The Startup Nation Strikes
Why We are Optimistic about Israel's Strikes on Iran
Most of you have likely heard by now about Israel’s military strikes on Iranian nuclear facilities and military leadership during the night of June 12–13. You've probably also already encountered a wide range of perspectives on the event, from condemnation to praise. Regardless of your view on whether the strikes were justified, it’s understandable to be concerned about the potential consequences. Will this ignite a wider war? Will it draw the United States into conflict? Could it increase the risk of economic recession? Given our firm’s investments in a number of both private and public Israeli companies, we feel it is important to offer our perspective—and hopefully help alleviate some of your concerns, particularly as they relate to your investments in Israel.
First, it is essential to emphasize that the Islamic Republic of Iran has posed a regional—and indeed global—threat since its violent inception in 1979. The U.S. Embassy Hostage Crisis (1979–1981) and the Hezbollah bombings in Lebanon that killed U.S. Marines in the early 1980s were just the beginning of a decades-long campaign of violence by a regime that has made “Death to Israel” and “Death to America” its rallying cries.
Throughout the 1980s, Iran fought a bloody war with Iraq, which escalated into attacks on oil tankers in the Persian Gulf and direct confrontations with the U.S. Navy. In the 1990s and beyond, Iran expanded its influence by building a network of terrorist proxies across the region, responsible for kidnappings, assassinations, and attacks—including the 1996 Khobar Towers bombing in Saudi Arabia.
During the Iraq War, Iran supplied insurgents with Explosively Formed Penetrators (EFPs), a type of IED that maimed or killed hundreds of U.S. servicemen. As Iran’s influence grew, even Arab nation-states began to recognize that Israel was less of a threat than the regime in Tehran—especially as Iran inched closer to acquiring nuclear weapons despite international diplomatic efforts. This realization helped bring about the landmark 2020 Abraham Accords, which normalized relations between Israel and several Arab states.
We recount this history to illustrate both the enduring threat posed by Iran and the strategic value of efforts to remove that threat. But we also want to contrast this dark history with a far more positive story—that of Israeli innovation and enterprise.
As a small country surrounded by larger and often hostile neighbors, Israel has relied on innovation and ingenuity to build a strategic edge. Military necessity drove the development of advanced defense technologies, but the required national service of its citizens also helped foster a unique ecosystem for military-to-civilian tech transfer. As early as the 1970s, Israel began making strides in civilian technology—particularly in telecom and software. Israeli tech expertise led Intel to open an R&D center in Haifa, Israel in 1974, which helped produce some of the core technology that undergirded Intel’s chip dominance for the ensuing decades.
By the 2000s, Israel had earned the title “Startup Nation,” having made significant contributions to advanced sectors like semiconductors, telecommunications, cybersecurity, biotechnology, and software. It is no exaggeration to say that Israeli technology underpins many of the devices and services Americans use every day—from Intel processors to the Waze navigation app.
Israel’s military, while small in manpower, has become the most technologically advanced in the region. It is not just Iran’s threat that has brought Israel and Arab states closer; it is also Israel’s economic and military innovation that makes it an ideal partner for Arab leaders eager to spark growth and modernization in their own countries.
It is for these reasons—technological prowess, ingenuity, and entrepreneurial spirit—that we invest in Israeli companies. These same qualities also make us confident that Israel’s mission to eliminate Iran’s nuclear capabilities and neutralize its destabilizing influence will ultimately succeed. The extent to which Israeli technological prowess and ingenuity has been demonstrated in the past few years in the nearly complete destruction of the Hezbollah network, the successful defense of the country against Iranian missile attacks, and the recent strikes inside Iran is simply extraordinary.
Israeli leadership has indicated that this operation may take time. Understandably, this will be a tense period—not just for Israel but for the entire world. Nevertheless, our contacts on the ground in Israel have conveyed their preparedness and confidence in navigating the days ahead. The Israeli companies in which we invest have also assured us that they are equipped with the necessary redundancies and contingency plans to maintain operations under virtually any condition.
With all of the fear and outrage in the news as this conflict unfolds, the market will likely be in a “risk-off” mode, particularly regarding Israeli companies. However, if the result of this operation is what we hope and believe it will be, then we think that market conditions following these events could actually rerate significantly higher. This means that any weakness in company valuations as a result of this conflict may actually be an extremely good buying opportunity. We will be tracking these developments very closely and provide further updates as events unfold. In the meantime, try not to worry too much, and please pray for Israel, Iran, the Middle East, and the safety of innocents all around the region.