Should Israel Fear Bursting Tech Bubble?
Israel has received much global acclaim in recent years for its booming tech industry, and many international tech giants, including Google, Intel and Facebook, have jumped to acquire a stake in the Start-Up Nation.
So it was no surprise that on a five-day business mission to Israel this month with Conexx: America Israel Business Connector, we met with more than 100 startups and innovators across the country. But an encounter with a hotel bartender who eagerly told me about his own startup as I decompressed from a long day of listening to elevator pitches left me wondering whether there are more bubbles in the Start-Up Nation than just the ones in my beer.
So I asked a few members of the Conexx delegation who work in the financial sector for their thoughts on the topic. Here’s what they had to say:
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- “Nobody really knows if there’s a bubble until after the fact. I know there’s a lot of excitement around Israeli tech right now, and we’ll probably see the top companies come to the forefront over the next few years, but it’s hard to call. I think there’s a real energy around Israeli tech in the past couple of years that has picked up even stronger of late. Some companies will probably not make it, but others will literally take off.”
— Dexter Caffey, founder, Caffey Investment Group
- “The bubble of 2000-2001 is still fresh on the mind of most investors, such that they still remember the lessons learned from that era. While there are thousands of startups in Israel, only a small portion are likely going to be funded, and only a small portion of those that get funded will succeed. This is healthy and is the same thing happening in the United States. There are many factors that go into making a successful company, and, of course, there’s always the possibility that certain tech sectors will become too hot and may burst.”
— Greg Kirsch, partner and head of intellectual property, Smith, Gambrell & Russell
- “The culture here in Israel has been the Start-Up Nation, and they have had tremendous success. As one success brings another success, everybody wants to get on the bandwagon. So there is tremendous breakthrough innovation happening in Israel, but for every one of those, there’s probably 12 deals that will go nowhere. You have to be careful because it is a bit of a Wild West. Every deal is not Mobileye or CyberArk that have billions of dollars in capital value eventually. People try, and people fail, and investors try, and investors fail.”
— Mark Spiegel, senior vice president, UBS Global Asset Management
Tech bubble or not, Israel may be the only country in the world where tomorrow’s next tech millionaire could be serving you an ice-cold beer, and that’s pretty cool.