The Weekly Circuit
👋 Good Monday morning in the Middle East!
Israeli Prime Minister Naftali Bennett’s coalition government has collapsed and the business community is yawning. As the Knesset, Israel’s 120-seat parliament, debates this week when to schedule the next round of elections – likely to be held in early November – tech industry leaders who have been driving economic growth see little impact from the government’s instability. What does make a difference is the prospect of recession in the U.S., where funding for startups is getting harder to tap, as Entrée Capital founder Avi Eyal tells The Circuit below.
Techno Campus: Many of those leaders will be milling around Tel Aviv University for Cyber Week, the annual jamboree that draws prominent figures in the digital security realm. Among corporate figures expected on campus are Check Point Software CEO Gil Schwed, CyberArk CEO Udi Mokady and Jane Horvath, Apple’s chief privacy officer. From the White House come both National Cyber Director Chris Inglis and Deputy National Security Advisor for Cyber and Emerging Technologies Anne Neuberger. Prime Minister Bennett, a former cybersecurity CEO, had been scheduled to address the conference, but his appearance is in question due to recent political circumstances.
Trending in the Gulf: Analyzing future business trends in the Middle East was top of the agenda at last week’s Qatar Economic Forum, although more headlines were generated from a video interview during the conference with billionaire Elon Musk. In Washington, the United Arab Emirates introduced Americans to Gulf Arab culture with a weekend fair of music, crafts and food on the National Mall, as The Circuit’s Gabby Deutch reports.
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Entrée Capital’s Eyal pushed start-ups to raise cash quickly, prepare to slash expenses
Avi Eyal, co-founder of Israel-based Entrée Capital, said he and his partners have spent the past year trying to prepare cash-burning startups for the economic slowdown that has hit technology businesses around the world. The venture capital firm, one of the biggest operating in Israel, manages about $1 billion in assets and has current investments in some 150 companies internationally. His message last year — the most lucrative ever for Israeli technology — was that CEOs should accelerate fundraising efforts and determine where expenses could be reduced.
Backup Plan: “We actually went to most of our portfolio companies, and in between June and December, we raised money for the bulk of them,” Eyal said in an interview with The Circuit’s Jonathan Ferziger. “At the same time, we told all the companies to have a backup plan, have a simulation of how they would cut costs very quickly, and how they would use that money, not to achieve the same growth but to achieve a quarter of their profits or less,” he said, “Some did, some didn’t.”
Serial Entrepreneur: Born in Israel and raised from age 6 in South Africa, Eyal is an engineer and a serial founder of start-ups who opened Entrée Capital in 2010 with internet entrepreneur Martin Moshal, a childhood friend. The firm was an early investor in Monday.com, a maker of workplace management software that held its initial public offering on the Nasdaq a year ago, and fraud-detecting Riskified, which trades on the New York Stock Exchange. Tracking the markets, both have shrunk in value since their 2021 IPOs.
Gulf Investments: Recently, Entrée has been investing in the Gulf, deepening relationships with Mubadala, the $284 billion Abu Dhabi sovereign wealth fund, and other Emirati businesses, after starting quietly before the September 2020 Abraham Accords. As the collapse of Israel’s coalition government sets up the fifth national election in three years, Eyal, 51, said the political instability holds much less of a threat to tech companies than the prospect of recession in the U.S., where many seek to raise money. “Governments come and go and I don’t think it has any impact on the technology space,” he said.
World Cup warmup
Elon Musk, oil prices, World Cup soccer dominate stage at Qatar Economic Forum
Heads of state, oil executives and the richest man in the world pondered the prospects for a U.S. recession last week during the Qatar Economic Forum. The three-day conference in the capital city of Doha focused on matters ranging from the global economic slowdown and escalating crude prices to whether Qatar can rustle up enough beds to handle 1.2 million ticket-holders for soccer’s 2022 World Cup in November.
Twitter Riddle: Elon Musk, however, stole the show when he injected new uncertainty into the question of whether he will ultimately buy Twitter and talked about where he’s spending other portions of his $220 billion personal fortune. Musk, the 50-year-old chief executive of electric carmaker Tesla and rocket company SpaceX, said there were still “unresolved matters” holding up his $44 billion bid for the popular social media platform.
Recession Inevitable: Asked about the U.S. economy in an interview by video feed with John Micklethwait, editor-in-chief of Bloomberg News, Musk said a recession is inevitable and outlined the job cuts he’s ordered at Tesla that will reduce the salaried workforce by 10%. “As to whether there is a recession in the near-term, that is more likely than not.”
Energy Deals: Also at the conference was ExxonMobil CEO Darren Woods, who said oil companies will need three to five years to “catch up” on the investments required to assure adequate world supply. He spoke on a panel with Qatari Energy Minister Saad Al-Kaabi, with whom he also signed an investment agreement to take a 6.25% stake in Qatar’s $29 billion North Field liquefied natural gas project.
An Emirati ‘majlis’ presents Arab culture at Smithsonian Festival on the National Mall
On a scorching summer afternoon, tourists to Washington, D.C., came to relax in the shade of the makeshift wooden majlis, Arabic for a sitting room, on the National Mall. The Washington Monument towered in the background. Children picked up brushes to paint watercolor pictures of flowers. A veiled Emirati girl held a falcon on her wrist, demonstrating the Bedouin discipline of handling the predatory bird.
Traveling Falcons: The dozens of interactive demonstrations and events were part of this year’s Smithsonian Folklife Festival, spotlighting the culture of the United Arab Emirates. More than 90 participants flew in from the UAE to showcase the nation’s vibrant, diverse culture. (No special plane was needed for the falconry participants; travelers on Etihad Airways can bring a caged bird with them on the plane.)
Saffron Perfume: Mona Haddad, a young woman mixing scents from saffron and rosewood to create perfumes, said she learned the craft from her mother. She dabbed a bit of oil on her fingers and rubbed it behind one visitor’s ears, telling her the fresh scent would last for three days. The festival concludes its first week on June 27 and picks up again from June 30-July 4.
Read the full story here.
Russian Exit: Russian commodities dealers are leaving Switzerland and setting up businesses in Dubai because of sanctions stemming from Russia’s invasion of Ukraine, which are making it difficult for them to operate.
DXB-TLV: Emirates Air inaugurated daily flights between Dubai and Tel Aviv, joining five other UAE and Israeli carriers that fly the route.
Spanish Trains: Etihad Rail signed an agreement with Spain’s CAF Group worth $327 million to supply passenger trains for the UAE’s new rail network, connecting 11 cities across the country.
Friendly Skies: Qatar Airways said the company is trying to work with Saudia, Kuwait Airways and other Gulf airlines to enable soccer fans to get to Qatar for the World Cup in November.
Egyptian Spree: Saudi Arabia and Egypt signed 14 investment deals worth $7.7 billion during a visit to Egypt by Saudi Crown Prince Mohammed bin Salman, including an agreement to build the Egypt Center for Petroleum and Petroleum Products Storage.
Orbiting the UAE: Abu Dhabi-listed companies International Holding Company and Alpha Dhabi will invest a combined $50 million in Elon Musk’s SpaceX.
African Medicine: The UAE’s Etihad Credit Insurance Co. and Israel Export Insurance Corp. agreed to collaborate in financing construction of four hospitals and a medical storage facility in Ghana.
On the Radar: U.S. aerospace company Leonardo DRS will acquire Israel’s RADA Electronic Industries, which makes tactical radar systems, paying a 34% premium in a deal that values Rada at $775 million.
Energy Trade: The Abu Dhabi National Energy Company and Abu Dhabi National Oil Company will acquire major stakes in Masdar, an Emirati renewable energy company, from Abu Dhabi’s sovereign wealth fund, Mubadala Investment Company, in a deal that values Masdar at $1.9 billion.
No Borders: Israeli e-commerce platform Global-e Online said it will buy Borderfree, which specializes in international shipping, from Pitney Bowes in a $100 million cash deal.
Flying High: Israir, which runs a low-cost Israeli airline and tourism business, raised $7.3 million in an IPO on the Tel Aviv Stock Exchange.
Dream House: Huspy, a UAE-based home financing startup, raised $37 million in a Series A funding round led by Sequoia Capital India, with participation from the San Francisco-based Founders Fund.
No Hacking: U.S. media giant Comcast agreed to acquire Levl, an American-Israeli startup that develops technology for authenticating wireless devices, for an estimated $50 million.
Buy More: Israel’s Amy, which uses artificial intelligence to help sales representatives build relationships with customers, raised $6 million in a seed round of funding co-led by Next Coast Ventures and Lorne Abony.
Very Large: Abu Dhabi-based Al-Seer Marine bought two ships known as VLCCs (very large crude carriers) and worth $110 million to expand its fleet amid higher global oil demand.
Making Babies: AiVF, an Israeli fertility tech startup, raised $25 million from Insight Partners and WeWork founder Adam Neumann’s family office.
Startup Fund: Vine Ventures, a New York-based early-stage venture capital firm, raised $140 million for its second fund, with half of the money dedicated to Israeli startups.
On the Circuit
Yair Lapid: The Israeli foreign minister and leader of the Yesh Atid party is expected to become acting prime minister this week, replacing Naftali Bennett, as the Knesset decides when to schedule new elections after the splintering of the government coalition.
Ted Sarandos: The Netflix CEO met Israeli Communications Minister Yoaz Hendel in a bid to stop international streaming services from being required to produce original material in Israel. He said Netflix may reduce investment in Israel if the law is passed.
Moti Eliav: Intuit appointed Eliav as site leader and general manager for the U.S. software company’s activities in Israel, succeeding Gene Golovinsky.
Ahead on the Circuit
June 27-30, Tel Aviv: Cyber Week. International conference brings companies from 80 countries to talk about latest trends in digital security. Tel Aviv University.
July 4, Haifa: Blue 2022 Economy Conference. Maritime industry leaders meet with government, energy and environmental figures, launch National Center for Innovation and Blue Economy. Bahai World Centre.
July 19, Nazareth: Economic Conference on Arab Society in Israel, Central Bank Governor Amir Yaron meets business and government leaders. Golden Crown Hotel.
Saudi Netplay: After Saudi Arabia rattled the Professional Golf Association by organizing a rival tournament earlier this month and offering star players as much as $200 million to join, the kingdom has approached the Women’s Tennis Association about hosting an event. Golfers who participated in the LIV tour were accused of “sportswashing” Saudi human rights abuses, including the 2018 murder of dissident journalist Jamal Khashoggi.
Circle of Life: Abu Dhabi will host “The Lion King” in November when the Tony Award-winning Disney musical makes its Middle East debut with a four-week run at the Etihad Arena.
Classical to Klezmer: Israel’s annual Voice of Music Festival offers performances this week ranging from classical and jazz to klezmer and oud at Kibbutz Kfar Blum in the Upper Galilee. June 28 to July 2.