Israel’s venture ecosystem to weather global crunch

Al-Monitor Pro Members

Daniel Frankenstein 

Co-Founder & Partner – Joule Ventures LLC 

Aug. 5, 2022

The private markets have seen a similar boon to the public markets over the past decade with low interest rates leading to more risk appetite and yield beyond more traditional products. The inflow of cash into venture funds, combined with more private equity and later stage players increasingly making earlier stage investments, has significantly grown the pools of capital searching for compelling private company investments. The increase in capital supply has driven up round sizes, valuations and the required exit multiples betting on a continued public bull market. With the cost of capital increasing and more scrutiny on valuations, there will be a global “reset” of valuations and a flight to quality businesses. Ecosystems like the United States where we saw the greatest amount of valuation inflation will be hurt most dramatically.  Ecosystems like Israel will have a softer yet dramatic correction.