7 flights in 7 days: powering up the Tel Aviv start-up scene
Start-up vibes and beach weather
Israel is home to the R&D and innovation functions of many of the world’s largest companies, over 130 of which are in Tel Aviv. The likes of Meta, IBM, Google all have R&D hubs there
Tel Aviv start-up scene; Highest number of unicorns per capita in the world, received $20bn in venture capital investment in 2021 (around 28x more per capita than the US)
A great example is Addionics, a company solving a big challenge for batteries by making them into 3D structures
Thanks for reading Eurasian VC! Subscribe for free to receive new posts and support my work.
Rushing through the airport in Istanbul, I ran like a maniac just to meet my connection to Tel Aviv. What a large airport it was.
It was my first proper business trip in 3 years since the pandemic began. Hong Kong was opening back up, and I wanted to squeeze as much productivity out of my travelling as possible.
My itinerary looked like this:
Hong Kong ✈️ Istanbul ✈️ Tel Aviv 🚉 Jerusalem 🚗 Tel Aviv ✈️ Milan 🚗 Turin 🚗 Milan ✈️ Zurich ✈️ Luxembourg ✈️ Frankfurt ✈️ Home Kong
7 flights in 7 days. This was an itinerary exhausting to even think about. Yet I couldn’t wait to get on my way. Amongst it all, I knew one country was going to captivate me.
Tel Aviv beckons
It had been 9 years since I last visited Israel, but this was the first time I was visiting as a venture capitalist.
Oddly enough, I had always had a fascination for Israel. Its melting pot of cultures, its deep and colourful history.
Growing up in the 90s and early 00s, I had mostly heard of it on the TV in the context of the regional conflict. It seemed a hard pickle to get out of.
But by 2020, the Abraham Accords were officially ratified, marking the normalisation of relations between Israel and the Arab world. Israel now has direct flights between Tel Aviv and several Arab nations – something unthinkable back then.
Israel has the highest R&D intensity in the world, placing 1st amongst OECD countries for R&D expenditure as a % of GDP (2020), regularly topping 5%.
Looking around the place, It’s like the world’s largest most well-known companies all decided to plop their R&D functions in Israel.
The Americans are here, the Europeans are here,…. the Chinese are here, Japanese are here, Koreans are here, Indians are here… over 130 multinational companies have established innovation centres in Tel Aviv.
Start-up nation ⏩ Scale-up nation
Entrepreneurialism flows strongly through the blood of Israelis, who are especially renowned for creating serial-entrepreneurship opportunities. However, there was a notion this was partly driven by uncertainty with the future. Start up, scale just enough, exit, start again. Take money off the table, reassess the changing battlefield, start again.
Well, this explanation doesn’t seem to cut it anymore. In 2021, Israel received US$20bn in venture funding, and already boasted 74 unicorns. By unicorns per capita, Israel ranks number 1 worldwide.
These were some of the statistics swirling in my head as my plane began its descent into an Israeli morning. The vast blue Mediterranean expanse giving way abruptly to the Tel Aviv beachline that stretched long into the horizon, and then over the Ayalon that runs parallel to it.
Gliding past the Bauhaus-style districts of the White City, boom, it was touchdown in Ben Gurion.
It was a glorious late-autumn Mediterranean morning.
The doors of Ben Gurion airport whooshed open as I emerged into a Tel Aviv that was beginning to stir. Named after Israel’s emblematic first prime minister, the airport was only a short train and bus ride from the downtown.
As I arrived at my first stop, I was treated to a phone call from my old friend Yair Shacked, a seasoned mobility and new energy investor and adviser. Yair give me a great tip as I asked him for ideas on what to do here, “Your time here is too short my friend, plant those seeds. Come back again soon. There is so much to see.”
My first stop was on his recommendation.
Addionics – powering the battery revolution
We use them every day. But we probably don’t think enough about them.
Batteries. They’re in our smartphones and, increasingly, in cars and other vehicles. People get anxious when they run out of juice, so to speak.
Scientists have spent a lot of money trying to alter the chemistry of batteries to make them better. Addionics aren’t doing it this way though. Instead, they are using AI to redesign existing battery materials into 3D shapes.
Let’s take lithium (LFP) batteries as an example. Here is a diagram of a battery cell
If the metal foil was toast, the lithium was cheese, and you liked cheese on toast… well…
Addionics makes sure you get cheese directly inside the toast, and much more of it!
See those aluminium (Al) and copper (Cu) foil layers in the left hand diagram? Those are called current collectors. Traditionally they are coated with active material to collect electrical current created at the electrodes and connect it with external circuitry. Addionics’s tech means the Al and Cu have a novel 3D architecture where active material is not only coated on top of the metal, but also impregnated inside, creating a 3D-shaped electrode.
Why is the 3D shape so significant?
Safer batteries: more stable, thermally more uniform (so less likely to heat/cool unpredictably)
2X the energy capacity at high rates: more of the active material (the good stuff), and less inactive material, is present in the layer
Last 150% longer: 3D shapes are actually stronger, less likely to crack and better at distributing heat
50% faster charge time: there is less physical resistance and this makes charging a lot faster
The best thing is they have developed a very scalable process to manufacture it all as a roll of film.
The benefits are not hard to understand!
A clever solution, with a clever analogy 😊
There are other companies looking at 3D batteries, but Addionics seems to lead the pack in terms of creating precise 3D structures, cost competitiveness, being able to scale, and not being reliant on any particular battery chemistry.
The battery market is also undeniably large. Just look at the forecast below for battery demand in gigawatt hours. Smartphones and consumer electronics were the main use case for batteries. But batteries are already most heavily used in the transport sector. By 2030, it is expected to take up >80% of battery demand. The vehicle electrification agenda has been a hot topic globally - Asia, and particularly China, has led on adoption, but the US and Europe are also rolling out supportive policies.
The Times They Are A-Changin'
When I visited Addionics they were going through a big move – literally. They were days away from moving to a bigger office.
Earlier in 2022, Addionics closed a $27m Series A round, and have both brand name strategic investors including major automotive supplier Magna, Novelis, JX Nippon Mining & Metals, and financial investors including automotive specialist Next Gear Ventures, and Israel’s Catalyst Fund.
It was really great to see the progress they had made since I first spoke to Addionics over Zoom back in 2021. I got to touch and feel what a 3D electrode material was actually like, and their production lab was full of activity.
Whilst they had clearly outgrown their office space, they were very kind to put me up for the day with the limited space they had.
I had the chance to catch up with CEO Moshiel and COO Eitan whom I’d met over Zoom a while back, and they took me out to “Tel Aviv’s finest restaurant”, in their own words.
Greasy spoon, worker’s café, diner – these are some of the things we might call a place like Shooka in the UK or US. The most defining thing about Shooka’s was Shooka’s own sense of humour. Apparently, it was obligatory to order a side of the most potent chili known to man. Thanks Shooka for telling me it was a crime not to try it. You funny man.
The food was excellent, much needed sustenance. I’d just flown 16 hours from Hong Kong.
Turns out Addionics has a big operation in London, where Moshiel did his PHD at Imperial College London. We had a lot to talk about my other home.
Eitan had moved from New York several years back, and had settled into life in the start-up nation. It was great to talk about coaching kids sport – surreal since I’d just gone from coaching kids playing a rugby tournament the day before in Hong Kong, to now being in Israel and wolfing down meatballs and hummus, sipping on mint tea. (I have an absolute weakness for hummus by the way).
In many ways, Addionics was the archetypal lean, Tel Aviv start-up – chock full of young, energetic people, solving a big problem, outgrowing its own clothes (offices).
Sprinkle in a bunch of PHDs solving a deeptech problem, and you have a great example of what the Tel Aviv start-up ecosystem offers.
Sadly, time in Tel Aviv was indeed short. The weather had been stunning, and I had been treated to famous Israeli hospitality.
As I left our lunch spot, Shooka told me, don’t go to Jerusalem, there’s nothing to see there, stay here, you won’t find a better gourmet restaurant.
So after a memorable and productive day in Tel Aviv, off I ventured.
Stay tuned for the next edition where I’ll let you know my experiences with the Jerusalem start-up scene.
Hasta luego Shooka. 5-stars for you mate.
Thanks for reading Eurasian VC! Subscribe for free to receive new posts and support my work.
Was this article on the Tel Aviv start-up scene useful? Help us to improve!
With your feedback, we can improve the letter. Click on a link to vote:
Build your own? 👉 FeedLetter.co
All views contained in this article are my own and do not necessarily represent the views of any other organisation.
None of the above constitutes investment advice in any way.