An American venture capitalist says now is the time to bet big on Israel – despite the country facing a multi-front war against Iran-backed terrorists in Gaza and Lebanon.
Aaron Kaplowitz, who founded 1948 Ventures only days after the deadly Oct. 7 Hamas terror attacks, invests in Israeli early-stage dual-use companies, firms that create technologies with both defense and civilian applications.
“When you’re forced to find life-saving solutions in real-time, the battlefield becomes the ultimate sandbox for innovation,” said Kaplowitz, who previously ran a state incentives program focused on attracting international companies to New York.
Kaplowitz’s faith in Israel comes as some tech entrepreneurs and investors in the so-called “startup nation” considered relocating to America as funding dried up in the wake of the massacre, as The Post previously reported. Others who previously made trips to Israel’s high-tech region known as “Silicon Wadi” canceled visits, sources said.
“The best entrepreneurs aren’t admitting it to many people but they’re contemplating leaving,” one gloomy venture capitalist told The Post just two weeks after the attacks.
Kaplowitz, however, pointed to the recent success of the US-funded and Israeli-developed Iron Dome, the missile defense system embedded with dual-use technology, as one of among “many validations” of his decision to plow money into Israeli companies at a time when most have backed off.
The Iron Dome worked to near-perfection in shooting down 99% of the roughly 300 missiles and drones fired at Israel by Iran on April 13.
“The same predictive tech that determines if and when to fire interceptors at incoming enemy missiles is being used today to predict wildfires in Oregon, reduce energy costs in low-income California neighborhoods, and prevent power outages across New York,” said Kaplowitz, who has been involved in early-stage investments since 2015.
“Many of these companies will go on to save American lives, safeguard critical infrastructure, and create local jobs.”
Israel can sorely use the infusion of cash. The country’s economy has been battered by the war – with the GDP tanking 19.4% in the fourth quarter of 2023.
Israel’s vibrant tech sector makes up nearly 20% of that figure. There are more VC firms per capita in Israel than anywhere in the world and most deals to invest in Israeli startups include US based investors, according to PitchBook.
The nation also has a track record of rebounding quickly after a conflict.
Following Israel’s 2014 war in Gaza, its economy grew by 4% – double the OECD average. And after its war with Hezbollah in 2006, the Jewish state saw a significant uptick in outside investment, some of which helped seed several game-changing companies.
“I have great faith in the power of the Israeli startup, and I foresee a ‘startup boom,’” Avi Hasson, CEO of Start-Up Nation Central, said earlier this month at a conference in Tel Aviv.
Kaplowitz said he quickly understood the need to inject capital into the Israeli startup ecosystem, which he referred to as “the beating heart of Israel’s economy,” after visiting the still-smoldering southern towns and kibbutzes on Oct. 18.
His other company – the United States-Israel Business Alliance, an organization that specializes in bringing governors to Israel – had arranged Gov. Hochul’s solidarity mission to the region.
“Especially in the early days of the war, Israel’s economy was suffering,” he said. “In an instant, it felt like the entire hi-tech workforce put their out-of-office notifications on, closed their computers, and raced to the frontlines to defend their communities.”
Seizing the opportunity to invest now in battle-tested technology at depressed valuations is one of the primary reasons Kaplowitz said he made the decision to launch Miami-based 1948 Ventures – a nod to the year the state of Israel was established.
After making two initial investments, 1948 Ventures is now in the process of raising $10 million to invest in a dozen additional companies that have undergone thorough due diligence.
Kaplowitz claimed that each company his VC is targeting has the “potential to be a game-changer” in both the defense and commercial markets.
Kaplowitz said he began researching the underlying vulnerabilities that Hamas had exploited by sending drones to drop grenades on the Israeli army’s observation and communication systems on Oct. 7, allowing thousands of Gazan terrorists and civilians to storm across the border undeterred.
He sensed that this “catastrophic security failure” opened the door to a more effective perimeter protection solution and decided that “1948’s” first investment would be in a startup that uses a disruptive software to detect wireless signals.
Today, the IDF has integrated the company’s technology to detect, classify and geolocate drones.
“I believe that on the other side of this punishing, existential war, Israel will emerge as the world leader in defense technologies for decades to come,” he said.
