The Empires of the Future are the Empires of the Mind

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The Empires of the Future are the Empires of the Mind

Winston Churchill

Opening Post

Dear Friends,

I am not sure why now, but better late then never. I decided to start posting some of my thoughts in this blog. And it will be mainly about the Israel high tech scene and our region, but not only. I hope to focus on things I care about, which I hope you will find an interest in.

My business life and areas of interest can be drawn, in a way, by 3 concentric circles:

The first one is about making Israel “an empire of the mind”. It relates to my work at Pitango Venture Capital , which is the largest venture capital group in Israel. Today, with 20 years of venture investments, with an exciting portfolio of more than 180 Israeli high-tech high-growth companies, and after raising 6 funds with a total of $1.6 Billion, I came to the following notion: I believe Israel should continue to be a state of science and technology, focus on innovation and further grow our economic export, where technology is in the heart of our economy. Remember what Churchill once stated: The Empires of the Future are the Empires of the Mind. We need to make sure Israel is, and will always be – an empire of tomorrow – an empire of the mind. Today we invest out of Pitango Fund VI. As we build our portfolio, we share the feeling that we are on the verge tremendous growth in the high tech sector in Israel – great ideas, outstanding entrepreneurs, and bigger-than ever market opportunities. We are moving from an EXIT driven market (and culture), to building companies that will becomeglobal category leaders.

The second circle is about investing in the non-participating communities in Israel Specifically I am referring to the Israeli Arab minorities. 1.6 million people, highly skilled and highly educated who are not an integrated part of the “Start-up Nation”. They represent more than 20% of our society with less than 8% National GDP (Gross Domestic Product). It is a No EXIT. No IPOs (Initial Public Offerings) and no M&A activities (Mergers & Acquisitions). No funds available for this community. We at Pitango formed a Private-Public partnership, with the Israeli Government (This is a model where the Government and the private sectors work together. A model I believe in, and think much more needs to be done this way). We raised $50 Million in our first Al-Bawader Fund, and this is the first VC (Venture Capital) and PE (Private Equity) Fund investing in the minorities. We set up an office in Nazareth, and have invested so far in 7 portfolio companies. The quality of the founders and the business opportunities falls no short of many of the 5000 start ups in Israel. We are looking forward to seeing our first EXIT which will drive more entrepreneurs in the Israeli Arab scene. Important to say – while we thought we are going to make investments in manufacturing and services, we found ourselves investing a lot in Internet and Enterprise Software. Al-Bawader, just like its elder sister, Pitango, is investing in our traditional strategy – be diversified by technology sectors, and be diversified by portfolio stages. From seed stage – to succeed…

The third concentric circle of interest relates to the Middle East region. We found a great acronym: TIME (Turkey, Israel, Middle East). Turkey is an impressive economic power, that just recently hit the $1 Trillion GDP level. I strongly support the Israeli PM’s decision to renew our relationships with Turkey after 3 years of wasted time. As our President said in an interview today – “I can see one million reasons why Turkey and Israel should be friends, and not even a single reason for not being friends”. So Turkey is a real power in our region and a model for many countries in this part of the world. Israel is an Empire (of the Mind…). But in between we have a region we need to start. From the start up nation to Turkey we need to have a “Start-up region”. 22 Arab countries share the same langue. 350 Million Arabs will be a huge Internet Market, where fewer than 100 Million are connected to date. I will soon post an article I wrote a couple of months ago, which I never publicized, and its title is –“The Arab Internet Spring – A Start-up Region”. The combination of know-how,  experience and entrepreneurial spirit Israelis share, coupled with the Israeli Arab community addressing the TIME markets, can be the secret sauce for the “Start-up region”. Arabic is the fastest growing language on the Internet today, soon to be the 4th largest in the world. Imagine what this Internet spring can do to this region, which is so young (average age is 26) and so slow to grow. It will drive jobs creation, Information proliferation, business efficiency and will change the face of the societies in this area.

These 3 concentric circles (all of them share the same focal point, which is innovation) will be the pools I will try to swim in, from time to time. I will try to share with you some insights as we continue and build our economy, society and neighborhood.

I would like to dedicate this first blog-post to Turkey, and wish that what happened in the last 3 years between our countries will soon be forgotten, while we will always remember to embrace peace.

May god bless us all.

BEST

Chemi

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