When the startup world talks Israel, they think they’re only talking one city: Tel Aviv. There are other municipalities that pop onto our radars like Ramat Gan, Givatayyim, Holon, Herzliya, and Petah Tikva, but they’re just suburbs of the big hub on the Israeli coast. Of all the cities dispelling the notion that TA is the only sustainable startup center in Israel, Jerusalem has been the most successful. Once the foundation of Israel’s startup initiatives, all the city’s VCs and small companies moved offices to the coastal financial capital once the second intifada broke out in 2000. But they have come back in full force.
Last Wednesday night, Jerusalem’s First Station was the spot for the local scene’s monthly HappyHourJLM meetup, organized by local non-profit Made in JLM in no small part thanks to the organization’s Head of Events Rachel Rosenzweig. The night was completely dedicated to venture capitalists, turning the tables on investors by making them pitch their own firms to a room of dozens of startup denizens (in other words, forcing them to make the case to be the investor rather than unnerving founders to make their case to be investees).
Not only was it a chance to see just how little practice some venture capitalists have pitching for themselves, but also an opportunity to see how many Jerusalem-centric investors the city now has.
“There are more places to work, more companies hiring and overall there is a feeling that all the hard work in the beginning is starting to bear fruit. There is still more to do, but it’s a great feeling,” said Yuval Wirzberger, VP of BizDev at 200 Apps. “I believe the strength in the Jerusalem scene is in that here the community is very close knit, strong and extremely supportive.”
The lineup was a who’s who of makers and shakers on Jerusalem’s investment scene. Flight Ventures’ Lou Kerner, Jumpspeed Ventures’ Ben Wiener, OurCrowd’s Prescott Watson, VLX Ventures’ Ori Choshen, PICO Venture Partners’ Danielle Blumberg Ullner, the fresh.fund’s Zaki Djemal, Cornerstone Venture Partners’ and Made in JLM founder Hanan Brand, the Parnasa Fund’s Eliyahu Attias, Terra Venture Partners’ Harold Wiener, Sapir Venture Partners’ Aaron Zucker, and ICV’s Glen Shwaber were among the pitchers taking to the mound.
“It was great to see VCs pitching,” Wirzberger added. “Putting them in the spotlight helps the community connect with them on a different level. It showed that they care about being involved and it was nice to see their excitement sharing their stories.”
That might be an apt description for Ben Wiener, the founder of Jumpspeed Ventures, whose stated goal has always been to deliberately focus investments on Jerusalem. He was exhilarated by the challenge of arguing for his own company as the investor you want.
“Oh, man – I love it. It’s got to be the greatest revenge for founders to watch the investors take their turn to pitch. Personally, I’m very passionate about what I do and I love to pitch Jumpspeed to founders. I think founders too often blindly ask investors for money, and should instead force the investors (or at least ask them nicely) to explain what makes them special. If we ask entrepreneurs all the time to tell us what their ‘secret source’ is, why shouldn’t they ask us the same thing?”
Vowing to keep your portfolio tied into a single ecosystem is risky when investment calls for diversification, but the city has met that challenge and then some. Jumpspeed started with a vow to only support local at a time VCs weren’t hunting for silicon in the city of gold, yet a number of companies were starving for capital. Now they are leading the investment train as one of the conductors instead of riding from its caboose.
“Personally I believe the most amazing things about the Jerusalem startup scene have been its renaissance from close to nothing four years ago to a vibrant scene today, and the diversity among the entrepreneurs — men, women, religious, secular, Haredi, Arab — are all represented.”
Some were determined to show themselves as both down-to-Earth and tough advocates for anyone who joined with their portfolio. Flight Ventures’ Lou Kerner was on his seventh trip to Israel in the last 18 months, and was enthusiastic about firing up the crowd of CXOs on this cold February night by warning them not to be swept away by the simple promises of investors and to constantly look out for themselves.
“Don’t let any VC tell you what to do with your company,” Kerner exclaimed. “I’m here to help you with your vision.”
Players like Jumpspeed, Flight, JVP and OurCrowd have not merely invested across the city, but also become critical employers as the city’s investment revenues have ballooned. The latter’s investment conference last week had 6,000 attendees and boasted impressive numbers of visitors from Singapore, Japan, and Europe, with new partners from Taiwan taking part. In a lot of ways, that conference reflected something a different sort of crowd different than what Tel Avivians might recognize, yet it was still indicative of the Israeli scene as a whole in terms of international interest and cutting edge tech.
OurCrowd’s team has grown by leaps and bounds. One of their early pickups, Prescott Watson, is now their Director of Special Projects and got the enviable task to take the stage on the organization’s behalf. He told Geektime that it really wasn’t anything new if you were an apt VC in the Israeli ecosystem these days.
“I find that our team pitches ourselves all the time. With any team or founder worth backing or investing in, there is enough money in this country that they have options,” Watson says. “He has enough options that any VC that is smart should take they time to explain why they should want them as their investors.”
If VCs are vested in the idea of growing Jerusalem, they have had to press that level of awareness to get a slice of promising startups’ respective pies. The city has other advantages though. Watson points to the city’s distinction as a site of pilgrimage in how it has caught the eyes of foreign investors and that it has served as a foot in the door for visitors.
“Something I’ve noticed is a lot of people come to Israel for a few days, delegations, mainly corporations, and they typically split up their trips into doing their business in Tel Aviv and then reserve one or two days for Jerusalem.” The tourists, who may or may not be religious themselves and may or may not be Jewish, want to check out the city’s holy sites and landmarks. That’s where OurCrowd’s location has made a difference. “Luckily our office is near the Old City so you typically see people coming in for an hour or two where they can stop by and say ‘hi.'”
Now Jerusalem is taking more of the business chunk of the schedule. As the scene has grown, Watson says that has given them a leg up as a de facto pit stop for business partners and other connections who are taking in the sites for the first time.
The expanse of the ecosystem was fairly sampled on Wednesday, as perhaps 200 people crammed into the Beer Garden at the now-refurbished, but original central train station from the country’s pre-independence, British Mandate period. It might have helped attendance that so many investors would be on hand, but that so many people locally were in the game to care to meet such influencers really illustrates the strides the city has made.
That underdog story compared to Tel Aviv — the Big Orange if you will — might be another one of those advantages the City of Gold has compared to the country’s finance hub on the coast, even if there is more overlap between the two cities than rivalry.
“It’s not a competition,” Wiener conveys to Geektime. “I assume Tel Aviv will continue to be larger in quantity of startups and investment, for the foreseeable future. Our mission at Made in JLM and as members of the Jerusalem startup ecosystem is simply to support those that are starting startups here in Jerusalem, and to call attention to the unique narrative of Jerusalem’s startup scene, in its own right, rather than as in some way competitive with Tel Aviv.”