TLV Partners launches a $250 million fund to invest in early-stage Israeli-founded startups

Last quarter, investors financed 3,011 startup funding deals in the United States. Investors spent $39.8 billion, down by nearly half from the same period a year ago. But the United States is not alone.

Israel, known for having the highest number of startups per capita, is also experiencing a slowdown in its technology sector, the state-backed Israel Innovation Authority reported last month. According to the agency, the slowdown in Israel’s tech industry has worsened in 2023, primarily due to political turmoil within the country. What is particularly troubling is that Israel seems to be diverging from the broader global trends indicating a potential global recovery. While the funding drought persists, there appears to be some good news for Israeli tech startups.

Today, TLV Partners, a venture capital firm that focuses on early-stage investments in technology startups, announced the launch of a new fund worth $250 million to invest in early-stage Israeli-founded startups that predominantly operate in the United States. The decision to shift the focus towards the US market stems from concerns regarding proposed changes to the Israeli judicial system.

With the fifth fund, TLV Partners will see its assets under management increase to over $1 billion. The primary objective of the fund is to make approximately 25 investments, ranging from $4 million to $8 million each, in various sectors including software, fintech, biotech, cybersecurity, and artificial intelligence (AI) startups.

TLV Partners also expressed its willingness to potentially invest up to $20 million per company in subsequent investment rounds. Having already invested in 60 Israeli companies and successfully exited 10 of them, TLV Partners brings a wealth of experience and expertise to the startups it supports.

Founded in 2009 by Rona Segev-Gal, Eitan Bek, and Shahar Tzafri, TLV Partners is based in Israel and primarily invests in companies founded in Israel. The firm has established itself as a prominent player in the Israeli startup ecosystem. It provides funding, expertise, and support to help startups grow and succeed. The firm has a diverse portfolio, investing in sectors such as software, fintech, biotech, cybersecurity, and artificial intelligence (AI).

The recent proposals put forward by Prime Minister Benjamin Netanyahu’s hard-right coalition, which aim to increase the government’s involvement in selecting judges and restrict the Supreme Court’s authority to invalidate legislation, have sparked widespread protests. These proposals have not only generated public dissent but have also been identified as a contributing factor to a significant decline of 70% in tech fundraising during the first half of the year.

“People are definitely interested in Israeli companies and Israeli technologies,” Rona Segev, a managing partner at TLV told Reuters. She also expressed concerns over the Israeli government’s judicial plan. “It’s actually pushing the high-tech industry out of Israel,” Segev added. “In the past three months, a lot of relocations are happening in our portfolio … And it’s growing very, very rapidly.”

So far this year, all of the startups TLV Partners invested in have been incorporated in Delaware. It is worth noting that while these companies are officially registered in the US, many of them maintain their research and development operations in Israel, which is known for its vibrant tech and innovation ecosystem. This approach allows TLV Partners to tap into the benefits of the US market while leveraging the technological expertise and talent pool available in Israel. By investing in Israeli-founded companies with R&D operations in Israel, TLV Partners can harness the strengths of both regions to foster growth and success for the startups in their portfolio.

In a statement, Segev said: “The $250 million is going to Israeli entrepreneurs but in the current political situation, 90% at least will go to non-Israeli companies. I don’t see a reason why it will change (that) most entrepreneurs choose to form or incorporate their company outside of Israel.”

She added, “As venture capitalists, we are okay investing in Israeli entrepreneurs wherever they decide to be at that point.”