Technology startups in the holy city of Jerusalem need more venture capital money if they’re going to be as successful as their Israeli rivals in nearby Tel Aviv.
With just a handful of investors on the ground in the city, it can be hard for some of the local tech startups to raise the money they need to grow their business and take it to the next level, according to Ben Wiener, a venture capitalist in Jerusalem.
When asked if there’s enough capital in Jerusalem to support the city’s startups, the investor said: “Of course not. There needs to be more.”
Jerusalem’s legal status is disputed: Israel has declared it its capital — but the ongoing, decades-old Israeli-Palestian territorial conflict means that most other countries do not recognise this claim. Many (including the UK) locate their Israeli embassies in Tel Aviv — Jerusalem’s western coastal neighbour that enjoys the lion’s share of the Israeli tech industry’s attention.
Investors have been slow to invest in Jerusalem startups since the early 2000s, according to Wiener. “We as Jerusalem earned a bias against us for over a decade because we didn’t produce anything good,” he said. “It’s only now in the last couple of years that that’s started to change.”
Jerusalem — a place of pilgrimage and worship for Jews, Christians, and Muslims since the biblical era — struggled to create a thriving tech scene in the 2000s for a number of reasons, residents say.
Elie Wurtman, the founder of Jerusalem-based VC firm Pico Partners, believes that the city’s startup scene suffered as a direct result of the second Intifada (the Palestinian uprising that began in late September 2000 and ended around 2005) combined with the bursting of the dot-com bubble in 2002.
During the Intifada, bombs were going off across Jerusalem on a weekly basis, and “it was impossible to get on a bus and know that the bus would arrive safely at its destination,” a Jerusalemite told Business Insider.
But today the city is more stable both politically and economically. As a result, it’s home to an increasing number of startups, Wiener claims. He says that he’s seen over 600 early stage software startups since launching his venture capital company, Jumpspeed Ventures, three years ago. So far, he’s invested several million dollars across 11 Jerusalem startups through his fund, he says.
Aharon Horwitz, the founder and CEO of Jerusalem startup AutoLeadStar, which helps companies boost their online sales by monitoring customer browsing behaviour, agreed that Jerusalem’s growing startup scene would benefit if there was more venture capital for founders to tap into on their doorstep.
Even as Jerusalem startups bemoan a lack a funding in their city, a number of Tel Aviv startups have found themselves on the radar of investors in Silicon Valley and Asia, with Tel Aviv battery storage firm StorDot raising money from the likes of Samsung Ventures and Russian billionaire Roman Abramovich.
Tel Aviv startups may have received much of the limelight in recent years — but it’s worth remembering that Jerusalem is where Mobileye, arguably Israel’s biggest tech company, was created.
Founded in 1999, the visual recognition company IPO’d on the New York Stock Exchange in 2014 at a valuation of $5.3 billion (£4 billion). Since the IPO the company has gone from strength to strength and today the firm has a market cap of $9.11 billion (£7 billion).
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