A new report collated by F2 Capital and derived from a survey of 25 early-stage VCs in Israel (including our input at Remagine Ventures), analysed investment trends for pre-seed in 2024 and reviewed the expectations for 2025. The report highlighted the resilience of Israeli startups despite the geopolitical challenges and shared the curret sentiment on trends in pre-seed deals.
Below are the key findings. The link to the full report can be found at the bottom of this post.
Key findings from the report:
- Pre-seed funds were active in 2024: Pre-seed investments were active in 2024, with investors closing an average of 4.4 deals per fund, with an average check size of $840,000.
- Speed is the name of the game: over 77% of pre-seed investments were done in the course of 2-3 weeks to a month
- The YC Effect? SAFE agreements were used in 94% of pre-seed deals. This has now become the norm for pre-seed. In contrast, 80% of seed rounds are equity-based.
Equally, as AI is so prevalent in pre-seed deals, it became the norm, and investors expect to see the moat less in the technology and more in the go to market.
“Since AI reduced the technological moats for most companies, we put more focus on GTM abilities and scaling potential.”
- AI’s Impact is everywhere: AI significantly influenced investment strategies, with 87% of investors reporting that 75-100% of their pre-seed investments were in AI-driven startups. Similarly, 74% of investors reported that 75-100% of their seed investments were in AI-driven startups. Investors are more cautious and focus on defensible AI use cases and GTM abilities. That being said, foundation Models are rapidly commoditising.
- The bar for Seed has moved up: Seed rounds saw rising expectations, requiring founders to demonstrate traction and strong unit economics. Investors closed an average of 3.5 seed deals with an average check size of $3M. Most seed investments closed within a month, with 2-3 weeks being common. Equity-based deals accounted for 80% of seed deals. To me this solidifies the need for pre-seed rounds: enabling the founders to build the early team, get to MVP and iterate quickly to get those early metrics in place.
- Sector Trends: The report identifies untapped potential in DevOps, resilience in Defense Tech and Vertical AI, and a plateau in some areas of Cybersecurity. It also notes that consumer-facing generative AI apps with low technical barriers may be overvalued.
Vertical AI will continue to gain momentum due to Israel’s technical talent and industry expertise.
- Shifting Expectations: Founders are seeking larger seed rounds, while investors are demanding greater efficiency and tangible traction. A dual market is emerging, with tough fundraising conditions in some domains and significant capital flowing into areas like AI infrastructure and Cybersecurity.
Why is now an exciting time for early stage investing in Israel
Overall, this report highlights the resilience and adaptability of Israel’s early-stage ecosystem. At Remagine Ventures, we believe that the combination of world-class technical talent, entrepreneurial grit, and practical AI applications creates unique opportunities.
Israeli founders are capitalising on the stronger foundations available to ship AI products, and focus on the US market almost from day one. This environment, particularly in applied AI where Israeli startups excel at solving real business problems, presents compelling opportunities for investors who understand how to navigate this market.
Read the full report here.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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