TLDR: Hetz Ventures, an early-stage AI investor, is highlighting a critical structural gap in Israel’s artificial intelligence ecosystem: the absence of a ‘flywheel’ effect akin to its successful cybersecurity sector. Managing Partner Judah Taub emphasizes that Israel lacks the coordinated national strategy, policies, and investments seen in other countries vying for AI leadership. Hetz Ventures focuses on deep tech, rapid execution, and founders who think in systems to bridge this gap and foster global commercial advantage.
Hetz Ventures, a prominent early-stage investor in artificial intelligence, is sounding the alarm on a significant structural deficiency within Israel’s burgeoning AI landscape. According to Judah Taub, Managing Partner at Hetz Ventures, Israel currently lacks a crucial ‘flywheel’ effect, a self-reinforcing cycle of talent, units, companies, and buyers that propelled its cybersecurity industry to global prominence. This assessment comes as part of CTech’s VC AI Survey.
Taub asserts that while other nations are making deliberate and coordinated moves—through policy development and strategic investments—to establish themselves as leaders in AI, Israel is notably absent from this concerted effort. He states, ‘In AI, we’re not seeing that same coordination. Many countries are making deliberate moves to lead in AI – you can see it in developing policies and investments. Israel is not. If anything, the thinking around it and the policy here are heading in the wrong direction.’
For Hetz Ventures, their investment philosophy in early-stage AI is not driven by speculative hype or aggressive growth projections. Instead, their focus is squarely on ‘deep tech, fast execution, and founders who think in systems.’ Taub stresses the importance of backing entrepreneurs who not only develop innovative technology but also possess a systemic understanding of how to integrate into global demand, execute swiftly, and translate technical prowess into tangible commercial advantages. He notes, ‘The founders we’re looking to back now are the ones who don’t just build cool tech, but who think in systems.’
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Despite the current structural challenges, Taub acknowledges that Israel still possesses ‘world-class talent.’ Hetz Ventures’ recent investment trends underscore their commitment to the AI sector; all of their latest ten investments are in deep AI or data engineering startups. Furthermore, AI and data-focused startups constitute over half of their portfolio since 2017, spanning diverse areas such as security, agents, infrastructure, and monitoring. While Hetz Ventures has not yet seen exits from its AI investments, Taub anticipates this will change soon, observing that successful AI companies exhibit ‘nonlinear and often exponential’ growth rather than incremental progress.
