Gigi Levy Weiss
Over the last few years, we have seen the evolution of the global blockchain ecosystem, which has started to move from cryptocurrency excitement and skyrocketing funding rounds to the development of scalable blockchain powered products by strong, proven teams. In that regard, the Israeli blockchain ecosystem is a microcosm of the global industry and the changes reshaping the future of blockchain and decentralization. In the coming few years we expect Israel to produce some of the most meaningful blockchain startups globally.
Real Projects Coming to Life
We are noticing a promising change in the Israeli blockchain industry. In 2017, focus was primarily on fundraising - fueled by the cryptocurrency ‘goldrush’ and the ability to raise capital at unprecedented levels for seed companies. But in 2018, we are seeing real projects coming alive. Groundbreaking concepts in areas such as collective intelligence and governance (DAO Stack) or data privacy in blockchain applications (Enigma), that started as mere theoretical whitepapers, are now delivering real platforms. Fintech and Insurtech Blockchain companies such as Colu, a token based payment platform are already in production with consumers using them in real life. It probably won’t be until 2020 that we see many of these ideas gain market traction, but this year marks a cornerstone for when the possibilities of blockchain technology started becoming a reality.
Quality of teams
A major shift in the recent 18 months is seen in the quality of the teams pursuing Blockchain ventures. If 2 years ago most teams were visionaries who in many cases lacked operational experience, recent founding teams include some of Israel’s top entrepreneurs. This is a major shift which is clearly visible in the quality of the ventures being funded, the additional talent these companies attract as well as the quality of the investors supporting these projects.
A real product focus
After the hype of the crypto-goldrush subsided, attention shifted from glorifying enormous fund raises to discussing projects that can truly create meaningful products. Projects are no longer designated mainly for raising money; instead, they are focused on real products that can gain traction in the market. This was a critical step in the evolution of the industry, as in the blockchain space - just like in any other startup field - projects that will not find their product-market fit will not be successful.
The need for a positive regulatory framework
While the Bank of Israel and the Finance Ministry deliberate on the potential for a state-approved cryptocurrency, the conversation is opening room for national optimism. The Tax Authority and stock exchange have released statements to begin establishing regulation for the issuance, exchange, and use of cryptocurrencies. This is a huge opportunity - current regulatory restrictions in many jurisdictions - including the United States - are slowing down innovation. Should Israel be able to craft a favorable regulatory environment allowing the industry to move fast - while protecting consumers of course - this could serve to accelerate the pace of innovation and help position Israel even better in becoming a leader in Blockchain technologies.
This brief glance at the current state of the Israeli blockchain ecosystem is far from a comprehensive overview, yet the trend is clear. In the global arena, Israel is maintaining its dominance as it spearheads theoretical, practical and legal innovation to advance the industry. Recent visits of the top global blockchain investors in Israel are the best indication that the industry is maturing and that meaningful companies are being created. It is now safe to say that also in this new frontier, Israel is being positioned as the ‘Blockchain Startup nation’.
Gigi Levy Weiss, managing partner NFX
The writer may hold financial interests in some of the companies mentioned in the article