Initiative to Bolster Israeli Startups Amidst Gaza War Challenges

Ezra Gardner of Varana Capital launches a $50 million fund to bolster Israeli startups affected by the conflict, highlighting the resilience of innovation in challenging times.

By Troy O. Fritzhand, Algemeiner

When Hamas terrorists raided southern Israel on Oct. 7, brutally murdering more than 1,200 people, mainly civilians, and kidnapping 240 others, the immediate fear in the tech world was how the country would bounce back.

Ezra Gardner — the CIO and co-founder of Varana Capital, an Israeli-focused venture capital fund — woke up that day “with every emotion from horror to sadness to anger” but ultimately realized he had to do something about it.

“I have been training 25 years to be a soldier for the Israeli economy,” the dual Israeli-American citizen told The Algemeiner.

Gardner — who is based in Denver, Colorado and in normal times travels to Israel every six weeks — got to work and established the Chai 10X Fund, a “no management fee, no performance fee, no research or invest expense” pro-bono fund aimed at propping up ready-to-scale Israeli startups impacted by the war with Hamas launched on Oct. 7.

Under this arrangement, Gardner and his firm will cover the expenses typically billed to investors, while donating his time for Israel.

He explained that Israel’s economy is more dependent on foreign direct investment than any country of the Organization for Economic Cooperation and Development (OECD), and that according to government statistics, the hi-tech sector in Israel is the largest tax contributor.

Gardner said this was an “existential moment” for the Jewish state, for which his grandparents fought in Israel’s 1948 War of Independence.

The 180 million NIS (about $50 million) fund has a “dual mandate as my mission as a soldier for the Israeli economy,” Gardner explained.

First is the raising and allocation of the money to the companies that need it most.

The Chai 10X Fund will focus within the same sector that his day-to-day fund, Varana Capital, has operated for the past 13 years — Israeli companies that have already raised money, conducted research and development, and either have revenues or are about to scale them up.

Their focus is on the hardware space, with products in fields such as computers, electric vehicles, and agriculture that are “demonstrably better than what currently exists, can be built, and is heavily patented.”

Gardner said that allocating the capital will “not at all” be a problem, and that there is a huge need for the funding Chai 10X is getting ready to deploy.

The second mandate for the fund, according to Gardner and what is taking up a large portion of his current trip to Israel, is “to be a conduit to the government to help the technology ecosystem get everything it needs.”

Throughout this process, Gardner has been meeting with top members of Israel’s Parliament, known as the Knesset, and the CEOs of Israel’s largest banks to break down and hopefully solve the problems facing the country’s economy during wartime.

“I did a thought experiment and thought: What if the war ended tomorrow, and in the best way? When would the guys in Silicon Valley hop on a plane and come back to Tel Aviv?” he said.

In Gardner’s estimation, even the best situation for fiscal year 2024 won’t have a great economic outlook.

The goal then, Gardner explained, is to work through and find ways to compensate the losses in foreign capital with domestic capital, which he said the Israel Innovation Authority is helping with, as well as funds like his own.

People outside of Israel “should know how resilient these entrepreneurs are,” Gardner said, adding that “Israeli innovation delivers no matter what.”

“We are strong and resilient,” he said. “There is no silver bullet, but together we can make it work.”