Venture capitalists launch emergency impact fund for war-affected Israeli startups

The fund, backed by investors from Pitango, Viola, and Silvertech, has a goal of raising $20 million to ensure early-stage startups can continue to grow during the war with Hamas

Sharon Wrobel is a tech reporter for The Times of Israel.

Israeli reserve soldiers seen during military training in the Golan Heights, northern Israel, October 30, 2023. (David Cohen/Flash90)
Israeli reserve soldiers seen during military training in the Golan Heights, northern Israel, October 30, 2023. (David Cohen/Flash90)

A group of leading venture capitalists and serial entrepreneurs have launched an emergency impact fund to raise $20 million to provide early-stage Israeli startups with a lifeline during the ongoing war with the Hamas terror group.

The impact fund dubbed Iron Nation founded by Chen Linchevski and Gil Friedlander, both Managing Partner at Calyx Ventures, and serial entrepreneur Jason Wolf, was created to ensure the continuity of operations of viable startups hurt by the October 7 atrocities perpetrated by Hamas and the onset of the war.

The fund is backed by pro-bono volunteers from across Israel’s tech ecosystem and venture community as well as supporters abroad, including Chemi Peres of Pitango Ventures, New York-based venture capitalist Charlie Federman of Silvertech Ventures, Danny Cohen of Viola Ventures, Moshe Lichtman of IGP Capital, Aaron Applbaum of MizMaa, and Calanit Valfer of the Elah Fund.

An estimated 15 to 20 percent of tech sector employees have been mobilized as reserve soldiers in the wake of the October 7 onslaught by Hamas that killed, tortured and mutilated some 1,400 people, most of them Israeli civilians, including babies, children and the elderly. The massive callup presents challenges for Israeli early-stage startups in terms of attaining critical funding and in terms of their daily operations.

About 70% of Israeli tech firms and startups are facing disruptions in their operations, including the postponement or cancelation of orders and projects, according to a recent survey by the Israel Innovation Authority and Start-Up Nation Policy Institute (SNPI).

“Young men and women have been forced to set aside their dreams as an act of duty to their country,” said Peres. “The investor community refuses to allow them to be another casualty of this war.”

File: IDF reserve units help guard a Kibbutz near the Syrian border in northern Golan Heights on October 8, 2023. (Michael Giladi/Flash90)

“Their widespread support speaks not only to the resilience of the tech ecosystem but to the belief that we can save a critical segment of the Israeli tech economy while creating a sustainable double-bottom line for investors,” he added.

The Israeli economy’s dependence on the tech sector has significantly grown in the past decade, and it now contributes 18% of GDP, versus less than 10% in the US, and about 6% in the EU. About 14% of all employees work in the tech sector and in tech jobs in other sectors. The Israeli economy relies on high-tech products and exports, which make up about 50% of total exports, as well as taxes from the sector.

The fund, which won’t collect management fees or carried interest is aiming to raise $20 million to back post-seed VC-backed startups and ensure that they can continue to grow during and after the war. Applications by eligible startups for funding of between $500,000 and $1 million will be processed and vetted within two weeks by the fund’s investment committee. More than 150 startups have already applied for funding in recent days, according to the fund’s founders.

“Israel has just suffered its 9/11 and I am proud to join the ranks of those working to ensure that the Israeli tech industry bounces back to the booming center it was before October 7th,” said Silvertech’s Federman, who was among the first to join the Iron Nation investment committee.

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