The Pandemic Is Accelerating Israeli Innovation in These Four Domains — Here’s Why
By Gil Ben-Artzy, Founding Partner, UpWest
Numerous domains have been forever changed by the Coronavirus pandemic, with some experiencing a phase of rapid acceleration as we all adjust to new realities of how work gets done. Many technologies were already trending toward a more remote/digital/distributed model, but the pandemic has catalyzed adoption rates and created a more immediate opportunity for entrepreneurs working in these spaces.
Though there is certainly room for growth and evolution in various sectors, four domains in particular — cybersecurity, digital health, cloud adoption, and future of work — are now front and center. Moreover, we believe that Israeli founders are uniquely positioned to play a meaningful part in these domains. We’re already seeing a number of promising companies in these industries coming out of Israel, many of which have already achieved significant market traction. Here are four domains where Israeli founders are already leading the way and will continue to drive growth in the wake of COVID-19:
Cybersecurity
One of the most immediate threats of the world working remotely is cybersecurity, given that employees are now using their personal devices and are physically removed from the “controlled” environment of the office. With so many employees using unsecured connections to access corporate data and confidential information, a company’s attackable surface is significantly larger, and therefore more vulnerable.
Companies like CyCognito* are tackling this and winning Global 1000 enterprise customers at a pretty remarkable rate. By mapping the ever-expanding attack surfaces for enterprises, CyCognito has developed a critical solution to a problem that will continue to grow as remote work becomes further entrenched as the norm. SentinelOne*, focused on endpoint security automation, has more than doubled its valuation over the last year to become a unicorn — a pace that testifies to the rapid growth of the cybersecurity industry as a whole. Israel has long been a hotbed for cybersecurity talent and innovation due to the experience many founders get in their military training there. Israeli-founded Armis was among the first IoT security-focused companies and was just acquired by Insight Partners in the largest-ever enterprise IoT security software deal. With new security challenges presenting themselves as the working world becomes increasingly digitized, expect to see the next generation of cybersecurity startups to also come out of Israel. Cato Networks and Aqua Security are just a couple examples of cloud security companies with a lot of early promise.
Digital Health
Israeli founders are also leading some of the most interesting companies emerging in the digital health space — for many of the same reasons as in cybersecurity. Digital health technologies such as remote patient monitoring, telehealth, consumerization of healthcare data, etc., require the utmost security and infrastructure expertise in order to function properly. These deep, complex technologies are right in the sweet spot for Israeli entrepreneurs. Plus, in Israel, many aspects of healthcare are already digitized thanks to a culture within the industry that encourages innovation and streamlining processes, especially compared to that of many other countries.
K Health, which uses AI to give personalized care to patients and connect them to doctors, is a good example of the impact Israeli founders have had on digital health. The company has raised nearly $100 million since 2016 and has a network of doctors that can cover more than 300 million people. Healthy.io, which offers the only FDA-approved home urine test equivalent to lab-based devices, has also grown rapidly over the past few years and just acquired one of its biggest competitors. Lynx* is another Israeli-founded digital health startup that allows hospitals to securely share their data with researchers and scientists working on new therapeutics and diagnostic solutions, all while retaining control of the data so as not to risk patient privacy.
Cloud Adoption
Migration to cloud-based technologies isn’t a new trend — far from it. But the pandemic has rapidly spurred adoption rates. As many companies prepare to have their employees work remotely through as far as the end of 2021, they’re investing in technologies to facilitate that new normal. In order to operate remotely, companies have to go to the cloud. Even those that were previously on the fence, or hadn’t made cloud a priority, are now fully onboard. A recent poll of global CIOs revealed that cloud technologies are among the largest areas of investment right now, as they prepare for remote workforces. Thirty-two percent of IT budgets will be dedicated to the cloud by next year.
Israeli companies by their very nature work remotely because they almost always have teams split between the US (sales, marketing) and Tel Aviv (R&D). Since they are already used to working this way, they know what it takes to thrive with a distributed workforce and have built some of the fastest-growing cloud technologies to do so. NetApp recently acquired Spot.io, which built a very successful cloud optimization platform that monitors the availability and pricing of computation power offered by cloud services. Codefresh*, which helps companies deploy software faster and reduce infrastructure costs, is also growing quickly and just closed its Series B. Perhaps most noteworthy is the fact that the three top cloud companies in the world — Amazon/AWS, Microsoft, and Google — all have major R&D centers in Israel, which signals that the global industry leaders are heavily investing in top Israeli talent.
Future of Work
As previously mentioned, the ways in which work is done will continue to evolve rapidly over the coming year plus. Monday.com is an Israeli-founded giant in this domain that quadrupled its valuation in the last year. Its project-tracking and task management tools are incredibly popular among enterprises and mid-size companies because of how seamlessly they allow remote teams to work together. Other technologies that deliver that same value proposition will only continue to grow. Even companies like Papaya Global and Stampli*, which focus on specific use cases (payroll and accounts payable, respectively), are seeing unprecedented growth in the last year because they simplify arguably mundane, analog processes that businesses depend on to function but have been slow to innovate.
Israeli founders thrive at applying deep tech and AI to “unsexy” industries in order to make things run more smoothly, and we should expect to see that trend continue as more opportunities emerge post-pandemic. Since Israelis have had to work as part of distributed teams for decades, they’ve had to find and/or create tools that allow them to function that way. That experience positions them well to lead the next generation of companies solving “future of work” problems.
* An UpWest portfolio company
