A winter's tale

It wasn’t until I became a venture investor that I fully understood the deep philosophy behind the strange timing of the Jewish new year for trees

Growing up Jewish, I thought it was kind of quaint that we celebrated the annual festival of Tu B’Shvat, the new year for trees, which falls this year in mid-January. As I grew up, I began to wonder why we would do it in the depths of winter, when most trees were bare and all you could see were tiny buds, with the promise of spring’s leafy greenery and summer’s rich abundance far beyond the horizon.

When I moved to Israel, which is still largely desert, I became more aware of the importance of trees and agriculture. I have always been proud of the fact that Israel is one of only two countries on the planet that entered the 21st century with more trees than they had in 1900. (The other was the United States). We planted millions of them through an early version of crowdfunding – the pushke or small, blue, JNF tree donation box that was a fixture in most Jewish families. I now realize how fortunate I was to have been raised in a culture that did not take trees for granted.

But it wasn’t until I became a venture investor that I fully understood the deep philosophy behind the timing of the Jewish new year for trees. It is a perspective that encourages an entire people to look beyond the tiny buds of cloudy January to the ripe fruit of sunny June. To celebrate what we hope to reap as we make our journey over the horizon, and not just the slim pickings that surround us today.

Tu B’Shvat is first mentioned in the Mishna, a collection of rabbinic teachings first compiled around the start of the third century, long before we had atomic clocks or the ability to predict the weather – let alone see into the future. Life was marked by constant conflict, catastrophic floods, deadly droughts, and a permanent lack of security. Yet this ancient people had enough hope in the future to look beyond the horizon, even if they were uncertain how to reach it.

Over the horizon

I take a similar approach to venture investing as the ancient rabbis nearly 2,000 years ago as they contemplated the trees of dark midwinter and saw how they would flourish in the sunlight.

The venture capital outlook is not measured in days, months, or even single years. Venture capital funds on average are built with a 10-year timeframe. We look into the future and try to peer over the horizon to a decade hence.

2021 was an extraordinary year for venture capital despite the continued pandemic. Israel celebrated a record year in which funding for startups more than doubled to $25.6 billion, including 77 mega deals of more than $100 million each, resulting in some 90 unicorns, 23 Wall St. IPOs and a startup ecosystem now numbering 9,000 different companies in a country with a population of just 10 million. We have entered a golden age for Israeli venture investing.

Some people wonder, with justification, whether our venture valuations have risen too high, creating a bubble. Any discussion of the issue requires a frame of reference relative to time. From a short-term perspective of months, quarters, or a year or two, this could be a problematic market. But many venture capitalists like myself are looking far beyond 2022 toward the end of the decade.

The true venture perspective is that the high-tech markets will surge in the years to come. If we were able to leap ahead into 2030 and look back at this decade, we would feel very fortunate to have invested – even now, when valuations have climbed so far relative to where they were before the pandemic.

New-born industries

Venture capital, turbocharged by the rapid digital transformation of the Covid era, is creating new-born industries that will undergo accelerated growth spurts as they develop through infancy to become fully-fledged sectors in the world economy. We may not know the exact timeframe in which they will reach maturity, and which ones will be the true winners, but many of them are certain to perform handsomely.  

At OurCrowd, we are investing in several of these infant industries. Quantum computing, which has long been a fascinating theoretical science project, is on the cusp of commercial deployment. We are betting on QuantLR, Polaris Quantum Biotech, Classiq and Entangled Networks. There is no guarantee that any of these quantum startups will be successful in the next year or two, but we believe that this sector will be really important by the end of the decade.

Climate change has combined with a supply-chain crisis to accelerate the emergence of a new generation of food technology companies sourcing meat, fish and milk from plants, yeast and lab-grown cells. Companies like Ripple, DouxMatok, Tovala and Beyond Meat are already feeding millions. Our mouths are watering as we anticipate the offerings from BlueNalu, Remilk, Maolac, Ÿnsect and BlueTree Technologies.

Agriculture is about to be transformed by the digitization of farming and distribution by companies like CropX, Taranis, BioLumic, Trellis, Plenty and Sufresca.

And the supply chain will be reconfigured by companies like Freightos, Flytrex, IntellAct, Salted and Farmstead.

Is it too early celebrate the growth of these new industries? Not if you come from a culture that marks the new year for trees in the middle of winter. I see the tiny buds and I am certain that, with the right attention and care, they will flower and produce fruit.

If you have never celebrated Tu B’Shvat, it’s never too late to start. Step outside, plant a tree of your own and watch it grow. And while you are at it, perhaps build a venture portfolio and watch it develop over the decade.