Venture Capital Investing in Technology
- Aug 10, 2023
In this episode of Engaging Alternatives Spotlight, Elana Margulies-Snyderman, Director, Publications, EisnerAmper, speaks with Or Haviv, Partner & Head of Global Innovation at Arieli Capital, a venture capital firm that invests in technology. Or shares his outlook for VC investing in technology companies, including the greatest opportunities and challenges, how the firm is integrating ESG and DEI and more.
Hello and welcome to the EisnerAmper Podcast series. I'm your host, Elana Margulies-Snyderman. And with me today is Or Haviv, Partner and Head of Global Innovation at Arieli Capital, a venture capital firm that invests in technology. Today Or will share with us his outlook for VC investing in tech companies, including the greatest opportunities, challenges, how the firm is integrating ESG, DEI and more. Hi Or thank you so much for being with me today.
Hi. Thank you for the wonderful opportunity.
Absolutely. So to kick off the conversation, tell us a little about the firm and how you got to where you are today.
So Arieli Capital was formed by family offices, Eric Bentov and Evan Renov, that's where the name came from really. And at the end of the day, the families have been investing in technology companies for a long time. But with the years, we realized that companies need more than just money. They need a whole village to help them grow and somebody to hold their hands and help them in many, many ways. So some people say smart money, but I think it's much more than smart money. It's more like the village approach and the entire holistic opportunity to open doors, offer mentoring, offer access to facilities. And at the end of the day, we are looking at the global market. So Arieli basically is composed of two different arms, the capital arm, which invests directly into technology companies, and on the other hand, the innovation arm, which is in charge of leading basically the acceleration process, the scale up process, the entrepreneurship process. So we have innovation centers and technology hubs working with amazing partners all the way from governments to banks and funds, universities, academic institutions, R&D centers, et cetera.
Great. Or, given your focus on VC, investing in technology, I'd love to hear your overall outlook for this space.
I can say that innovation is the forefront of humanity. I think that when you look at humans, at the end of the day, the main thing that separates us from let's say many other living organisms is basically our brain and our ability to innovate and execute on it. So not just be creative, but the ability to make something out of nothing. I think that humanity also figured out a way to do it, some sort of a format that helps us take an idea into reality. And that's basically the startup world. If you look at a lot of books and formats that speak about it, such as the Lean Startup, they basically are a guidebook for human beings to take their ideas and make them a reality.
So at the end of the day, if you ask me what I think about innovation, and I think the one thing that really connects us all humans is that no matter what social demographic you are from, what's your academic background, if any, I think we're all united by our ability to innovate, our desire to innovate. It's burning inside every human around Earth. And the job of companies like Arieli is really to become the execution platform, the platform on which, or through which human beings realize their human potential.
And more specifically, Or where do you see some of the greatest opportunities in your space and why?
So in Arieli we really look at innovation as the main pillars of life. That's how we divide the global ecosystem. So main pillars of life means certain verticals such as health, for example. We saw a tremendous this verification of the need in technology and innovation in the health sector. I mean, humanity recently got out of the global COVID pandemic. Let's not forget, it's a pandemic that completely grounded all of the different industries in the world and showed us the potential and not the good potential of the impact of a global pandemic. And let's not forget that humanity found a cure for that pandemic within a couple of weeks, thanks to technology and innovation. The fact that it took several months to get to the market because of the trials and different regulations and all that stuff. But at the end of the day, we found a cure within several weeks to a month to something that in any other generation would have completely paralyzed humanity for many, many years. So health is one of these verticals.
Another vertical is food and agriculture. Agriculture is one of these sectors that is going through huge changes. My entire mother's side of the family are farmers, and we all know farmers as people who go to the field and get their hands dirty and work in the rain and in the sun and all that. But we all see a huge change. Farmers are becoming high-tech people. In order to manage a farm in the next few years, you need to know code, you need to know computers, you need to know AI, you need to be able to have 5G in your farm to get all the data and process it and to be able to know not just how to fix your irrigation system. But how to fix your drone and your autonomous vehicles that are managing your farms. So it's a very, very interesting process.
Another process that you see in food tech. I mean, there's a company in Israel that is printing meat, real meat, and they're printing it. I'm talking tons, I'm talking commercial level. You're standing in front of a machine, you press a button, you choose your sirloin steak, and within one minute the machine prints it. That completely takes out the need in entire slaughterhouses or completely changes the ecosystem when you think about other applications such as, "Okay, how do we feed crew on a spaceship on the way to Mars? What are you going to do? Are you going to pack food for many, many months of trip?" That's a lot of weight. But if you take one machine that can print food, that covers it. But there's many, many other applications. So we're talking about food tech, we're talking about agritech, we're talking about healthcare.
Another main vertical that is very exciting is space. I just touched upon it in a short example with the food, but space is the new frontier of humanity and the implications are cross vertical. So space is the accelerator for many, many technologies. For example, energy. Anything that goes up to space has to be cutting edge, as small as possible, as light as possible, as efficient as possible, as cheap to produce as possible and as trustworthy as possible. So basically all the technologies that are developed for space, for things like food and energy and health and propulsion and all these things are taking humanity huge leaps forward.
So I'll give you another example of a vertical that Arieli is very passionate about, which is let's say impact, anything that's impact climate for example. So we're dealing ... Look around the world right now, there's a lot of impact of the changes in climate on food production, food security, desertification. Countries such as Italy and other countries that are big producers of food are finding themselves in situations where they have to use technology to bridge the gap because their protocols, their food growing protocols that they've been using for some cases, thousands of years are no longer relevant. And that's a big, big impact on humanity if we don't deal with that right now.
So all these are examples of verticals that Arieli is very passionate about. We have innovation platforms, investment platforms, huge partners all around the world in each one of these verticals. And we see it not just as a business opportunity, but as a responsibility, social responsibility to help humanity push that forward.
And one last sector that I'm passionate about is academia. Academic institutions all around the world are basically huge mountains of knowledge. Humanity's top brains have been in these institutions for many generations. And since we got involved with many, many academic institutions, we met so many talented professors and doctors and researchers, and we realized that most of humanity's problems are already solved. They're just sitting in some academic institution and waiting to be commercialized and get out to the public. There are so many diseases that humanity already found a cure for. So many problems that humanity already found a cure for. But they just haven't found the right business model to get commercialized and find their way into the public's hands. And that's another huge responsibility that Arieli sees. If we can make an impact there and help to bring more of these amazing solutions and solve some of humanity's largest problems, that would be an accomplishment that we'll be very happy to take part in.
Or on the other hand, what are some of the greatest challenges you face and how do you conquer them?
Well, I think that the main challenge is how do you get to enough people? Because all these solutions and all these technologies and the greatest assets of any company in the world is the people. It's not the technology, and it's not the patent, and it's not their machines, it's the people. And how do you get to people? How do you educate people? I think that when we look around education systems all around the world, they're not necessarily teaching people for entrepreneurship. They're not necessarily providing us tools for entrepreneurship. Certain institutions definitely do that. Advanced institutions definitely do that. But when we look around us, and because Arieli works with many, many governments around the world, we see more and more the need to educate people to take risks.
So one big challenge is a cultural issue. How do you teach people that failure is okay? Not only okay. in Israel, we have a saying that if you don't fail twice before you're 30 years old, you're not trying hard enough. So how do you teach people that it's good to fail, that that's the road to success, that that's the road to find solution, and that you cannot innovate by definition without challenging the status quo, without pushing the boundaries? And that comes hands in hand with failure. And that's a big challenge because I can build the biggest fund on Earth and have all the money in the world to invest in startups. But if I don't have good people that are educated for failure, for pivoting, for innovation, for taking risks, then that money is worth nothing. And in our industry, you know what they say, we're not in the real estate industry. This is not investing in gold or in gas and oil. This is startups.
And startups is a high risk, high reward industry, which means we're okay taking a high risk. We're okay with the fact that, I don't know, 90% or more of the investments will never realize or materialize. But the few that do, need to change the status quo. That's why we always say it's not about evolution, it's about revolution. Don't take a certain system or process or device and try to improve it. Change the industry. Challenge the status quo. If you want to build new cars, don't improve on a certain model of a car. Build a car that will transport people from point A to point B in a way that will completely disrupt and set the new status quo, which is much better. And these are challenges that I think are more towards education because if we do the right education systems to human beings all around the world, humanity will experience a huge growth in innovation, which will come again. We will experience better life overall.
Or, we've covered a lot of ground today and wanted to see if you have any final thoughts you'd like to share with us.
Yeah, there's a final thought that I would love to share with people that are listening and just remind us all that when you're going through life, you can choose which attitude to take. You have the attitude of an apartment renter. You're renting your space on Earth, which means it's comfortable, you're renting. If you have a problem, you go, you complain to somebody, somebody comes and fixes your heating system or whatever. Or we can change your mindset and realize that all of humanity, all of the people on Earth are not renting Earth. We own our life, we own our future, and we have a responsibility as the owner, just like a homeowner owns the responsibility, if something breaks to fix it or to make sure it's better in the first place. Humanity needs to figure out a way to change its mindset to ownership. If we own our future and we own our life on Earth, then we realize that the only person we can complain to about our financial systems, our health systems, our transportation system, energy system is us. We need to point our fingers at us.
And my last message for this podcast is take an ownership. If you want to create a better future, we need to do it, whatever you're passionate about. I meet amazing entrepreneurs, for example, in fashion. They realize that fashion is an amazing industry, but it has a lot of challenges. You have pollution, you have a certain social impact that it does, and people that want a better future in fashion, more accessible, less polluting, positive impact, and go create one, go innovate and create a better future. So I think taking ownership is my message. And if Arieli or any one of our teams can help anybody that's listening and provide advice or direction or anything else, that's what we are here to do. And I want to especially thank you for this opportunity and for this podcast. And I think that delivering messages to people about innovation and about making the world a better place is a huge privilege. So you're doing a great job and thank you for this platform.
Well, Or I wanted to thank you so much for sharing your perspective with our listeners, and thank you for listening to the EisnerAmper Podcast series. Visit eisneramper.com for more information on this and a host of other topics. And join us for our next EisnerAmper Podcast where we get down to business.
Transcribed by Rev.com
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Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.
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