When entrepreneur Chen Linchevski looked at pictures of the devastated parents of a young Israeli killed on October 7, he asked himself: “How can we make his sacrifice worthy and make Israel a better place?” He came up with the idea of an emergency fund to help viable Israeli start-ups impacted by the war.
Linchevski teamed up with fellow entrepreneurs Gil Friedlander and Jason Wolf to start Iron Nation, and the three founders put normal life on hold to make it a success.
As experienced entrepreneurs, they themselves had benefited from the high-tech sector. “We feel that now is our time of giving back,” says Friedlander.
Israeli start-ups have been hit dramatically by the war. Team members have been enlisted for service in Gaza, investment term sheets (financial agreements) have been withdrawn, or their work has been impacted in the south or north of Israel. Since October 7, the financial risk of investing in Israel has soared.
“Unfortunately, we’ve seen many investors moving away from Israel, whether for financial reasons, anti-Israeli sentiment or even antisemitic sentiment,” Friedlander says. And new entrepreneurs are struggling. “We cannot ignore them,” he adds.
Given the increased risks, Iron Nation aims to make investment more attractive; because Friedlander and his colleagues volunteer and take no fees, it means much higher returns.
Iron Nation was a success from the get-go. It surpassed its £15 million ($20 million) target for the first fund and has already invested in 18 companies to date. “So the impact on the high tech and the economy is significant,” says Friedlander.
That 860 companies applied for funding shows the challenge for young companies in Israel and how scarce funding has become. But for investors it means that if Iron Nation is making 25 investments from a choice of 860, these are going to be top-end companies.
Building the startup nation: (left to right) Founders Jason Wolf, Gil Friedlander and Chen Linchevski
“Funding is scarce, but the innovation in Israel is outstanding,” says Friedlander. “One of our goals is to show the value that Israeli innovation is bringing to the world.”
Iron Nation has invested in some “amazing” life science companies. One of these, Nurami, improves post-surgical healing with products developed from biomaterials that are now in use at six medical centres in the USA. It is led by an Arab-Christian female founder and the company employs Muslims and Jews.
“We have so much publicity around killing, and here it’s about healing,” says Friedlander. “It’s a very diverse team, and you don’t always hear this about Israel, that all these groups are working, creating and innovating together.”
Nurami had its investment term sheet withdrawn because of the war. Then Iron Nation swooped in and invested. “This company is now very successful,” says Friedlander.
Another company supporting the medical world is UltraSight, an AI-powered ultrasound guidance technology that helps medical professionals to take high-quality cardiac images at the point of care for diagnosis. It’s of huge global significance given that cardiovascular disease is the number one cause of death globally, killing 18 million people a year, according to the World Health Organisation.
Starting in 2018 as a joint venture between NYU and the Weizmann Institute of Science, UltraSight was about to start fundraising when the war began and a quarter of its workforce went on reserve duty.
The rest, including the company’s CEO Davidi Vortman, stayed put. “I had a really hard time leaving the country to meet customers and partners,” says Vortman.
“My son said, ‘Dad, you should go because we are fighting so your generation can continue to build the start-up nation.’ That changed my point of view.”
The company donated ultrasound devices to the IDF medical teams alongside NYU to allow soldiers to receive better care in the field. And when Iron Nation stepped in, it was able to raise more funds. “Iron Nation was superb in understanding the need to come fast and help us,” says Vortman.
Friedlander tells of how one of its start-up founders had come out of Gaza after 120 days there, signed the agreement with Iron Nation and returned to continue his service.
“I know that to succeed in this business, you need to be very resilient, and I’m confident that these people, making it with the hardship of war, will find it much easier to deal with competition and with customers,” he says.
The high-tech sector is huge in Israel, accounting for 53 per cent of exports, 36 per cent of the country’s income tax revenue, and employing 12 per cent of the workforce. While many investors have abandoned Israel, Iron Nation seeks out those sympathetic to the country to invest in equity.
“Israel relies on the technology sector, and if it does not succeed, Israel will not continue to flourish.”
Iron Nation is now raising the second fund, which it anticipates will be £75 million. “Our mission is to connect the Jewish nation and the startup nation,” Friedlander says. “This is not philanthropy. People invest for profit, but are supporting Israel and Israeli high tech at a challenging time.”
