A Bethesda couple is currently in the middle of a large collaborative effort with several venture capital incubator groups to provide funding through investments to Israeli startup companies as they face challenges getting off the ground and sustaining success due to the Israel-Hamas war following the Oct. 7 attacks.
Steven and Susy Shapiro, co-founders of eHealth Ventures, an Israeli incubator and venture fund, began an unprecedented collective effort to bring several incubators together in the post-Oct. 7 world and help struggling startups with the Geshem Impact Fund.
“Oct. 7 happened, and everything changed … We realized that some of our companies [that eHealth Ventures had invested in], for a lot of them the founders were called up for active duty as well other key people,” Steven Shapiro said.
With this knowledge in mind, the Shapiros began working to create the Geshem Fund, which consists of a group of eleven incubators that will provide emergency relief in the Israeli startup industry, a major strength of the country’s identity and economy.
Shapiro cited a statement from the Israel Innovation Authority in December that said that within six months, 50% of Israeli startups will run out of money. He added that his group’s efforts will work to get these companies through the war until they can get back on their feet and pick up their work from where they left off.
“We are not getting paid or having financial incentives – we are doing this to help the struggling startups. Many CEOs were called up to serve, clinical trials and product development in Israel has almost stopped along with other challenges. Some game-changing technology may never be completed,” Shapiro said.
Shapiro said that typically in venture investment cases like these there is usually about an 80/20 spilt of the exits with the company but given the nature of circumstances surrounding the companies’ need for money, they’re taking zero percent of the exits.
“None of us are going to take money, [we’re] doing it for the world to help Israel. We’re doing it [because] we think it’s critical for the survival of Israel,” he said.
Shapiro said that the money they raise will be there to fill in a “gap” for these companies while their projects are on hold and their key management staff are off fighting in the war.
He added that the concern was that some good companies that had really promising concepts or current work wouldn’t survive that gap without help and their work would be lost.
The fund will be raising this money primarily through American sources, and they’re looking to collect at least $5 million as a minimum due to the cost to run the fund. Shapiro said that they have some commitments but have not yet reached their goal.
Shapiro explained that they must raise the money through “qualified investors,” which consists of people with an understanding of the private equity market who meet “certain regulations” in order to be able to invest.
“Everybody’s reaching out to their [fundraising] networks. We’ve contacted hundreds of people. And we’re doing a roadshow next week. We’re going to a Boston meeting on Monday, on Tuesday in New York City, and Thursday we’re doing it in the D.C. area, where we’re having people from Israel come speak and to really explain what’s going on in the front lines,” Steven Shapiro said.
The Shapiros hope that the combined efforts of the incubators in the fund will be able to have a positive impact on the Israeli economy, where they and many others are concerned about the long-term impacts the war might have.
Shapiro explained that the Israeli economy is tied closely to the startup business, referring to the country as the “Startup Nation.” He added that the technology sector is a huge employer in the country.
“We think it [the fund] will have an impact and it’ll prevent companies that would otherwise be very successful from going out of business,” Shapiro said.
He also said that this fundraising campaign is another sign that the American Jewish community cares about Israel, its people and their future through supporting the economy.
He added that while many people are pitching in to help the victims, individuals and families that have been displaced and the men and women serving in the Israel Defense Forces, this is their way of doing the same thing from an economic standpoint.
“That’s something unique about Jewish people. When there’s a problem, everybody gets totally focused and pitches in. And it’s remarkable, it’s so rewarding,” Shapiro said.