Amid global slowdown, VC founder Elie Wurtman says Gulf can help in plugging Israel’s tech talent gap
Wurtman is looking at Israel’s deepening ties in the Gulf to help solve the chronic shortage of developers and engineers
Venture capitalist Elie Wurtman looks to the Gulf Arab states as a potential savior for Israeli tech startups that can’t find enough qualified engineers to hire. First, though, they’ve got to weather the global market crisis that threatens to dry up funding.
“I don’t think it’s doomsday across the board, but companies that require substantial capital may be challenged,” Wurtman, the American-born co-founder and managing partner of Jerusalem-based Pico Venture Partners, said in an interview with The Circuit. “This is a good time to be more prudent with expense management.”
As the Nasdaq Composite stock index has plunged almost 30 percent this year, many of Israel’s biggest tech companies trading on the technology-heavy New York exchange have seen their market values sink. In turn, investors in the country’s more than 6,000 startup companies, which range from anti-hacker cybersecurity firms to telehealth services for pet cats and dogs, are cutting back.
That means a rough period is in store for the country’s high-flying tech culture, which has inflated both salaries and housing prices, said Alex Zabezhinsky, chief economist at Israel’s Meitav Investment House. “The slowing economy and rising interest rates, especially after such big valuations in the past, will surely bring worse times for technology companies and make it harder to raise money,” he said.
Wurtman, 52, whose interests include Vroom, an online platform for selling used cars in the U.S. that trades on the Nasdaq, says his ups and downs over three decades in venture financing have given him tools to coach PICO’s nearly two dozen startups. “Most of these companies will be able to get through it,” he said.
Vroom, whose market capitalization rocketed to $5.5 billion shortly after its March 2020 initial public offering, sank to a value of $200 million last week, trading at $1.45 a share. In June 2020, Nasdaq-traded cloud services company NetApp bought Spot.io, another PICO-funded start-up, for $450 million.
Among his projects today, Wurtman is looking at Israel’s deepening ties in the Gulf to help solve the chronic shortage of software developers and computer engineers that plagues the burgeoning tech industry in the small country of 9.5 million.
Pro-business policies in Bahrain and the United Arab Emirates, including tax-free income and liberal visa policies to fuel their expat-driven, oil-pumping economies, should draw Israeli companies to set up remote operations in the two small countries that normalized ties with the Jewish state through the Abraham Accords in 2020, he said. Rather than trying to navigate the tricky labor and social environment for foreign workers in Israel, companies can use their talents while they live in Dubai.
A report released in April 2021 by the Israel Innovation Authority and Start-Up Nation Central found that 60% of Israeli startups were having trouble recruiting for their research and development teams. The Israeli government has announced plans to give out more visas to foreigners who seek to work in tech. Programs have cropped up across the country to train Arab Israelis and Haredi Orthodox Jews in coding and other technology-related skills.
“What does the Gulf represent to me? It represents a very immigration-friendly environment, local subsidies, good infrastructure. You get a work visa if you’re going to be a productive member of society. You can come live there and work there, tax-free,” Wurtman said.
“Within several years, you’ll have dozens, or even hundreds of Israeli companies with satellite development offices in the Gulf,” Wurtman said.
The ability of companies to manage their workforces across national borders was underlined this week when Google moved most of its Russian employees out of the country, according to The Wall Street Journal. As the Ukraine war grinds on, most of Google’s employees in Russia chose to work for the company abroad, the Journal said, adding that many have moved to Google’s hub in Dubai.
Another solution proposed to fill Israel’s tech needs is hiring talent in Africa. Iyinoluwa Aboyeji, a Nigerian general partner at the venture capital firm Future Africa, founded a startup called Andela, which teaches tech skills that help Africans get jobs around the world. Aboyeji told The Circuit in March that he wants the company to be used as a pipeline for Israeli companies.
These days, Wurtman says his passion is the firm’s 10-year-old PICO Kids initiative that seeks to bolster science, math and entrepreneurial skills among students in Jerusalem schools. Last year, the program flew a select group of those young people for a week of touring and study in Dubai, where they spent time with Emirati youngsters and worked together on projects addressing the issue of water scarcity.
“Bringing the kids together in Dubai was obviously magical in the sense that there was hesitation, especially on the other side, but I would say also here [in Israel] as well,” Wurtman said.
“The thing I always hear from kids that go to these programs is understanding that in spite of where we live… we’re actually very similar and we have a lot in common,” he said. “And that together we can come up with interesting solutions that can benefit people across the region.”