Oil soars and stocks slide amid Middle East escalation fears

Stocks fell and oil surged as much as 13% in its biggest intraday rise in three years early on Friday, as investors feared a major escalation of tensions in the Middle East after Israel attacked Iran’s nuclear program and Iranian military leaders.

Brent crude surged to $78 a barrel before easing to around $75, rapidly erasing much of this year’s losses caused by trade tensions and increased OPEC+ output. Gold also hit its highest level in weeks, rising 1.2% to $3,423.30 an ounce as investors fled to safety.

Analysts fear that Iran could target shipping in the Strait of Hormuz, which about one-fifth of the world’s oil passes through, potentially disrupting supplies of millions of barrels of oil a day in an extreme scenario. Such a scenario could see prices reach $130 a barrel, JPMorgan Chase & Co. recently warned.

“We are seeing classical risk-off moves,” Matthew Haupt, portfolio manager at Wilson Asset Management, told Bloomberg. “What we are watching now for is the speed and scale of the response from Tehran. That will shape the duration of the current moves. Quite often these moves fade after the initial shocks.”

Meanwhile, Gulf airlines delayed and cancelled flights to Iran, Iraq and Israel on Friday, with some rerouted mid-flight. Israel’s Ben Gurion Airport was closed until further notice, while Iran closed its airspace and Iraq suspended civilian flights. Flights to Lebanon and Jordan were also disrupted.

Egypt intercontinental rail plan needs go-ahead for Saudi bridge

Egypt is aiming to link its expanding railway network with Asia and Europe, but it hasn’t yet been able to finalize plans to build a bridge to Saudi Arabia.

In the meantime, it will use ships to bring cargo across the Red Sea, Reuters reports. Saudi’s King Salman first announced the bridge project in 2016, envisioning a road that would cross the Straits of Tiran to Egypt’s Sinai Peninsula.

If completed, the route would compete with another notional rail project that would connect the UAE to Israel’s Haifa Port through Saudi Arabia and Jordan.

Another project on the drawing board would run north from the Gulf through Iraq.

Takwin Ventures helps Israel’s Arab tech entrepreneurs navigate obstacles

HAIFA, Israel – Waseem Geraisy, co-founder and CEO of medical device startup Sorlis, worked for 15 years as a business consultant at a variety of small companies before taking steps to acquire the skills and contacts he needed to build an Israeli tech firm.

Like other Arab entrepreneurs, Geraisy, 38, recognized the obstacles. Among them, Israel’s bountiful startups largely emerge from a close-knit ecosystem cultivated in the army’s intelligence technology branches. Arab citizens, who make up 21% of the population, are exempt from military service and miss out on the networking culture generated there.

Enter Takwin Ventures, a project co-founded by two of Israel’s largest venture capital firms, which tries to fill in the gaps and give Arab companies the support and funding they need. Geraisy, whose company has developed a device for the early detection of bed sores, was accepted to Takwin’s 3D Generation program in 2022 and is now trying to raise $5 million to get it off the ground.

“We had few useful connections,” Geraisy told The Circuit. “3D Generation gave me the opportunity to meet people I would not have met anywhere else.”

Takwin, Arabic for genesis, was co-founded in 2015 by Imad Telhami, a veteran Arab executive at Israel’s Delta Galil Industries, a textile maker with factories in Egypt and Jordan. With backing from Erel Margalit, founder of Jerusalem Venture Partners and a former member of the Israeli Parliament, and Chemi Peres, chief of Pitango VC and the son of former Prime Minister Shimon Peres, Telhami grounded Takwin on the principles of ambition and growing a tough skin.

“You need to have the courage to dream big if you wish to build a company,” Telhami told The Circuit. “An entrepreneur cannot think like a victim.”

In Geraisy’s case, Takwin sent him to 3D Generation’s six-month academic program at Reichman University north of Tel Aviv in Herzliya, Israel, where he mixed with industry mentors and other participants, eventually brainstorming with them and co-founding Sorlis.

Dr. Nardeen Zoubi, an Arab woman who also participated in the Takwin program, is Chief Medical Officer. Rafi Rabinovitz, a mechanical engineer and startup veteran who was Geraisy’s mentor at Takwin, joined Sorlis as Chief Science Officer. He brought in Micha Nisani as Chief Technology Officer after the two were senior executives at Given Imaging, one of Israel’s best-known medical device startups. The company, which pioneered the field of capsule endoscopy with its swallowable pill-sized camera, is now a unit of Dublin, Ireland-based Medtronic.

Sorlis received $1 million in seed funding, split evenly from the Takwin 2 fund and a grant from the government’s Israel Innovation Authority. Geraisy said the company will seek to obtain FDA approval for the device and raise $5 million in a Series A financing round led by Takwin.
 
Headquartered in the northern port city of Haifa, Takwin has provided 13 early-stage startups with a combination of funding, office space, research assistance, and connections to professional networks, Itzik Frid, Takwin’s CEO and managing partner, told The Circuit.

“We started with a social mission but we always said it is a return-based fund,” Frid said. “We are looking to make tons of money for our entrepreneurs and investors because we believe only by making huge returns will we entice young folks in the Arab sector to go into high tech – the same way it happened in [Israel’s] Jewish sector.”

Among Takwin’s other portfolio companies, Imagry makes software to guide self-driving vehicles without maps, SeismicAI makes an early warning system for earthquakes and Myndlift allows therapists to give patients guided neurofeedback remotely.

Arab business leaders in Israel saw themselves as a natural link to the broader Middle East market after the 2020 Abraham Accords that sought to normalize relations with the UAE, Bahrain, Morocco and Sudan. Among the showcased speakers at Saudi Arabia’s Future Investment Initiative conference in 2022 was Samer Haj-Yehia, then Chairman of Israel’s Bank Leumi, the country’s largest lender, now Chairman of the Strategic Advisory Board at Israel’s Vintage Investment Partners.

The Takwin office is a favorite showpiece for diplomats seeking examples of brighter prospects amid the gloom of the Middle East conflict. U.S. Ambassador Jack Lew posted photos on X after his visit to Takwin in February, hailing the “amazing joint contributions of Arab and Jewish business partnerships in Israel.” 

Fadi Swidan, Takwin’s Vice President of Marketing and Business Development, said basing the firm in Haifa makes it more accessible to Israel’s Arab citizens who mostly live in the north, but makes it more remote from the center of VC gravity in Tel Aviv and Herzliya.

“That is why we needed a dedicated fund to give them a starting point, to give them access to smart money and good access to networks,” Swidan said.

Frid notes that venture capital has dried up over the past two years from Silicon Valley to Tel Aviv, making Takwin’s challenge even greater. Aiming to raise $80 million in 2022 for its Takwin 2 fund, the firm has had to lower its goal to $30 million since the Gaza war.

“If fundraising is an issue for all Israeli companies,” Frid said, “it is ten times worse for Arab-Israeli companies.”

UAE, Israel battle computer hackers together with ‘Crystal Ball’ platform

TEL AVIV, Israel – Fighting computer crime together has helped reinforce ties between the United Arab Emirates and Israel since they signed a normalization agreement almost three years ago, the UAE’s head of cybersecurity, Mohamed Al Kuwaiti said.

Visiting Tel Aviv last week for the annual Cyber Week conference, Al Kuwait introduced the “Crystal Ball” project, a digital platform for detecting and repelling computer attacks. Microsoft, Israel’s Rafael Advanced Defense Systems and Abu Dhabi-based CPX are providing the technological backbone, and an unspecified number of countries will also participate.

“Cyberthreats do not distinguish between nations, do not distinguish between entities or people,” Al Kuwaiti said on Tuesday at Tel Aviv University gathering. “That is why we need to unite against those threats, and the Crystal Ball, that we are aiming for the whole community, will be the first step toward that.”

Al Kuwaiti, who met with Israeli Prime Minister Benjamin Netanyahu on Monday as part of a group of national cyber directors attending the conference, said the platform will enable partner countries to “easily and seamlessly share information.” The collaborative international effort will be strengthened by the combination of abilities, processing power and volume of data, he said.

The mission is to “design, deploy and enable regional intelligence enhancement” through collaboration and knowledge-sharing to combat national-level cyberthreats, according to a slide Al Kuwaiti showed during his presentation. He said the value of cooperation between the two countries was demonstrated recently when they worked together to ward off a DDOS (distributed denial of service) attack on their networks.

The UAE and Israel normalized diplomatic relations as part of the September 2020 Abraham Accords, leading to the bolstering of both commercial and strategic ties between the countries. Al Kuwaiti said the connection with Israeli tech companies has been especially helpful in his country’s transition to a digital economy.

Amid the high-level meetings, two networking organizations for information security  professionals in the UAE and Israel signed a memorandum of understanding to promote collaboration. UAE-based EliteCISOs and Israel’s Cyber Together said in a statement that they would cooperate on knowledge-sharing, professional training and cybersecurity workshops to help confront emerging threats to both countries.

The meeting with Netanyahu was held at the headquarters of the Israel Security Agency, or Shin Bet, whose director, Ronen Bar, spoke at the Cyber Week conference about the agency’s increasing use of artificial intelligence.

“The ISA and AI have one thing in common,” Bar said. “We both make a living by looking for patterns and anomalies.” He said the agency has also developed its own Generative AI tool that can be used like OpenAI’s ChatGPT.

Another AI innovation being tested by the ISA is an airport security system that he said would “dramatically change” the screening process before flight check-in.

“Maybe one day we will abandon the traditional favorite question for all of you: Did you pack by yourself,” he said.

Bar said the ISA is setting up a technology incubator to help startups develop generative AI products to address security and intelligence needs. He said AI will help the agency in several areas: prioritizing information; boosting intelligence capabilities by identifying patterns and deviations from patterns; becoming a tool in the decision-making process; and helping to forecast trends and the likelihood of their realization.For the agency, he said, generative AI will be a “partner” at the decision-making table, but not a “decision-maker.”

Speaking at the conference on Monday, a former Pentagon official warned that both government and business aren’t paying enough attention to AI’s potential dangers.

“I think that Israel should be very concerned about what algorithms Iran may be trying to develop or acquire overseas,” said Ezra Cohen, the former acting under secretary of defense for intelligence and security who is now vice president for corporate strategy at Oracle Corp.

“Now I’m not saying that we should be treating AI today like a nuclear weapon or anything like that, but there should be certain procedures that are put in place and I think a lot of these companies are really very juicy targets for the adversary,” Cohen said.

NT-Tao seeks to generate nuclear fusion with compact reactors

HOD HASHARON, Israel — Creating a miniature version of the sun in a nondescript office building outside Tel Aviv might be the key to providing cheap, waste-free energy for the entire world.
 
NT-Tao, an Israeli startup led by a former submarine commander, is one of some 30 companies racing to generate energy through nuclear fusion. Its founders are trying to develop fusion reactors small enough to fit in a 40-foot shipping container, but powerful enough that each could provide electricity for 1,000 homes.

After raising $22 million in February from Japan’s Honda Motor Co. and other investors, NT-Tao is looking to grab a modest chunk of what some predict could become a $40 trillion fusion industry. Leaders in the field include Cambridge, Mass.-based Commonwealth Fusion Systems, which is backed by billionaire Bill Gates, and Seattle, -based Helion Energy, which counts Sam Altman, CEO of artificial intelligence pioneer OpenAI, as an investor.

“Fusion energy is really the only abundant source of energy that is clean, and you can get as much as you need,” said CEO Oded Gour-Lavie, who co-founded NT-Tao in 2016 after serving 30 years in the Israeli navy. “There’s nothing coming close to it.” 

One problem: the technology doesn’t quite exist yet. 

When hydrogen gets heated under pressure to around 100 million Celsius, about six times hotter than the sun – even for a fraction of a second – it becomes so hot that the electrons are sheared from the atoms and the nuclei collide with one another. When two nuclei meet and fuse together, an enormous amount of energy is released. Finding a way to capture the energy generated by that fusion could go a long way towards solving the current energy crisis.

At the NT-Tao lab in the Tel Aviv suburb of Hod Hasharon, the hydrogen is heated into plasma, the fourth state of matter after solid, liquid, and gas, which is generated when temperatures exceed 2,700 C. Because temperatures will eventually approach millions of degrees Celsius in the fusion reactor, the plasma must be suspended in space inside a doughnut-shaped experimental tube. Super-powerful copper magnets hold the plasma, which flows in a circle without touching the sides. Plasma makes up 99% of the sun and Gour-Lavie says the process is like creating a miniature sun.

Fusion will be one of the prominent topics at COP28, the United Nations Climate Change Conference, which starts Nov. 30 and will be hosted by the United Arab Emirates. The conference’s president-designate, Sultan Al Jaber, who is also CEO of the Abu Dhabi National Oil Company, spoke at a climate conference in the UAE last month about the “need to keep pushing for breakthroughs in battery storage, expand nuclear, and invest in new energies like fusion.”

The theories underpinning nuclear fusion have been around since the 1940s, but no one has been able to make it work on a significant scale. Last December, the National Ignition Facility in Livermore, Calif., achieved a breakthrough. The experiment set up 192 lasers that were trained on a tiny bit of frozen hydrogen the size of a peppercorn. The combined force of the laser beams created an output of energy that was slightly higher than the input, generating enough excess to boil about two liters of water.  

Stoked by the success, investment firms are pouring more money into the nascent fusion industry, which has already captured some $5 billion in VC funding. The U.S. government has invested about $700 million a year in fusion research since the 1950s. NT-Tao started an affiliation in May with Princeton University and the Princeton Plasma Physics Laboratory, a U.S. Department of Energy facility at the New Jersey campus. It also collaborates with scientists in Israel, the U.K. and Japan.

Nuclear energy used today is generated through fission, which captures the energy that is released when two atoms split. Fission is the technology that produced the atomic bomb that the U.S. dropped on Hiroshima on Aug. 6, 1945. As a nuclear energy source, the downsides of fission include the history of disasters such as the 1986 Chernobyl explosion, the challenge of radioactive waste disposal and the high cost of building a nuclear plant.

“Our vision is really to democratize clean energy worldwide,” said Gour-Lavie, who founded the company with chief scientist Doron Weinfeld and chief technology officer Boaz Weinfeld, who are brothers. NT-Tao’s compact reactors could be distributed in undeveloped areas where a regional power grid doesn’t reach, or to disaster zones where the grid has collapsed. 

Nuclear fusion requires hydrogen, which is accessible in seawater, and a small amount of lithium, which can be mined from deposits across the world.There are no waste products and little danger of explosion, because the moment the plasma stops being heated, the nuclear reaction stops.

NT-Tao is using a hybrid model between two existing technologies for nuclear fusion, the doughnut-shaped Tokamak, a Russian invention from 1958, and the Stellarator, which creates a twisting, circular path for plasma to circulate within a doughnut shape. The company’s name derives from the equation for creating the fusion reaction, where N means density, T means temperature, and Tao is the time that the atoms are confined.

While the company doesn’t expect to have a commercial product until the 2030s, Gour-Lavie, who commanded submarines in the navy, is confident it is on the right path. Shinji Aoyama, senior managing executive officer of Honda, said in February that the company has “high expectations” for NT-Tao. “Honda believes that fusion energy technology will be a breakthrough technology for affordable, stable, clean energy, and we envision this technology will become increasingly important as electrified vehicles become more popular,” he said.

Other experts are intrigued, but wary of attempting to commercialize technology that doesn’t exist yet. “Definitely, there’s potential, and this is why governments and humanity in general are interested in this kind of energy,” said Erez Gilad, a professor of reactor physics who chairs the department of nuclear engineering at Ben-Gurion University in Beersheva, Israel. “However, the way to produce energy from this kind of nuclear reaction, with fusion, is a very long way away,” he said. “We have several major problems to solve before we even start thinking about the application and the engineering challenges of harnessing this kind of energy to produce electricity to the grid and to charge our electrical vehicles.”

According to a survey from the Fusion Industry Association, the first fusion power plants are expected to come online between 2035 and 2050, and will require a $7 billion supply chain. Most attempts are much larger than NT-Tao’s shipping container approach. The ITER Tokamak, a $24 billion, 35-nation experiment in southern France, has been building a 23,000-ton machine since 2010, though it has been troubled by ballooning costs and delays. 

Energy is “at the heart of most of the things that you need to solve,” Gour-Lavie said. “If we make this happen, we can have abundant energy with almost zero waste and it will be relatively cheap. Really, this is about energy being democratized. Nobody sits on the mine of this material. This is in the oceans. Everyone can get this material.”

Endangered coral reefs connect countries in Mideast and Africa

Less than two years ago, Israeli and European researchers took a Nazi-built naval ship that had been used to place mines, outfitted it with modern scientific equipment and set sail from the Israeli city of Eilat to the Port of Sudan to study coral formations. The journey, which took place just months after Israel and Sudan normalized relations through the Abraham Accords, was among the first instances of formal scientific cooperation between the two countries.

But in the middle of the night, just a day into the voyage, a huge crash threw the researchers out of bed. The ship had run aground on a coral reef off the coast of Sinai, causing extensive damage and canceling the survey, which was sponsored by the Swiss-founded Transnational Red Sea Center.

“It was scary,” Maoz Fine, a professor of marine ecology at Hebrew University in Jerusalem and the Interuniversity Institute for Marine Science in Eilat, told The Circuit. “We were stuck on the reef for a few hours before we were rescued by the Egyptian navy. We lost a lot of equipment and personal stuff, but… the biggest loss was not to continue the cruise to Sudan.” 

Although Sudan signed onto the normalization agreements in January 2021, and there have been some high-profile visits between the two countries, relations are still strained. While some European researchers flew to Sudan for a coral survey a few months later, Fine has not returned.

Next month, the Transnational Red Sea Center, founded by the Swiss Federal Institute of Technology in Lausanne, plans to carry out the full coral survey that was planned for 2021. The European and Sudanese researchers will study why coral across the Red Sea has been much more resilient to rising ocean temperatures than other places around the world. Researchers believe that the Red Sea’s hardy corals might contain the secret to help struggling corals around the world, which have declined by 14% globally since 2009. 

Just below the surface of the Red Sea is a riot of psychedelic color, a Dr. Seuss-like jungle of more than 200 species of corals stretching down to the seafloor. Diving in the Red Sea is like entering a playground of underwater cliffs and caves and narrow canyons filled with corals that look like giant brains the size of a school bus, two-dimensional neon yellow oak trees, and bright orange tubes waving hello to the circulating schools of fish.

The water in the Red Sea is exceptionally clear compared to other marine environments, which allows sunlight to penetrate farther down than other areas, so the color is spectacular at every depth. And, most enticing for researchers, the Red Sea’s vibrant corals have been barely perturbed by the rising sea temperature that is bleaching other corals around the world, causing them to lose their color and sometimes die.

“We think the northern Red Sea has the best chance of survival, because the corals are farther away from the bleaching threshold than any other locality in the world,” said Fine, who has spent decades studying the corals in the Red Sea. Until recently, he’s only been able to collaborate directly with Jordanian and Egyptian scientists. There are eight countries that border the Red Sea: Israel, Jordan, Saudi Arabia, Yemen, Djibouti, Eritrea, Sudan and Egypt.

Cooperation across the entire Red Sea is essential for understanding why the coral are so resilient, Fine said. “If we don’t have a spread of monitoring and research along the Red Sea, we miss part of the picture,” he said. “There is a latitudinal gradient in temperatures, and of course there are local parameters like overfishing, so to have a full picture, we have to do it all along the gradient.” Since its founding in 2019, the Transnational Red Sea Center has run two research missions to Jordan and Djibouti.

Globally, corals cover less than 1% of the ocean floor, but they’re an important economic engine and environmental resource. Corals support approximately 25% of all marine life and generate billions of dollars and millions of jobs in fishing and tourism, as well as providing protection against storm surges. The value of goods and services provided by corals around the world is estimated at $2.7 trillion per year, including around $36 billion of coral reef tourism, like scuba diving, snorkeling and boat tours.

Although Australia is perhaps the best-known scuba destination, Egypt’s proximity to Europe makes it one of the most popular countries in the world for diving. Sharm el Sheikh alone has almost 300 dive clubs. Coral reef-related tourism contributes 3.5% to Egypt’s gross domestic product, according to the Global Coral Reef Monitoring Network’s 2020 report. Saudi Arabia’s Vision 2030 economic plan specifically calls for developing coastal tourism to diversify the kingdom’s economy. In Yemen, more than 220,000 people depend on fishing as their principal source of income, and commercial fishing accounts for 15% of the GDP.

“These reefs are the livelihoods of millions of people in the region, and we want to keep it intact and healthy, and the research is one of the parts of keeping [the coral] happy,” explained Fine.

Israel accounts for just 12 kilometers of the thousands of kilometers of coast along the Red Sea, but the corals are an important economic resource in Eilat, Israel’s southern resort city. There are more than 400,000 dives per year at 19 diving clubs, Yossi Chen, CEO of the Eilat Tourism Corporation, told The Circuit. “We really need to appreciate these corals, because the corals take care of us and take care of the sea,” said Chen. “It’s a real tourist attraction, and I hope people can understand what would happen if that went away.” Chen said that 80% of Eilat’s population works in tourism or tourism-connected jobs to support almost 3 million visitors per year from within Israel and abroad. 

The northern Red Sea is an essential place for studying coral resilience because local coral can survive at temperatures much higher than the average water temperature, thanks to what scientists believe was a harrowing journey for the corals to establish themselves. During the last Ice Age, 20,000 years ago, the Red Sea dropped by 120 meters and was cut off from the Gulf of Aden, leading to massive die-offs, Fine said. Coral only started returning to the Red Sea around 8,000 years ago, when the sea was once again connected to the Arabian Sea. Coral that today is in the northern Red Sea came from coral larvae that floated from the Arabian Sea and had to pass through the southern Red Sea. In the southern Red Sea, temperatures can reach 34 degree Celsius in the summer, around seven degrees warmer than the northern Red Sea. This means that only coral able to survive warmer temperatures made it to the northern Red Sea.

The research can help shed light on coral problems in the Persian Gulf, which is located at similar latitudes but experiencing much worse bleaching. Overall, the Gulf region has lost more than 40% of living coral between 1996 (when monitoring began) and 2019.

Globally, other scientists are using artificial intelligence and algorithms to track patterns of coral bleaching, trying to identify areas where bleaching is less prevalent and to see if those corals share characteristics with the northern Red Sea, to identify the most important areas for conservation.

“These [monitoring stations] provide the whole world all of the required data related to the health of the corals, so decision-makers can know exactly how the corals are doing,” said Ali Al Sawalmih, director of the Marine Science Station in Aqaba, Jordan, who is also part of the Transnational Red Sea Center. Al Sawalmih has been cooperating with Israeli and Egyptian scientists for years, but said the Transnational Center is allowing researchers to study the Red Sea as a holistic ecosystem for the first time.

Sudanese researchers joined the Transnational Center mission in Jordan last August that was set up to deploy a coral monitoring system on eight different coral colonies off Aqaba’s coast. Al Sawalmih said one of the most interesting aspects of the collaboration is that scientists from each country can study species of corals they don’t have locally.

Both Al Sawalmih and Fine agreed the Transnational Center is only possible because of an outside, neutral leader, at least in the beginning. “You need someone to trigger the beginning, and the Transnational Red Sea Center played a role in waking us up,” said Al Sawalmih. “It’s essential to have a neutral body that can communicate between countries without diplomatic relations and is a friend of all.”

Fine said the presence of a neutral leader also helps maintain public support for the research, without making it political. “Collaboration is not always seen as a good thing by the public or by some parties,” he said. 

But Al Sawalmih, who grew up in Aqaba and has a deep, personal connection to the Red Sea, believes that scientific cooperation is an effective building block to pave the way for better diplomatic relations.

“If we apply for projects together, diplomatic people are aware of that, and that starts new collaborations on higher levels. Science is very good for this,” he said. “Water molecules don’t recognize borders…cooperation is not a choice, it’s a must.”

General Atlantic doles out $1 billion to maturing Israeli startups

When Max August was a Harvard undergraduate, he scraped data from about 8,000 startups and 11,000 of their founders to complete a senior thesis on Israel’s fast-maturing tech scene that was supervised by former U.S. Treasury Secretary Lawrence Summers.

Three years later, many of those same Israeli entrepreneurs are vying for the attention of the young investor, who has helped distribute close to $1 billion on behalf of General Atlantic, one of the world’s biggest private equity funds. Most prominent of nine companies in the firm’s Israel portfolio is Mobileye Global, the Intel-controlled maker of self-driving technology that held an IPO in October and is currently valued at about $25 billion.

After starting as an intern at the Park Avenue firm, August was sent to Tel Aviv as an associate last year to scout investment opportunities, opening an office in the 61-story Azrieli Sarona Tower where he can gaze over the Mediterranean coast. Alongside Alex Crisses, a managing director from New York who shuttles to Israel to close deals, General Atlantic last month recruited Yoram Teitz, who was managing partner in Israel at accounting powerhouse Ernst & Young, as a senior adviser. The team is overseen by Anton Levy, the firm’s co-president and chairman of its global technology group.

“Israel is moving from a venture-capital-only market to a later-stage market, where you’ll find bigger companies [and] entrepreneurs who have bigger visions,” Crisses told The Circuit in an interview. “As a global investor, we wanted to pick the locations that over the next five years will have the most innovative technology. And we really do believe that Israel will be that.”

With $73 billion in assets under management and 16 global offices from London to Shanghai, General Atlantic came late to the game in Israel, a tiny Middle Eastern country that has spawned the greatest number of  technology startups per capita in the world. Termed a growth equity firm, General Atlantic held back until it saw a growing pattern of Israeli companies raising $100 million and more in a funding round, an indicator of business strength. Similar criteria have drawn other global investment leaders including Blackstone, SoftBank and Koch Disruptive Technologies.

According to the Tel Aviv-based IVC Research Center, the number of Israeli companies valued at over $1 billion – dubbed “unicorns” in Silicon Valley – rose from two in 2018 to 42 in 2021.

And if Israel was once known primarily for being a powerhouse in cybersecurity and software, Crisses said General Atlantic is looking at the next generation of entrepreneurs in fields ranging from financial services and healthcare to climate technologies.

In 2020, the firm led a $210 million fundraising round for AppsFlyer, which uses data analytics to help marketing firms grow. It led two $150 million rounds for HiBob, which assists midsized companies in managing human resources. In 2021, it co-led a $543 million funding round for Transmit Security, which authenticates users without employing passwords.

Mobileye, which Intel bought for $15.3 billion in 2017, is a model for what brought General Atlantic to Israel. It’s “really defining the next chapter of the maturation of Israeli technology,” August said. The firm agreed to buy $100 million of Mobileye shares as part of the IPO. 

General Atlantic also sees opportunity in Israel’s growing connections with Arab countries, paved by the 2020 Abraham Accords that were signed with the United Arab Emirates, Bahrain, Sudan and Morocco. “Israel has amazing technology to export,” making it “a real beacon in the area,” Crisses said in the joint interview with August on Zoom.

The arrival of General Atlantic and other world-leading firms reflects the “evolution of ecosystem” in Israel’s investment market and gives it credibility as a country with a greater number of large tech firms, said Avi Hasson, CEO of Start-Up Nation Central, a nonprofit group that promotes the country’s innovation industry.

“Ten years ago, that list would have been very, very short… whereas now there are dozens of such companies in multiple sectors,” Hasson, who was previously Israel’s chief scientist, told The Circuit. Funds such as General Atlantic bring with them financial knowledge, operational expertise, best practices and international networks, all of which are “critical to the growth” of Israeli companies, he said.

August, 25, who grew up in New York City and attended Horace Mann, an elite, college-prep school in the Bronx, developed a connection to Israel at Harvard, where he studied economics. While there, he co-founded the “Israel Summit at Harvard,” an annual campus event that connects students from more than 100 universities with the Jewish state. Summers, who was previously Harvard’s president, and economics professor Paul Gompers served as advisers on August’s thesis: “The Impact of Experience on Israeli Entrepreneurial Success.”

General Atlantic is looking for further investments in Israel and will put money into companies that demonstrate a market growth opportunity and “real product-market fit,” August said. Financial technology, life sciences, biotechnology and climate technologies are the firm’s target areas for Israel.

General Atlantic closed on its BeyondNetZero fund last month, allocating $3.5 billion to support entrepreneurs who deliver innovative environmental solutions while creating durable growth businesses. “We’re deeply focused on climate in Israel,” August said. “We define climate fairly broadly, and so if you think about food tech, ag tech,” and reusable materials, there are “a lot of companies that are already reaching a growth stage” and become ripe for investment.

General Atlantic does not divide its global investment budget by region. Funding for individual companies ranges from $25 million to $1 billion. A single investment committee decides which companies will receive the money, Crisses said. “We have a lot of confidence that… a number of those will come from Israel.”

Politics in Israel and criticism of its new government under Prime Minister Benjamin Netanyahu are unlikely to affect General Atlantic’s investment plans, Crisses said. He also takes in stride the economic shakeout that has cut venture capital funding in Israel almost in half from 2021. Crisses pointed to the General Atlantic’s steadfastness through political and economic turbulence in India, China and Latin America.

When the firm enters a region, it does so with “a lot of thought, a lot of preparation and with the desire to stay long-term and be part of the fabric of the community,” Crisses said. “That’s what we do in all the geographies we enter, and we’re really passionate, personally and institutionally, about making that in Israel.”

Robotic hives keep bees working hard for the honey

BEIT HAEMEK, Israel – Beekeepers around the world are engaged in a desperate battle for survival. Devastated by rising temperatures, pesticides and mite infestations, honeybee colonies are collapsing in record numbers. More than 35% of the world’s bees die each year due to “colony collapse disorder,” in which entire hives perish at once.

An Israeli startup aims to help commercial beekeepers deal with the phenomenon through the use of robotic hives that employ artificial intelligence to maintain optimal conditions, in hopes of helping bees survive the modern world.

“If every hive would have its own beekeeper 24/7, you wouldn’t see colony collapse at all,” Saar Safra, the CEO and co-founder of Beewise, told The Circuit. “This is what the robot does.”

The beehive disorder derives from several interconnected issues: global warming, lack of biodiversity, pesticides, pests and diseases that developed in the past 50 years against which  bees have no natural defenses. Beewise has developed a self-contained colony of hives, powered by solar panels and connected with Bluetooth, that enables a small robotic arm, equipped with cameras and precision sensors, to monitor a group of hives for common problems. The “BeeHome” can also harvest the honey automatically and collect it in a dedicated container.

“Imagine a bee leaves the hive and goes foraging. Then she’s poisoned by pesticides. Then it gets really warm, so she’s boiling. And then she gets back home, and there’s not enough food because there’s a lack of biodiversity. She doesn’t have a chance.” Safra said.

Since its founding in 2018, Beewise has raised about $120 million from venture capital firms including New York-based Insight Partners, Corner Ventures, based in Palo Alto, Calif.,  and Tel Aviv’s Fortissimo Capital and Lool Ventures. One of the investors is Sanad AD, a VC based in Abu Dhabi, capital of the United Arab Emirates, where the climate is especially challenging. Sanad AD, which launched in 2015, has investments in health care, real estate, automobiles, emerging technologies and security.

Bees can’t survive in the UAE during the summer. Many Gulf states practice seasonal beekeeping, purchasing bees in the fall for their winter crops and then letting them die in the summer. In the BeeHome, the bees can “oversummer” inside the hive, receiving sugar water rather than going out and foraging, with the thermostat keeping the hive at a survivable temperature, so they can reemerge once the weather cools. Bees in colder climates in Europe and North America are used to “overwintering,” when they stay inside their hives and maintain the temperature at 35 C (95 F) by beating their wings.

In a lychee grove outside Kibbutz Beit HaEmek in northern Israel, the bees don’t look like they’re using cutting-edge technology. They’re buzzing away, setting off from the Beehome to forage or returning to the structure with bright yellow pollen on their hind legs. The entrances are close together, but bees can identify their hive based on the pheromones of their queen and their color-coded entrance in purple, orange and green (Bees can’t identify other colors, like red).

It’s inside the hive where the tech comes into play. Honeycomb frames are arranged like a library, with each frame sitting on the shelf like a book. A robotic arm slowly plucks a selected frame from the shelf to examine it. The robot moves slowly, so as not to disturb the bees, taking three minutes to remove the frame. Then the robot uses something like a hair dryer to gently blow the bees off the frame it wants to inspect. It checks the frame for a number of data points, like the amount of honey, the presence of mites or the number of cells with worker bee larva.

The BeeHome uses AI and algorithms to determine if a hive is getting ready to swarm, or naturally divide, and take steps to avoid that process. If the frame has honey ready to harvest, the robot inserts it into a small centrifuge, and spins it until the honey separates from the comb and collects in a small container.

The algorithms seem to be working. Beewise has an 8% colony collapse rate compared to the 35% global rate, said Safra.

“Bees are starving and malnourished in most places,” professor Sharoni Shafir, the director of the B. Triwaks Bee Research Center of the Hebrew University of Jerusalem, told The Circuit. “The world’s population is increasing at an alarming rate, there are so many people and we need to feed them.”

Israel leads the field in bee technology, with at least half a dozen companies integrating tech into beekeeping. According to CrunchBase, Beewise is the best-funded initiative by far, with $120 million in funding, followed by Israel’s BeeHero with $20 million. The next largest company is Beeflow, in Argentina, which develops customized feed for bees to enhance the bee’s immune system. Other bee tech companies include Bulgaria’s Pollenity, which includes tech advances such as a robotic dancing bee to help bees locate the best flowers for pollination (Bees communicate food locations through their “waggle dance”).  

Because Israel is a small country, almost everyone involved in bee tech passed through the Hebrew University’s Faculty of Agriculture, and most sat in one of Shafir’s classes. They’re in regular contact, sharing information and research. “The idea that knowledge is power, that’s something we can learn from the bees,” he said. “Bees are so successful as a social species because their communication is so successful.”

In the past 18 months, Beewise has grown from 20 employees to 150. More than 100 are located in Israel, and the rest are in the headquarters in Oakland, Calif. Israel is the R&D heart of the operation, with a cheery open-space office accented in yellow and black on the kibbutz. Safra said the company made a conscious effort to recruit software and hardware developers from Israel’s Arab minority, by advertising with billboards in surrounding Arab villages. Today, about 25% of Beewise workers are Arab.

Currently, Beewise is concentrating on research and development and slowly rolling out more BeeHomes in the U.S., one of the largest agriculture markets. Safra said the company also plans to work close to home in the Middle East, but the market is much smaller. Today, Israel has about 100,000 hives across the entire country, and other countries in the region have even fewer. In comparison, a large commercial beekeeper in the U.S. has about 50,000 hives.

What keeps Safra up at night is that bee colony collapse is growing at a faster rate than any single company can address.

“Our formal goal is to save the bees, that’s why we exist,” he said. “But you need to get to a certain scale when you can really make a dent on the global population. That scale requires tens of thousands of these devices in the field, and we only have a little over a thousand. So we still have some way to go until we can really make a real impact on the planet.”

Koch’s Israeli investment chief aims to disrupt venture capital funding

Eli Groner meets with hundreds of startups each year as the managing director in Israel for Koch Disruptive Technologies, which since 2018 has doled out almost $1 billion to emerging Israeli companies. For the fraction of those deemed disruptive enough to get funding, KDT, the venture arm of gigantic U.S. conglomerate Koch Industries, sees itself as a devoted ally that doesn’t expect quick returns.

“We are patient capital,” Groner told The Circuit during an interview at the firm’s 35th -floor Tel Aviv office overlooking the Mediterranean. “We invest with the expectation that we are going to partner with them forever or for at least for 10 years. Now, that is not always the case, but that is certainly the way we look at it when we make an investment. So, we want to work with people that are high integrity, resilient, committed and playing the long game.”

Dressed in a light-blue button-down shirt and tailored tan trousers, the American-born Groner has business experience and an insider government background that impressed KDT when the firm opened its Israel office three years ago, the only one outside the United States. Now 52, he spent three years as a top aide to then-Prime Minister Benjamin Netanyahu, serving as director-general of the Prime Minister’s Office. Any political savvy he gained in government has been useful in representing Koch Industries, whose owners are among the biggest contributors to right-wing causes in the U.S.

KDT, founded in 2017, focuses on “early and growth stage” technology companies around the world, with an aim also at finding synergies to boost parent company Koch Industries. The Wichita, Kan.-based conglomerate had revenue last year of more than $125 billion and 120,000 workers worldwide. It owns a diverse group of companies involved in activities that include manufacturing, agriculture, paper, building materials, oil refining, renewable energy and medical products. 

KDT’s first foray in Israeli startups, and first investment ever, preceded Groner’s joining the firm –  $100 million in backing for Insightec, a maker of magnetic resonance-guided ultrasound technology. The company’s products help alleviate ailments like Essential Tremor, which causes involuntary trembling of the head, hand and voice, and Parkinson’s disease, which causes uncontrolled movements throughout the body. KDT followed up with an additional $100 million to the company in March 2020.

When it first funded Insightec, KDT didn’t have an office in Israel. On a visit to meet industry players, company executives had an encounter with Groner, fresh out of the Prime Minister’s Office, who offered a geopolitical overview of Israel and the region. “We really connected on vision and values,” Groner said. “Six months later I got a formal offer to join KDT and open up the Israel office.”

Groner has since led KDT’s investments in 13 Israeli startups that operate in fields ranging from health care, semiconductors and cybersecurity to manufacturing and agriculture. 

As a rule, Koch-funded companies must be “disruptive” — having the potential to promote “creative destruction — the continuous process of iterating, improving and destroying current business models and platforms, even our own,” the firm says on its website. Ideally, they can also transform Koch Industries, to help the mother ship keep up with industry developments and best prepare itself for the future. As far as the chosen entrepreneurs, they must be dedicated and flexible, Groner said.

“You can have the best vision, the best strategy, the best technology, [and] you’re going to be beaten down time and again, because things aren’t always going to go your way,” he said. “A founder who is resilient, who can roll with the figurative punches, and figure out how to execute, no matter which curveballs are thrown his or her way, those folks are gold.”

Groner’s efforts come during a period when Israel is forging new partnerships with the United Arab Emirates, Bahrain, Morocco and other Arab countries, under the banner of the Abraham Accords signed two years ago. 

It is a “very exciting time for the region,” he said. “It is an opportunity for everyone, whether you are an entrepreneur, whether you are an investor. But at the end of the day, it is going to be the same values and principles that apply. Are you aligned in values? Are you aligned on vision?”

Because of Koch’s wide variety of enterprises, the conglomerate can help startups test and sell their technologies within its holding companies and its network of partners, thus getting their product to market faster and providing “meaningful support for entrepreneurs,” Groner said. 

In the health care sector, besides Insightec, KDT has invested in Immunai, which seeks to map the immune system to create new therapies and drugs, and NeuraLight, which is building a platform driven by artificial intelligence to improve drug development for patients with neurological disorders.

In the semiconductor field, KDT led two investment rounds for a total of $217 million in Vayyar, a developer of radar imaging technology for sensors used in a variety of industries. KDT has also invested in cybersecurity startups Cyrebro, where it led a $40 million funding round, and OneLayer, in which it made an equity investment of $6.5 million; KDT led a $45 million investment round in the drone startup Percepto, and invested in the agtech firm Greeneye Technology, which uses AI and deep learning technologies for the selective spraying of pesticides. KDT’s first exit was the sale of Israeli software firm DeepCube to Nasdaq-traded Nano Dimension Ltd for $70 million, according to Crunchbase data.

According to data compiled by the IVC Research Center, which tracks the Israeli tech industry, capital raised in Israel with Koch participation totaled $1.33 billion in 2021 as opposed to $150 million in 2017. In the first nine months of 2022, capital raised by Israeli startups with Koch participation totaled $304 million.

Corporate venture capital involvement, such as Koch’s, in Israeli tech companies has surged over the past few years, with such deals accounting for almost 50% of the total in 2021, a bonanza year for fundraising by startups. Investment has slowed in 2022,

“The rise in activity by Koch reflects a rise in the involvement of corporate venture capital funds in the Israeli tech ecosystem, and the need of local tech firms for the significant amounts of money they can provide,” said Marianna Shapira, a senior analyst at IVC.

Koch Industries has been the subject of controversy for years – with critics pointing to the extraordinary wealth of members of the Koch family, their large contributions to conservative political causes, and their vast political influence on a variety of issues in the U.S., including skepticism about climate change. OpenSecrets, an organization that tracks campaign spending, reported that Koch Industries has injected over $1 million in backing, directly and indirectly, dozens of House and Senate candidates who voted against certifying Joe Biden’s presidential victory after protesters rioted in the U.S. Capitol.

Asked whether controversy surrounding the Koch family affects his work, Groner said he is sure there are many company founders that his office funds who do not agree with him or with Koch politically. “The best way to change people’s perceptions is to work closely with them and partner with them and focus on areas where we are aligned.”

Declining to address the issue directly, a company spokesperson pointed to an article written two years ago by Charles Koch. In it, the billionaire co-owner, chairman and CEO of Koch Industries congratulated President Joe Biden and Vice President Kamala Harris on their victory and called for all parties to work together to solve the crises that are holding back the nation.

On the issue of climate change, the Koch website says “manufacturing and a healthy environment aren’t mutually exclusive” and shows data about how the firm is cutting emissions, producing less waste and investing in energy efficiency projects.  

As chief of Netanyahu’s office from June 2015 to May 2018, Groner was responsible for domestic and international policy decisions, from developing Israel’s offshore natural gas fields and deregulating the economy to setting up the nation’s cyber bureau and its digital health policy. At the same time, he juggled foreign policy issues and was tasked to deal with Israeli political parties. 

Before joining Netanyahu, Groner was Israel’s economic attaché to Washington. Previously he was a senior advisor to the chairman of Tnuva, one of Israel’s largest food makers. He also worked for six years as a consultant at McKinsey & Company and five years at The Jerusalem Post as a sports and economic reporter.

As a child he lived in the central New York city of Binghamton, where his father was the rabbi of an Orthodox Jewish congregation. After moving to Israel, Groner performed his military service as a paratrooper. He went to college at Israel’s Bar-Ilan University and earned an MBA at New York University.

The business world is different from politics and government, Groner said, but he feels very much at home in both worlds. “It is two different muscles, two different skill sets. And it is very, very hard to succeed in both because it requires different skills. I personally, am very intrigued by both worlds. I enjoy both worlds and recognize that each one has different benefits and drawbacks.”

He must also now operate in an environment that has turned sour for tech, with shares and valuations plunging globally in the wake of Russia’s invasion of Ukraine, rising inflation and lingering effects of the COVID-19 pandemic. 

The lower valuations, Groner said, are healthy for the economy, as they can create  investment opportunities while clearing the field of poorly performing companies.

“You are going to see valuations go back to normal, sanity returning to the markets,” he said. “Any great crisis is a horrible thing to waste. This is going to create incredible opportunities for people that are patient and take a long-term view. ”Koch is committed to Israel, he said, because the company has identified that there is within the tiny nation a “very distinctive concentration of disruptive technology.”

Groner said Israel’s value comes from a unique concentration of entrepreneurs, academic institutions, the military, venture capitalists and growth equity investors spread over a small geographical area.

“There’s no place else like it in the world, really,” he said. “That is my focus here.” 

Eager Israeli food startups shrug off Beyond Meat’s market woes

When Beyond Meat Inc. went public in May 2019, investor excitement over the sizzle of its plant-based burgers sent the stock soaring, giving the California-based company a market value of almost $14 billion. Three years later, the shares have fallen more than 90%, fueling concern about whether consumer demand for meat alternatives will live up to the expectations they’ve generated.

In Israel, home to a thriving vegan culinary culture and more than 400 food-tech startups, the prevailing outlook is optimistic. While several Israeli companies are producing plant-based versions of beef, chicken and fish – as well as eggs and dairy products – another frontier of so-called cultivated meat, which is made from animal cells grown in a lab, is gaining traction.

“Plant-based meat as it is today won’t get people to stop eating meat,” Guy Nevo Michrowski, CEO of Israel’s ProFuse Technology, told The Circuit. “The only thing that will get them to switch is something that really tastes like meat and that is what is already happening.”

ProFuse raised $2.5 million last month in a funding round led by New York’s Green Circle. Investors included Tnuva, one of Israel’s top two food producers; beverage-maker Tempo; OurCrowd, a Jerusalem-based platform for crowdfunded venture capital investment; and Newport Beach, Calif.-based Finistere Ventures.

Until now, high cost and lengthy production time have been the main problems in making cultivated meat marketable. If these can be solved, cultivated meat can take off exponentially as demand continues to grow, Michrowski said, citing projections that meat consumption will double by 2050 as the world’s population reaches 10 billion. Despite the initial hype, he said, companies like Beyond Meat and Redwood City-based Impossible Foods have not produced a satisfactory substitute for steak-lovers. Michrowski himself is a vegan for ideological reasons, but says he has no problem eating cultivated meat.

ProFuse’s technology, which nurtures the cells in a nourishing liquid, was developed over six years of research at Israel’s Weizmann Institute of Science. The process can potentially enable the large-scale manufacture of meat in bioreactors at a cost similar to producing farm-grown beef, chicken and pork, Stu Strumwasser, managing director of Green Circle, said last month after the new investment was announced. ProFuse’s method “may substantially accelerate that process and thus fundamentally change the calculus for the commercialization of lab-grown meat,” he said.

Another Israeli company working on cultivated meat is Aleph Farms, which gained fame for producing the world’s first lab-grown steak. With actor Leonardo Dicaprio among its investors, Aleph Farms raised $105 million last year to bring its steaks to market by 2023. The funding round was led by DisruptAD, the venture capital platform of the Abu Dhabi sovereign wealth fund ADQ,  and the Growth Fund of Greenwich, Conn.-based L Catterton, the largest global consumer-focused private equity firm. The company’s process of cultivating cells extracted from cattle was developed at Israel’s Technion Institute of Technology and supported by Strauss Group, Israel’s other top food manufacturer.

The United Arab Emirates and Bahrain, which import the vast majority of their food, have been developing partnerships with Israeli food-tech companies since the 2020 Abraham Accords, which normalized relations between Israel and the two Gulf states. Aleph Farms and DisruptAD have discussed building a manufacturing facility in Abu Dhabi to produce cultivated meat products and sell them across the Gulf.

The alternative protein market as a whole drew $1.75 billion in investment in the first half of 2022, according to the Good Food Institute Israel. Of that, $320 million was invested in Israeli companies, second only to the U.S. Consumer demand for plant-based alternatives (PBA) to meat, however, have stalled in the U.S., according to a report by Deloitte published in September.

“The addressable market may be more limited than many thought,” the report said. Dramatically improved taste in recent years unlocked new interest in PBA meat. But the portion of the U.S. population open to trying (and repeat buying) it may already have reached a saturation point.” Among the reasons cited for the halt in market growth were the higher price compared to meat and “cultural resistance to a product some view as ‘woke,’ the report said.

Until its shares started their steady slide in July 2021, Beyond Meat looked like a sure winner. The stock, which reached a peak of $234.90 in 2019, and was trading as high as $178 in 2021, has fell last week to a low of $12.76.

Introduced in 2012, it offered an enticing combination – a completely plant-based product that looked like meat, could be cooked like meat, and tasted more like meat than any previous product. The company took off first with strips of fake chicken, then created products emulating beef and pork. There were rollouts in Whole Foods, and a major partnership with  McDonalds dubbed the McPlant burger, which was discontinued this year in the U.S. 

But since the 2019 IPO, Beyond Meat has failed to meet sales targets. Part of the problem was the impact of COVID-19 restrictions on restaurants, many of which closed for months during the pandemic, and the company’s shift in focus to supermarkets. One bizarre incident that may indicate the level of tension at Beyond Meat was the arrest of Chief Operating Officer Douglas Ramsey in September after he got into a fight in an Arkansas parking garage with another driver and bit the man’s nose. Ramsey was suspended by the company.

Among other Israeli companies that have drawn large international investment is Redefine Meat, which uses a proprietary 3-D printing process to turn plant-based proteins into steaks. The Rehovot, Israel-based company, whose logo is an upside-down cow, raised $135 million in January in a funding round led by Tel Aviv-based Hanaco Ventures and London’s Synthesis Capital.

SavorEat, an Israeli company that trades on the Tel Aviv Stock Exchange features a robot chef making plant-based dishes to order, is rolling out its technology on U.S. college campuses. The machine it sells allows food operators to “customize the meal based on level of doneness as well as fat and protein level,” Barak Orenstein, vice president of marketing,  told The Circuit . “This has not been done before.”

Despite Beyond Meat’s market plunge, Israeli companies see a bright future for meat substitutes and expect even more companies to join the race for the perfect alternative steak.

“If the megatrends of health and wellness and sustainability persist, the foundations of the industry will remain strong,” Orenstein said.