Since the October 7 Hamas attacks and the subsequent war in Gaza, some experts have been predicting doom-and-gloom for Israel’s flourishing tech sector.
Sergey Gribov, a general partner of US-based early-stage venture capital fund Flint Capital, says those predictions might have been premature. Out of nearly 70 companies in Flint’s investment portfolio, 40 are Israeli.
“There were maybe a couple US VCs who had questions, but most of us remained very, very positive towards [the tech sector in] Israel,” Gribov says.
“But obviously, it has not exactly been business as usual. We have been trying to do whatever we can to help, from collecting donations for the army … to helping our Israeli portfolio companies,” he adds.
“For example, the CEO and founder of one of our companies was on reserve duty for three or four months. He would do reserve duty for 12 hours, and for the next 12 hours he would basically run the company instead of sleeping.”
Gribov, an Israeli citizen living in Boston since 1997, is well-versed in the local tech developments. “I’m in Israel every couple of months,” he notes.
“I moved to Israel in 1990 from the Soviet Union. I went to university in Israel, did army service, and then started working at [Israeli biotech drug discovery company] Compugen shortly after it was founded,” recalls Gribov.
“What happened was that the company needed to open a US office. The founders already had families, but I didn’t. So I was willing to go.”
In 2000, Compugen launched its initial public offering (IPO) and became a success story for the Israeli tech industry. “We even appear in the Start-Up Nation book,” he notes.
Gribov, a computer scientist by trade, went on to found his own startups, and even studied at MIT – Massachusetts Institute of Technology. “Basically all my life I worked in startups,” he says.
In 2016, Gribov joined Flint Capital together with Andrew Gershfeld, which had been established two years prior by Dmitry Smirnov. All three entrepreneurs are originally from the Soviet Union.
Gribov and Gershfeld are based in Boston. Smirnov works at the fund’s back office in Cyprus.
Besides Israel, Flint also invests in companies in the US and Europe, and has nine employees across all its offices.
“We do have a lot of cyber [portfolio companies]; in Israel we prefer cyber because there is a lot of interesting stuff going on in that sector,” Gribov notes.
“But we also have fintech and digital health. We’re pretty flexible. We understand the market and we invest accordingly.”
Over the past 10 years, Flint has opened three funding rounds, with $100 million worth of investments in the first two, and 160 in the third.
“Each fund has a lifespan of about eight to 10 years. You actively invest in the first three, maybe four years, and then you continue to support your companies’ growth without actively investing,” he explains.
Pull quote: “Israeli high-tech proved it is very resilient. Despite the war, despite some startups having 15 percent of their workforce drafted to reserve duty, the system was still working well.”
“We started the second fund in 2018, that one is almost fully invested; the third fund we started a little bit less than two years ago.”
Gribov says that the Israeli high-tech market is unique because it “delivers no matter what.”
He explains that investments in the Israeli high-tech sector have actually grown this year, which is evident by the fact that valuations of the tech ecosystem in Israel right now are higher than those in the US due to “oversupply of money.”
“One of the most important characteristics of a good startup is resiliency. Israeli high-tech proved it is very, very resilient. Despite the war, despite some startups having 15 percent of their workforce drafted to reserve duty, the system was still working well.”
Gribov adds that the war has contributed to new technologies ”being spun out of different think tanks.”
“At the start of the war, there were a lot of different groups which tried to figure out how to help, and we are already seeing a lot of interesting startups emerging out of all of it,” he says.
“Not to mention the whole defense sector, which is just kind of exploding with new interesting technologies.”
Just before we ended our interview, I asked Gribov why the fund was named Flint.
“It’s actually because of Captain Flint from Robert Louis Stevenson’s books,” he says. “We like that character.”
“There is also this known quote from Steve Jobs: ‘It’s better to be a pirate than join the navy.’
“And we think this is the better fitted approach for startups.”
Produced in association with ISRAEL21c
