immediate future.