Q&A With Gil Dibner, An ‘Outsider’ VC With $41M To Give Deep Tech Israeli, European Startups A Leg Up In The US
Gil Dibner is an outsider, a contrarian, an outlier. At least that’s how he describes himself and his approach to investments as a venture capitalist with a career spanning 15 years in the US, Israel, and Europe.
Throughout his career with major firms such as Gemini Israel Ventures and Genesis Partners in Tel Aviv, Index Ventures in London, and DJF Esprit, also in London, he’s invested in over 40 enterprise companies at seed stage, two of which reached unicorn status as companies valued at over $1 billion. Both – JFrog, a DevOps platform, and Sisense, a business intelligence firm – were founded by Israelis.
In 2018, Dibner set out on his own to found Angular Ventures, a VC firm with offices in London, Tel Aviv, and New York focused specifically on “deep tech,” early-stage startups in Israel and Europe with unique technical or domain expertise. These startups also have to have global ambition, with an aim to enter the US market early on.
Angular Ventures has so far invested in 12 portfolio companies in Israel, the UK, Finland, Romania, and the US, among other countries. These companies include Aquant.io, a field service optimization company with offices in Tel Aviv and New York, HR workplace misconduct platform Vault based in London, nano-tech security technology provider Dust Identity in Boston, and food supply chain optimization company Trellis based in Tel Aviv.
On Tuesday, Dibner revealed that Angular Ventures raised a $41 million fund to further invest in deep-tech startups at a rate of between five to seven companies a year. A majority of the capital base is institutional, including two US-based endowments, several leading fund-of-funds, and family offices from around the world, Angular Ventures said in a statement.
All of Angular’s LPs are private/commercial (so, non-governmental, non-corporate) which “validates our strategy, reflects the attractiveness of our opportunity set, and affords the fund full flexibility to pursue the best investments within our geography,” Dibner said.
In a sit-down interview in Tel Aviv with NoCamels this week ahead of the announcement, Dibner says his unique experience in Israel working with deep-tech startups has made him a better investor in Europe, and his time in London working with companies across the continent has made him a better investor in Israel. And he’s combined these experiences with his American background to create the “only institutional seed fund focused on enterprise technology” investing in Israel and Europe and with a platform presence in New York to support US expansion
His expertise and broad view are reflected in the deeply researched and informed newsletter he publishes weekly(ish) to thousands of subscribers, and in his Twitter profile, where he posts regularly to an audience of over 10,000 and counting.
He also publishes on Medium, posting his newsletter, independent research, analyses, and, most recently, a backgrounder to Angular Ventures.
In the piece, Dibner explains the importance of investing agnostically in Israel and Europe “in the best founders and companies we can find regardless of where they are from,” attracting institutional investors who “understood the fund’s strategy,” and ruling out “any government LPs that would limit us to specific geographies,” as well as “corporate LPs who would limit our sector focus to their strategic objectives.”
The post also emphasizes the importance of having US market ambitions. “Over 90 percent of the exit value of enterprise tech companies born in Europe or Israel was generated by companies that had a significant US footprint — it doesn’t really matter where you come from but it sure as hell matters where you are going.”
Here’s our Q&A with Dibner where he talks about his life as a VC working in three continents, his “outsider” outlook, and his focus on deep tech. Some of his answers have been edited for clarity.
NoCamels: Can you give us a quick 101 on deep tech and why you chose this as the focus for your VC firm?
Gil Dibner: I’m not sure there was ever a moment when I consciously decided, ‘OK, I’m going to be a deep tech investor.’ I think that came later. I was excited by Israeli high-tech. I didn’t really know what technology meant when I started. I began my career covering technology companies on Wall Street. So in 1999 [at] CIBC, 2000 [at] Goldman Sachs through 2003, I saw the first tech bubble rise and explode. And at that point…I was covering what was called internet infrastructure, the beginnings of a public internet. Companies…that we’re building the core building blocks of this new technology that we all kind of knew was going to change the world. And so technology meant, you know, looking at companies that were doing something deeply innovative and transformative.
And for someone who’s not a technologist by training, I’m just simply not smart enough to invent the next internet or to invent the next machine learning algorithm. So the closest I can get is working with people like that and helping them build businesses. Once you appreciate the significance of the technological leaps that these companies and founders are making, you both realize how difficult that is, and it becomes very, very appealing to be in the room with people like that and try to help them. And it’s also intellectually fascinating because you’re doing something deeply innovative, both technologically but also from a business perspective.
I made the transition to venture capital after 2005, moved to Israel, joined Genesis Partners, worked there for five years, and then Gemini Partners, worked there for two years.
And it was really in Israel that the focus sort of became clear to me. As these Internet technologies and connected devices, data, the information age, as it were, as that became more prevalent, you sort of had this evolution.
Because I was working at these particular Israeli VC firms, I spent those seven years kind of sticking to my knitting on the deeper tech side. So the definition of deep tech started to evolve as well. We were looking at software models, at SAAS models, what came to be called big data, what came to be called machine learning and deep learning, vertical enterprise software, enterprise infrastructure, the evolution towards virtualization, containerization, microservices, different IT architectures, but always on the sort of cutting-edge technology side as opposed to the pure applications side.
When I showed up in Europe – I was recruited by Index Ventures to join them in Europe and help them look at European and Israeli early-stage tech companies – I pretty quickly realized that that broadly speaking, the venture world kind of bifurcated into the deep tech enterprise-y side and the consumer side. And I had very little value to add on the consumer-y side.
But I found that in Europe, the experience and expertise space I was bringing from Israel to European founders who were struggling to build deep tech companies was actually very unique in Europe, and very valuable as well.
NC: How so?
GD: Because I had spent the past seven years in Israel, in venture capital, every Sunday, all we would do for 10 hours every week was just sit together as partners and talk about deep technology: solar energy, energy storage, physical storage, virtualization and containerisation, APIs, SAAS businesses, backup disaster recovery, all of these different technologies. That’s what we spent our Sundays doing. And so there were very few VCs in Europe who’d been trained that way.
Most of my competitors in Europe had come from the other side, from the private equity world, from the investment banking world. And most of their activities were certainly in 2012-2015, most of the European venture was pretty solidly focused on consumer technologies.
And so I was kind of this unique outlier in that ecosystem, looking at the world of European venture as an Israeli VC, which was already kind of unique. I was also continuing to look at Israeli tech, so I never stopped looking at Israeli tech. And even today, half or more than half of what Angular Ventures does is still Israeli.
So we’re very rooted in the Israeli tech landscape. It’s just that we’re open to doing things that are not Israeli as well. And we’re exporting that approach to a different and larger market, considered quite different, I think.
If you look at the investments that I was making when I was in Israel before and even now, with Angular Ventures and before, we’ve really tried to focus on more contrarian, slightly more out there business model.
So, for example, when we did the Sisense investment, it was contrarian because we didn’t have the phrase ‘big data’ at the time, it was a business intelligence company; that’s the phrase we used. The term big data didn’t exist yet. So ‘everyone knew that BI or business intelligence was a dead market. It was over. You know, it wasn’t interesting.’ When we did JFrog, it was ‘obvious to everyone around the table that there’s no money in developer tools. Developers don’t have budgets. It’s not interesting. It’s too hard.’
These were contrarian companies in many ways. And both of them are now doing north of $100 million in revenues.
So, whether that’s a deep tech focus or just a contrarian bent or something, I think that’s always been what’s informing my investments and I think there’s almost this paradox. Because I’m not a technologist myself, part of my approach is to really sit with these very technical founders and kind of force them/help them to explain the business significance of what they’re doing and work with them closely to articulate a plan for defining a category and then dominating a category and communicating that category to investors and customers effectively in the very early stages.
NC: What’s your vision for the new $41 million fund?
GD: I basically built a fund I wish existed before, and on some level, it’s the only fund I could build. Angular is a response to a specific need that I saw on European market and the Israeli market as well to some extent, which was as I started to broaden out from looking just at Israeli companies – and to looking at European companies in the context of what I knew about deep technology and enterprise technology from the Israeli market – I realized that it was the sector expertise that was the actual valuable thing, not the geographic expertise.
For a long time, venture capital was thought of as a geographic thing. So an Israeli VC did Israeli venture, a French VC did French venture, a UK VC did did UK venture and an Eastern European VC did Eastern European Venture. And what I realized as I was meeting founders, I was very aware of where they came from. And none of this really matters at all. All people care about is that the technology’s awesome, the product is awesome and the execution is awesome.
I was seeing companies coming from everywhere, not just Israel. I realized, you know, Israel’s great, but there are great companies being formed in a lot of places.
The expertise that I’m bringing to the table is relevant in these other places. On some level, it’s even more unique in those places than it is here [in Israel]. And looking at all these things together was super helpful.
So there are areas like security where Israel is clearly a leader or data analytics where Israel was clearly a leader. And in looking at Israeli deal flow, it makes me a much better investor when it comes to looking at similar areas in France or Finland or Portugal. There are other things like industrial automation or open-source or design tooling where Europe is way ahead of everyone, and looking at European deals makes me a better investor in those areas in Israel.
And so, that’s the realization that kind of led to this. I said ‘wait a second, what I need to do is build a fund that’s defined by its investment strategy, by the type of company we’re trying to back with a type of founder we’re trying to back and by his or her challenges. And not by where that founder happens to have come from.’
When an Israeli company succeeds massively and globally, we like to tell ourselves that it’s because they’re Israeli. But the truth is, it’s despite the fact that they’re Israeli, that they’ve succeeded. And the same is true for France and the same is true for Portugal or anywhere.
The real question that drives the massive success is ‘how able are you to build a global business,’ not how you build an Israeli business or Portuguese business or whatever.’ So once you look at it that way, the origins of the founders, the origin of these companies are a lot less important than the shared experience [of trying to break into the largest market in the world and getting comfortable operating in a foreign place.]
And if you’re an Israeli operating in New York or a Portuguese founder operating in San Francisco, you’re suddenly an outsider. And that’s my world. I’m an outsider. So I think there’s a sort of a shared ethos and a shared experience of being into this market as a disadvantaged outsider.
NC: Maybe it’s not necessarily the case for European startups, but Israeli startups, usually from the get-go, think globally and want to be in the US. So when you say you’re “trying to help the few do the impossible,” you’re essentially telling them you will help them be global but aren’t they already aiming to do just that?
GD: Yes. Look, am I inventing something? No. What I’m doing is building a fund only around that. There are two questions here. One is ‘are European companies thinking globally? I’m interested in the ones that are.
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So the philosophy of the fund is we’re investing in companies based on that criteria.
Not all Israelis are effective in the US from day one either. And how they go to the US. There are funds out there that say ‘you move to the US right now and I’ll invest in you’; that’s not appropriate for every company. So the process of defining how to best do that is something that can be done [better]. You need to get that right of transit. So we’re focused on companies are doing that well and helping them do that well from day one, whether they’re Israeli or not.
We’re working with those European founders that are ready and able and willing to do that, not the ones that are not. Same is true in Israel. I think if you ask me what’s my value-added in Israel. Look, there’s a lot of good investors in Israel, a lot of good investors in Europe and a lot of good investors in the US. I’m not going to sit here and tell you that I’m the only one knows I’m doing.
I am saying I would put my track record up against any early-stage investor in Israel. And I would also say that Angular, as an institutional seed fund, is probably among the more structured, among the more institutional, among the more experienced seed vehicles in Israel that are able to write a 500,000 to $1.5 million check at a very early stage. And we bring a more global perspective than most of the other investors that are here writing checks at that stage.
What Angular is really about is the export of an Israeli philosophy to a much broader market, which is easier for an Israeli to do, I think, than for an American to do because we understand the challenge of breaking into a foreign market as an essential part of your pathway to success. And the imperative to do that early.
NC: What makes Angular unique as a VC firm in Israel?
GD: There are very few sector-focused funds in Israel. We have had a head of platform who’s based in New York. So we’re really focused on the US. I think very few funds, at our stages or other stages, have their head of platform in the US. So at that stage, for your first check investor to have a US-based platform operation help you succeed in the US, that’s pretty unique.
The fact that we’re sector-focused, there are one or two other sector-focused funds in Israel, but we are an enterprise tech-only fund. I think that helps strengthen our value-add.
We have a network of advisors that we build which is pretty unique. They’re part of the fund structure. They’re heavily incentivized with the fund economics to help our portfolio companies. You have the founder of Sisense, you have the founder of JFrog right there, you have these two founders of $2 billion unicorns out of Israel that I’ve backed that are now giving back to Angular.
We have a US immigration advisor who is part of that team. We’re the only fund with a close relationship with someone who is going to help you get your US visa.
We have a London-based Israeli who is a branding guru. We have a New York-based Israeli who’s a marketing guru and used to run the marketing for Wix…So we’ve put together a pretty impressive team of people to help these companies. And it’s all oriented around helping enterprising and deep tech companies succeed globally.
We have a mission, which is enterprise tech, and we have a method, which is ‘let us help you break into the US early on.
NC: You’ve mentioned “meaningful barriers to entry.” What do you mean by that?
GD: The essence of venture capital is you’re investing early with a very long time horizon and you’re basically trying to say, ‘I’m going to predict that in seven to 10 years, you’re still going to be growing quickly, you’re still going to have attractive markets.’ For that to be true, there has to be some defensibility to what you’re doing. So you call it ‘barriers to entry,’ call it defensibility, call it intellectual property, network effect…there are several ways. But a business that doesn’t have defensibility tends to ultimately collapse pretty quickly when it meets the market.
So, one of the illusions or delusions that a lot of early-stage founders and companies face is, ‘well if I just build something interesting and hire some people who can sell it, I can grow it.’ Yes, you can grow it. You can grow from 0 to a million dollars. You can probably even grow from a million revenue to five million or maybe even to 10 million. The question is, ‘what happens at 10?’ Are you going to continue to be able to grow quickly? And my job is a seed investor is to help you get to the position where the best Series A investors will want to back you 18 months to two years from now. And they’re going to be already thinking about the Series B. You’re always going to be thinking about the next round and the next round.
And so if you’re trying to predict not just what your growth is going to be now, but what it’s going to be in two years, in three years, in four years, then you’re really trying to predict whether there will be some kind of defensive barriers that will allow us to keep our prices up and our margins high at that point in time, and whether you’re building some kind of a machine that can sell quickly. So if someone does give me $20 million to hire a sales force, they can be effective or is it going to be an inefficient sales process? And we’re going to burn the $20 million.
I think where I’ve been very good historically is to try to work through these issues with a founder at the seed stage. I mean, literally had this conversation with the founder this morning, where he’s like, ‘I’ve got this interesting thing. I’ve got some customers lined up’ and I’m like, ‘that’s really great. And that’s really impressive. But I’ve seen – and this happens to be an Israeli company – I’ve seen companies all over Europe and Israel doing exactly the same thing you’re doing. What’s your edge? What’s your angle?
As a VC who’s meeting early-stage companies all the time, you can sort of see the future because all that’s happening is these founders are coming to tell you what they’re gonna be doing over the next two or three years. Everyone’s telling you what their plans are. So I’ve met, you know, six of your competitors and I’ve met VCs in the US who are backing other competitors of yours. And I’ve seen their decks and I’ve seen what they’re planning on doing. And guess what? It is the same thing you’re planning on doing.
NC: How is this approach received?
GD: I think the best founders embrace that process. The best founders understand that they want an investor they can push against, an investor who is going to challenge them.
I find that the best founders are actually very receptive to these kinds of challenges and have already thought through some of these issues. The best founders are more terrified than me.
The worst response is: ‘I haven’t thought about it.’ The next worst response is: ‘I’ve thought about it. I have this trite answer.’
NC: With Israeli founders, have you found that they think through these issues, are they long-term thinkers?
GD: I think venture capital is not a business of generalizations. It’s a highly specific business. But if you’re asking specifically about Israel, I think there’s definitely been a tremendous improvement in the ability of Israeli founders to think through this stuff as we’re seeing wave after wave of successful founders in multiple industries go global, they build global businesses. And then they come back to Israel, they start a new business, they go back to the US like they’re on their second or third time through.
And there’s a deeper and deeper network of experienced founders that other founders can seek out and get advice from.
It’s definitely getting better, it’s definitely improving. And I think the same is true in other ecosystems as well. The same is true in the UK and France and Germany and Spain and Portugal and other places, they’re just a bit behind, but they’re catching up. I think Israel can’t stay on its laurels and just think that we’re going to continue to be this outlier technology miracle forever. I think there’s great technology happening all over the place and Angular is part of it.
NC: What gets you excited about a company? What do you look for?
GD: I think something that I find very compelling is domain expertise of the founder. I think we’re in an era right now where there’s sort of a cult of the founder and there’s definitely cases where someone is self-taught, where someone without experience in the industry learns the industry and builds something amazing, and that absolutely happens. I’ve been in cases like that.
What really excites me is when we have a founder who has lived a problem, intimately and thoroughly and is building a business not because they necessarily want to be a founder, but because they just lived with this problem and have this intense urge to solve it. And this confidence that they’re going to solve it, venture funding or no venture funding. Venture capital is just an incidental thing, they think of it as one strategy among many to finance this thing. But from their perspective, they’re driven by the problem and they know the problem.
An example is this portfolio company we have called Aquant which has two Israeli founders on the East Coast, with R&D here in Israel. They’ve since been backed by Lightspeed [Ventures, an American VC firm] in Series A and we did the seed round And they’re in field service optimization. What they do is use machine learning to optimize the field service operations of various businesses. So any business that has technicians in the field, they’re going out to fix machinery or fix elevators or fix jet engines or whatever it is, they can help you optimize that whole process. So things like which technician, which parts, what time, when to send which truck to where, all that stuff. The founders come from ClickSoftware, which was the previous generation of that industry. [ClickSoftware was originally founded in Israel and is set to be acquired by Salesforce for over $1 billion.]
The amount of industry insight that these founders bring to the table is priceless, just absolutely priceless. And no three kids from Stanford could replicate that degree of depth. And that is, I think, deeply significant. That kind of depth of expertise is something that is very, very exciting because it usually leads to product insights that other companies take a long time to get to.
NC: What are some trends you’re spotting in deep tech for the coming year?
GD: We’re in that era when everyone’s funding everything right. I tell you I want to build a hotel on the moon, someone will finance it. But I think it’s very hard to come up with a contrarian insight. But I think what we’re seeing is more and more applications of data and data science, and data-driven decision-making in more and more industries.
There’s been this gradual evolution from using the digital toolset in a 100 percent digital environment like online advertising to starting to do machine learning like Aquant in the physical world, of field technicians in a truck driving to fix an elevator. And so, as we start to instrument more and more of these processes, we’re getting more and more data and you can start to apply machine learning and deep learning to new types of data sets, in some cases to create new data sets that didn’t exist before and drive real tangible business value in old industries. Like elevator repair, or like oil or gas, or like shipping.
And that drives more and more organizations to deploy these pretty sophisticated data technologies and pretty sophisticated automation technologies. And they will never have the in-house teams to do that effectively.
So there are two big trends. One on the infrastructure side and one on the application side. On the infrastructure side, I think we’re gonna see a lot of tooling emerge to help large enterprises deploy these kinds of solutions more easily without having to hire 20 data scientists, which they can’t afford to do anyway. And I’ve invested in companies like that.
I think the other trend we’re going to see is a shift towards full-blown automation. We’re just in the beginning stages of automation. And I think automation is what comes after machine learning. And there’s an interim step, which is explainability, which I think is also very important. And I think people are still struggling with the explainability question. We’ve built these machine learning models that we don’t really understand why they’re telling us to do something.
For example, the model says that I should deny your credit application, but why? How do I know that it’s not because of your gender or because of something I’m not supposed to be taking into account? How do I know that the model is not telling me to do something for a reason that violates my corporate policy? Also, I want to get comfortable with the model, I want to understand why it’s doing what it’s doing; it’s not enough for me to have a black box, even if it’s perfect.
And as situations change, I want to be able to manage and maintain that model. And I need to understand those things before I’m willing to let them all go and automatically do everything. So there’s sort of this explainability challenge and this automation challenge I think are going to be solved together over the next several years. And companies that are doing that are super interesting to us.