Accelerator Fusion Raises $20M to Support Israeli Early-Stage Startups

Early-stage startups

Tel Aviv-based accelerator program, Fusion, has recently secured a total of $20 million for its new fund, aimed at investing in early-stage Israeli startups and first-time founders. Founded in 2017 by Guy Katsovich and Yair Vardi, Fusion has already invested in over 100 startups, with a combined valuation of $1 billion.

Insight Partners, a US-based venture capital and private equity firm, along with 70 serial entrepreneurs and venture capitalists from Israel and the US, including notable figures like Gigi Levy-Weiss and Ofer Ben-Noon, have backed Fusion’s new pre-seed fund.

The fund has already made investments in 30 startups led by Israeli entrepreneurs, including Quris (an AI pharma startup), Blend (a localization startup), Zoma, and The Real Cereal Co. With the final closing of the fund, Fusion aims to make pre-seed investments in an additional 60 to 80 Israeli startups by 2026.

Despite a decline of 75% in investments in Israel compared to the previous year, Fusion remains committed to supporting Israeli companies and taking risks where others might hesitate. Katsovich stated, “In the last five years, we have been one of the most active ‘under the radar’ investors.”

In the first quarter of 2023, Israeli tech companies raised $1.7 billion in capital, a 70% decrease from the $5.8 billion raised in the same period of the previous year. This decline follows a peak in private investments in the local tech sector in 2021, with investments totaling $26 billion, which dropped to around $15 billion in 2022.

Katsovich emphasized the importance of initial capital for first-time founders and those working in verticals unfamiliar to Israeli investors. Fusion provides $150,000 in funding to startups in the early stages, between the idea stage and the initial product or revenue stage. The accelerator program not only offers financial support but also facilitates access to future investors, mentors, advisors, and potential clients, with a specific focus on the US market.

Fusion’s portfolio boasts over 20% of startups led by women founders, including Agora (a real estate investment platform), DigitalOwl (an AI medical analysis platform), and (a customer marketing platform). More than 70% of the portfolio companies have successfully raised funds following the program, with an average funding amount of $2.5 million.

The accelerator program includes a bootcamp in Tel Aviv, followed by a three-week roadshow in Silicon Valley, New York, and Los Angeles, where participants meet with US investors and mentors. Throughout the program, founders have the opportunity to engage with over 150 mentors from Israel and the US.

Upon completing the accelerator program, participants join Fusion’s alumni network, comprising over 200 founders. This network serves as an ongoing platform for workshops, forums, and discussions on fundraising, company management, hiring, sales, and partnerships.

In conclusion, Fusion’s $20 million fund will enable the accelerator program to continue supporting early-stage Israeli startups and first-time founders. With its focus on providing initial capital and valuable resources, Fusion plays a vital role in the growth and success of the Israeli startup ecosystem.