In recent months, Dovi Frances, founder of venture capital fund Group 11 and a regular participant in the Israeli version of "Shark Tank", has been badmouthed on the social media of some of Israeli high-tech’s top industry leaders. His conciliatory attitude towards senior government figures, including Prime Minister Benjamin Netanyahu, has infuriated anti-government protest leaders, who prefer to speak with one voice - the one that objects to the government's judicial reform moves, and the sector’s unequal share in bearing Israel’s socio-economic burdens.
Frances’s comments against managers at companies like Papaya Global and Riskified who made statements about withdrawing funds from Israeli bank accounts, a secret meeting with Netanyahu last month, and with Minister of Education Yoav Kish the other week, made it definitively clear to Israel’s high-tech elite that he does not share their worldview.
Frances recently celebrated a kind of small personal victory when he proudly shared photos of himself with senior executives of Open AI, the artificial intelligence company behind ChatGPT, whose CEO, Sam Altman, paid a quick visit to Israel. Frances, it turned out, was host to the delegation, which included prominent names such as Ilya Sutskever, one of the founders of OpenAI, a former Israeli who immigrated to Canada; Head of Public Policy Anna Makanju, Chief Operating Officer Brad Lightcap, Head of AI Specialist Yaniv Markovski, and Technical Chief of Staff Bianca Martin.
He also made sure to take advantage of the opportunity and bring the senior delegation together with his portfolio companies and with CEOs and investors to whom he is close: NSO co-founder and CEO Shalev Hulio, now CEO and co-founder of Israeli cyber company DREAM, in which Frances is invested; Alex Bouaziz, co-founder and CEO of payment management company Deel [a competitor of Papaya Global - A.G.]; Gong CEO Amit Bendov, Rapyd CEO Arik Shtilman, Tipalti co-founder and CEO Chen Amit, and Nvidia Israel Senior Country Director Nati Amsterdam.
The delegation started the day at the offices of Masterschool, one of Frances’ portfolio companies, which provides an online course management system for universities and high-tech companies and during the Covid-19 period ran high-tech training courses for thousands of start-up hopefuls. The delegation hosted Minister of Education Yoav Kish at the Masterschool offices, and from there continued to a cocktail event at the Dream offices in Tel Aviv’s Sarona complex, and ended with a meal at nearby restaurant Claro. Frances refuses to say how the relationship with OpenAI came about or why he was chosen to be the host. "I’ve been living in the US, living in California, and working in Silicon Valley since 2006. I have an assortment of connections that allows me to reach the people I need to reach in a short time."
"You can’t live on past glories"
Frances will not reveal the content of the meetings with the top management of the world's most intriguing company, but reveals that one of his goals in meetings with politicians and industry insiders was to present a program he is working on to promote artificial intelligence in Israel.
"Israel has been living on the 'Startup Nation' story, but we cannot live on it forever. We have to move forward, into the age of artificial intelligence," he tells Globes. "You can’t live on tales of past glories. First, we must bring as many as possible of the top executives in this field to Israel, and hold as many meetings as possible: from Elon Musk, through the CEO of Nvidia, to Sam Altman. We must solve the financing issue: because of the global crisis in high-tech investment, we will end the year with a total of $5 billion in investment in Israeli startups. This amount puts us behind in comparison with the stream of investment we’ve become accustomed to in the past, and means we have to make up a shortfall of $10 billion in the next three years just to maintain momentum. Therefore, the vacuum left by foreign investment must be filled from within."
Will the government help?
"Everyone must pitch in: the financial institutions need to invest and increase their allocation to venture capital assets far beyond the current 0.8% level. Venture capital fund partners like me need to understand that this is a state of national emergency, and waive management fees on funds raised during these hard times".
There is no precedent in history for venture capital fund managers waiving their management fees.
"But there’s no precedent in history for the situation we’re in. We are in a state of national emergency. Much less money is coming into Israel, and there is an artificial intelligence revolution going on. The reason that investments have dried up isn’t the judicial reform but the global economic situation. But what characterizes us as Israelis, the asset we have always had, is the ability to pitch in and work together. The government should also provide guarantees, which don’t necessarily require state budget funds. Governments have ways to help markets move faster without losing money. We must also take care of education and train 100,000 AI engineers here in a short time. In Israel, 30,000-40,000 engineers enter the market every year through the army, universities, and training courses, so there’s a big gap in reaching this goal."
How will you train 100,000 AI engineers when the government exempts haredi youth from learning English and math, without which they will not be able to work in the field.
"We need to find effective ways to think about education on a large scale and find quick ways to train software engineers, artificial intelligence engineers, and they need to come from the weakest strata of society: the haredim and Israeli Arabs. There are 1.2 million haredim in Israel, and this population is growing by 4.4% a year. That means this group doubles in size every 16.3 years. Within 15 years, the haredim, the religious, and Arabs will be the majority in the country. So, the protests have their place, but our job is to reach out to the population through education. Platforms like Masterschool can train you, for example, to be an English teacher within a year. We have here the best minds in the field: Ilya Sutskever who wrote the basic model of OpenAI, and Noam Shazeer, one of the most important scientists in the world, who conceived the mission and vision of the field. So, don't tell me that it's impossible to solve the problems here. Everyone should pitch in and start pulling together instead of fighting among themselves. Let's make Israel the AI nation, instead of a backward nation that shoots itself in the foot."
You're part of Israel’s tech industry. Surely you understand the protesters’ fears about the judicial reform. After all, foreign investors have also expressed great concern about it. They know that it may jeopardize their ability to maintain their intellectual property in Israel, and reduce the chance of winning a fair trial in any type of dispute.
"The demonstrations are important. I was even present at some of them. But I’m looking towards the year 2030. We must turn our attention to other things; there’s a national emergency, and anyone who doesn’t understand that -- misunderstands completely where the future is going. My job is to be a futurist; I invest in the future. The world is going in a direction that, unless we prepare for it as a nation, we’ll will miss out. Both sides need to get off their high horses and be flexible."
Published by Globes, Israel business news - en.globes.co.il - on June 18, 2023.
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