What Israeli Startups Should Know Before Talking to US Investors: A Complete Guide

Israel is known as the Startup Nation, where entrepreneurs are rapidly founding new companies to solve the world’s toughest challenges. This vibrant business environment is very attractive to US capital because it offers opportunities for rapid growth through technology and innovation.

However US investors bring more than just money. They offer their networks, credibility, and market access. And it's important for Israeli founders to recognize the key challenge that American VCs have different expectations than Israeli angels or local funds.

This article will break down what Israeli founders must prepare before stepping into a US investor meeting.

Why Israeli Startups Are Eyeing the US Market

It’s clear why Israeli founders may wish to attract US investors. There is a significant advantage at scale, meaning larger funding rounds and access to a bigger customer base through their connections. They can offer strategic access to Silicon Valley, New York, and Boston ecosystems and technology hubs and offer the market access needed for young companies to quickly scale.

Understanding the Mindset of US Investors

There are some critical things to consider when getting to know the mindset of a potential investor. Find out what is their tolerance for risk, and their expectation for traction. How much traction might they expect to see before an investment, and what is the expectation for growth to follow. 

Investors will want to understand the scalability of your product or service, and what will be the US market potential if it can succeed. They will use data-driven decision making, including: ARR, Churn, and CAC/LTV ratios.

Preparing the Perfect Investor Pitch Deck for US VCs

There are some key considerations on how to prepare the perfect pitch deck that will be shared with investors.

The first is to keep it simple and story-driven. Illustrate the problem, provide your solution, demonstrate the traction, and your product roadmap. Show clearly what is the TAM - or the Total Addressable Market, where the total revenue opportunity is shown if a product or service were to capture the market. 

Highlight what the strategy will be for a US go-to-market, and distinguish how it would be addressed differently than what has happened with Israeli traction. Share profiles of the founding team and showcase their global mindset and adaptability. Include financial projections in USD with realistic assumptions.

Legal, Compliance, and Structuring Considerations

It will be important to consider if you will need a US entity in order to raise funds. This is where having a trusted financial advisor can guide you through the structure, set up, and tax implications abroad. Setting up a Delaware C-Corp or US subsidiary will matter if you’re anticipating business activity, sales, and hiring employees there. And there may be regulatory pitfalls to avoid. Some legal considerations include Trademarks and Intellectual property protection for cross-border startups.

Common Mistakes Israeli Startups Make When Approaching US Investors

Beware of oversight on common areas. This includes overvaluing the company compared to US benchmarks. A lack of clarity on US customer acquisition strategy. Not sufficiently localising the product story for an American audience. Poor follow-up and communication after meetings. 

There are also cultural and communication differences to be aware of. Israelis need to take their directness and adapt it to a more storytelling approach in their pitches. There is a preference for

clarity over technical jargon. It’s important to be confident, but not arrogant. And build relationships leading with trust.

How to Build Relationships with US Investors Before the Pitch

Founders should take every opportunity possible for networking through accelerators, conferences, and demo days. Build the relationships, and continue the connection online through LinkedIn. Prepare for meetings by doing research on investors in advance - be familiar with their areas of interest and speak to their experiences.

Final Checklist Before Approaching US Investors

Consider these steps as a check before you go for it:

• Do you have a US-ready pitch deck?

• Are your financials and metrics investor-grade?

• Have you considered legal structuring and compliance?

• Are you prepared to answer tough due diligence questions?

• Do you have a network or warm introduction strategy?

Having US investors can accelerate the growth for an Israeli startup, but it requires thorough preparation. Israeli startups have an edge with innovation but must adapt to US standards in order to go the distance. 

We encourage founders to seek expert guidance, as we provide at SZ Shvarts Zedkia.

Ready to take your Israeli startup global? Book a consultation with our advisory team to perfect your US investor strategy, pitch deck, and market entry plan. Let’s make your next investor meeting a success.