Like everyone around the world, Israeli startups are closely following Trump’s soon-to-be presidency
As news of Donald Trump’s successful long shot run for the presidency of the United States broke Wednesday morning, it sent immediate shock waves through the global markets.
Markets in Asia and the Mexican peso were the first to take hits. The Nikkei 225 fell by 5.36%, while the Hang Seng Index for its part dropped by 2.16%. The peso took a nosedive, losing 12% in just a matter of hours. Thankfully, the bleeding began to ease after Trump made his acceptance speech, but fear continued to reverberate throughout the markets.
Conversely, gold trading shot up, with CNBC reporting a 5% spike in trading, supposedly the most significant rise in the commodity since the vote for Brexit. For anyone familiar with public markets, gold is one of those investments that are sought after in times of deep uncertainty since it is thought to maintain value in rougher waters.
Traditionally lagging behind the public markets, the private equity sector has been slow to respond, leaving most with an uncertainty about how the events will play out in the tech industry.
“Shocks like this have an immediate effect of slowing investment decisions. The problem with this election is that Trump’s position on most issues is wholly unclear,” Adam Fisher of Bessemer Venture Partners tells Geektime. “My expectation is that the market will have a sharp reaction but will then stabilize and come back, not unlike what happened with Brexit.”
In Israel, the tech and investment community appeared to be showing a more “wait and see” kind of attitude. As one of the most active startup scenes, having raised $3.26 billion so far this year alone from private equity, Israel would likely be among those to feel the crunch. So why the relative ease that has been expressed so far?
One way to read this calm could be that Israeli VCs and entrepreneurs feel that they already have their gold investment, based on the fields that have been shown to be strong here, and are likely to remain in demand even in the event of a slowdown.
Cyber security has been one of Israel’s strongest exports, and recent years have been no exception. As more hacks continue to gain headlines like this week’s revelation that 9,000 customers at the British Tesco Bank had money stolen from their accounts, demand for solutions to keep our digital selves safe will only increase.
Kobi Samboursky, a co-founder and managing partner at Glilot Capital Partners which has a number of cyber companies in their portfolio, tells Geektime that cyber will remain relevant moving forward.
“Cyber is part of what we do,” he says, explaining that regardless of who the president is, cyber remains a significant threat. Samboursky points out that state actors like China continue to be a threat to the US.
“We expect that cyber attacks and spending will increase and specifically with [Trump] as president it will probably be more dramatic,” he tells Geektime, adding that, “Cyber is a very easy way to attack, cause damage, and collect information. If relations [with countries like China] worsen, it will give another boost to the cyber industry.”
Interestingly, as a candidate Trump called for state actors like Russia to target the US with cyber attacks, having enjoyed the theft and leak by Wikileaks of private emails from the Clinton campaign. Exactly how seriously his administration would tackle intrusions by the Russians remains in the air.
Despite the fears that many others have expressed thus far, Samboursky is generally yet cautiously optimistic about the next stage now that the elections are behind us.
“I think that it will be a safe assumption that markets will tumble for a while but it will be temporary,” he says. “It is up to him on whether he is able to establish a government that can give people comfort and specifically if he is smart enough to put people in the right positions from the hi-tech community that things will be safe and stable.”
”Even if you look at hacking of emails, from a pure business perspective, for a fund like us and the Israeli industry in cyber, it could be good news that cyber could become more of a common tool to use,” he posits.
That said, Samboursky says that some questions for the tech community remain in the air regarding issues like immigration. Nearly all Israeli CEOs spend considerable time in the US setting up their sales offices. This is not to mention all of the other international talent that they hire for their US branches that could quickly dry up. If visas for hi-tech workers are curtailed, it could have an impact on business.
Beyond cyber, Samboursky believes that Israel has a serious advantage in fields like deep software, Big Data, business analytics and other other hard sectors. As such, they may fare better in a period of stress on the market.
Israeli firms like Twiggle and the work that they are doing in reshaping the world of e-commerce through Big Data and machine learning are also likely to remain in big demand as more of the economy goes online.
Samboursky hopes that because Trump comes from the business community, that he should be able to maintain a stable business atmosphere, possibly one that is more friendly than how it could have been under Clinton. “If indeed he will be able to improve the economy of the US, then we will benefit as well since we are so closely correlated. Assuming that the American economy will go forward, Israeli companies can go forward.”
“I think that uncertainty is key in the coming days and weeks. At the end of the we are a part of the global economy and if everything is calming down, then we are a part of it.”