No words. The Heartbreaking Situation in Israel
Gil Dibner

This newsletter (and Angular Ventures as a firm) is committed to ambitious world-changing innovation in Europe and Israel. We try to keep politics out of our work and out of this newsletter. No one signed up to this newsletter to read our opinions on global affairs. The events of the past three days, however, have been so overwhelming that we can not continue with business as usual.

On Saturday, we were all witness to one of the most horrific deliberate attacks on civilians in recent memory. It took place in Southern Israel, and its scale was so massive that nearly everyone in Israel (or anyone who knows enough Israelis) knows someone who was directly affected.

As a firm, we have invested in 19 Israeli companies. Everyone is affected. On Monday, I learned that the nephew of one of our CEOs was killed in combat. Earlier that same day, I learned that the son of one of the VCs I most admire in Israel was killed in combat. At least two of our CEOs are on active duty in reserve combat units. Another founder, an American, told me that one of his relatives was severely injured (but expected to recover) and that one of his relatives is returning to Israel to rejoin his reserve unit. Several of our founders and many of their employees are serving in the reserves, risking their lives to defend their families. Every Israeli civilian and parent is spending these days aware that rockets are being fired at them and that terrorists are seeking to harm them. The scale of the human tragedy that is unfolding is nearly unimaginable, but for anyone who has seen the videos, heard the testimonies, and spoken with those affected — it is all too real. There are no words to capture this level of pain.

Our hearts go out to our Israeli friends and families.

I am not a political analyst, but there is every reason to expect that the war that broke out over the weekend will last for some time and will lead to more suffering on both sides. I pray it will be shorter than I fear it is likely to be. I pray it will be less costly than I know it is likely to be. Things will get darker for a while.

Despite the scale of the pain and the depth of the tragedy, Israel (and Israeli tech) will recover from this. The incredible success of Israeli high-tech is not a random event. It is rooted deep in a culture of innovation, adaptability, teamwork, and resilience against impossible odds. These qualities will lead Israel through the very dark days to come and — ultimately — out the other side.

As an American, Israeli, and now honorary European VC, I have the unique privilege of working across cultures. I want to share a note from a German CEO I worked with some years ago. He emailed me today:

“I just want to take a moment to express my deepest sympathy in this horrific moment for your country. Seeing the atrocities done to your people leaves me shocked and speechless. They remind me of what nine decades ago, my country did to your people, bringing tears to my eyes. …just know that you, your people and your country have my everlasting sympathy, admiration and support. I deeply hope that your loved ones are safe and that Israel will be able to stop this horror very soon.”

Amen.

Between Hebrew speakers, when one discusses a tragedy or a great sadness, it is common to use the expression: “sheloh tedah.” It translates roughly to: “may you not know (such sadness).” That is my wish for everyone reading this, whether you are in Israel or anywhere else. May we never again know such sadness and pain as we know today.

Gil

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EUROPE & ISRAEL FUNDING NEWS

Sweden / Fintech. Brite raised $60M to scale its “account-to-account” payments platform.

UK / TechBio. Automata Technologies raised $40M to expand its life science lab automation technology.

Netherlands / Robotics. Microsure raised $40.15M to finalize the development of its newest microsurgical robot.

UK / Artificial Intelligence. Unitary AI raised $15M to capitalize on the momentum its seeing with its multimodal approach to video content moderation.

WORTH READING

ENTERPRISE/TECH NEWS

Enterprise tech spending. Battery recently released their State of Enterprise Tech Spending Report which highlighted most importantly that enterprise tech spending is “not dead yet” and, in fact, there are growing signs for optimism. Key highlights of the report include:

• The percentage of companies with declining technology budgets remained relatively steady between Q1 2023 (27%) and Q3 2023 (29%).

• Fewer enterprise tech buyers are remaining on the sidelines of the AI trend. 79% of enterprise technology buyers expect to deploy generative AI/LLMs in the next 12 months, compared to 32% only six months ago.

• Enterprises are beginning to move beyond the experimentation phase with generative AI to execute meaningful deployments, primarily for use cases related to customers, people management, sales and knowledge management. 93% of buyers expect to move beyond experimentation with generative AI and LLMs within two years.

• Across enterprises, there are positive trends in hiring, often a leading indicator for future projects and budgets. Among Battery’s Q3 respondents, 37% plan to increase hiring compared to only 27% in Q1 2023.

Breakthrough in energy storage. MIT engineers have created a new supercapacitor, a potential breakthrough in energy storage and alternative to batteries for storing electricity. It is constructed solely from cement, carbon black and water — materials which are abundantly available and affordable. This new supercapacitor may be the key to affordable and scalable renewable energy storage. The potential uses for this technology are astounding. “The MIT researchers who developed the system say that their supercapacitor could eventually be incorporated into the concrete foundation of a house, where it could store a full day’s worth of energy while adding little (or no) to the cost of the foundation and still providing the needed structural strength. The researchers also envision a concrete roadway that could provide contactless recharging for electric cars as they travel over that road.”

SaaS landscape. Jason Lempkin recently spoke about how he believes the worst is behind us, that SaaS companies are in a “cautious recovery” and that there’s reason to be modestly bullish. According to Jason, evidence of the cautious recovery are that IPOs are finally back, “Klaviyo filed its S1 — the first great SaaS IPO since December of 2021 at $650M in ARR, growing almost 60% and profitable”, and that layoffs of both people and apps are effectively over. “The reality is there was an explosion in sales and marketing and other categories in 2021 when the goal was to grow, grow, grow. So, the excess people and apps got cut after the belt tightened. Salesforce and almost every leader did some form of layoffs to get fit and more efficient. But now they’re done. Salesforce said they aren’t doing any more layoffs, and they’re actually doing critical hires now. It’ll never be like 2021, but outside of spot issues for leaders, hiring is slowly resuming.”

HOW TO STARTUP

First 10 hires. Lenny Rachitsky wrote a great post about hiring your early team with a fascinating now-viral infographic of the first 10 hires at top B2B companies. Some of the most important key takeaways are that:

• Over two-thirds of the top B2B companies hired an engineer as employee #1. “In the rare case when an engineer wasn’t the first hire, it usually came down to the founding team having enough horsepower to build the V1.”

• 60% of the first three hires were engineers and 100% of companies hired at least one engineer among their first three hires.

• Very few companies hired a salesperson among the first three hires.

• Customer success/support was a popular role for the first three hires. “Of the non-engineer hires, almost a quarter of them are customer success/support”.

2023 SaaS KPIs. ICONIQ has put together 2023 benchmarks for five key metrics for SaaS companies, the “enterprise five”: ARR Growth, Net $ Retention, Rule of 40, Net Magic Number, and ARR per FTE. Founders may choose to use these KPI benchmarks to help determine how well they’re performing relatively. This year has been tough for all — even top quartile SaaS companies. “2022 and 2023 have had a significant impact on SaaS performance, with companies seeing lower YoY growth in the first half of 2023 than any other period in the last five years. Whereas top-quartile SaaS companies can usually grow 2.0x-2.5x year-over-year until $100M ARR, the rate of ARR growth decreased to ~1.5x for companies scaling past $50M in 2022–2023.”

HOW TO VENTURE

VC market update. A recent PitchBook report highlighted that venture activity is still largely subdued. “Total venture investment around the world amounted to $73 billion in Q3 2023, compared to $105.9 billion a year earlier. That’s also 65% less than Q4 2021’s record of $213.4 billion.” Additionally, across the world, venture deal volume has fallen every quarter since Q2 2022 and there was a sharp drop in deals in the latest quarter. “Q3 2023 saw 7,434 deals compared to the previous quarter’s 9,563 deals.” One geo which is bucking this trend: Europe. European venture capital deal total funding has actually increased every quarter this year.

PORTFOLIO NEWS

Vault Platform is one of Fast Company’s 16 brands putting utility at the center of their impactful work.

Datos Health partnered with Silverchain to elevate remote healthcare in Australia.

Aquant’s VP Growth, Edwin Pahk shared how GenAI is leveling the playing field in the workplace.

Forter published a report highlighting consumer’s “trust premium”. One key finding in the report was that “UK consumers are willing to spend 44% more on average with a retailer they trust”.

Sisense unveiled Compose SDK for Fusion, a code-first set of application programming interfaces that enable developers to quickly and simply build analytics tools to embed within the workflows of business users.

JFrog announced that they have appointed Ed Grabscheid as new CFO.