How Israel’s Tech Giants Are Rethinking the Exit: The Rise of the 00B Playbook

Israel’s tech industry has matured far beyond its “Startup Nation” nickname. Today, it’s home to billion-dollar companies defying traditional exit strategies, staying private longer, and aiming to be among the world’s most valuable tech giants. Yet this evolution brings growing pains: outdated financial structures, liquidity challenges, and an urgent need for a new approach to value realization. Ophir Reshef, partner at Israel Secondary Fund, offers a compelling view into why Israel’s next $100 billion companies must reject early exits — and how the entire system must evolve to support them.

Seventeen years ago,

This exponential growth isn’t limited to local dynamics. Globally, technology dominates every facet of life. The six largest US companies are tech firms, each valued between $1 trillion and $3 trillion. In parallel, Israel’s ecosystem has transformed from scrappy startups to ambitious scaleups, attracting $12 billion in investments in 2024 compared to just $1.2 billion in 2010.

The new trend? Tech leaders in Israel are no longer chasing fast acquisitions. Instead, they’re betting on long-term growth, investing heavily in infrastructure and market leadership. Wix, for example, created $650 million in value from founding to IPO, but added nearly $20 billion in the following years. The big payoff comes from patience — and from independence.

Of course, high growth brings high risk. Markets can shift, regulations can change, and competitors can emerge overnight. SolarEdge’s dramatic collapse from a $20 billion valuation to $600 million in just 18 months is a painful reminder. Yet acquisitions, while seemingly safer, don’t always guarantee success. Many acquired Israeli startups like Chromatis or Habana Labs failed to meet expectations post-acquisition.

One big hurdle: Israel’s financial infrastructure doesn’t support companies aiming to stay private and grow big. Founders and VCs often have most of their wealth locked in illiquid shares. VCs operate on decade-long fund cycles and feel pressure to show returns — even if the company’s best days are still ahead.

To solve this, Israel needs modern liquidity mechanisms. Three primary routes can help tech companies avoid premature exits:

IPO (Initial Public Offering): While ideal, IPOs are rare. Only 40 tech IPOs occurred on US exchanges between 2022 and 2024. Companies now wait over 12 years on average to go public — too long for early stakeholders.
Private Equity Majority Transactions: PE firms like Francisco Partners offer partial liquidity while preserving growth potential. But they often require strategic shifts and early profitability, which may not suit every company.
Secondary Share Sales: These allow founders, employees, and investors to sell part of their holdings without forcing a full exit. In 2024, secondary deals accounted for 71% of VC exit dollars globally. They free up capital while preserving independence.

To truly dominate on a global scale, Israeli tech needs to embrace these modern financial tools. Founders should be able to focus on long-term value, employees should enjoy liquidity, and investors should earn returns without pressuring early exits. Only then can Israel realize its full potential in the global tech arena.

What Undercode Say:

The shift in Israel’s tech scene marks not just a financial evolution, but a strategic one. Here are key takeaways and insights based on the trends discussed:

Exit culture is fading fast — Companies like Wiz are changing the narrative from “build to sell” to “build to lead.”
Late-stage value creation is real — The biggest gains often come after the IPO or traditional exit window.
Liquidity must evolve — Israel’s outdated infrastructure could throttle its most promising companies unless solutions scale up fast.
Secondary markets are the silent enabler — Allowing partial liquidity without giving up control might be the smartest route for founders today.
Risk is no longer the enemy — High valuations come with volatility, but they also reward boldness. Strategic patience is the new weapon.
Market leaders are formed in years 10–20, not year 2 — VCs need to recalibrate expectations for timelines and returns.
The global vs. local factor — While tech is global, Israel’s internal financial maturity is still catching up with its companies.
Acquisitions aren’t always wins — Several “successful exits” look less stellar in hindsight.
Culture shift is needed inside VC firms — LPs must support long-haul thinking rather than forcing quick turnarounds.
Employee motivation depends on liquidity — Offering RSUs and secondary options is essential to retain talent in long-term journeys.
Regulation and public markets gatekeeping IPOs — Higher standards make public listings harder than ever, delaying liquidity events.
Private equity brings growth with compromise — While viable, PE often demands strategic concessions that limit long-term vision.
Wix’s playbook is a model for scale — From modest IPO to massive market cap, its trajectory proves patience pays off.
Israel’s next giants might be homegrown FAANG rivals — But only if financial policy, VC culture, and founder incentives align.
Data centers and AI shift valuation models — Companies like Mellanox, if independent, could be worth 10x more due to AI demand.
Premature exits mean leaving money on the table — Billions lost due to early sales is a recurring pattern.
The 10-year VC cycle is broken — Time horizons must expand to accommodate next-gen tech growth.
Founders need mental security too — Secondary deals provide stability, preventing burnout or early departures.
IPOs shouldn’t be the finish line — They should be viewed as a midpoint to greater scaling.
Tech monopolies change acquisition logic — Being acquired today often means being neutralized, not empowered.
Scarcity of IPOs increases the value of secondary liquidity — Limited public options force creativity in private capital markets.
Mellanox is a cautionary case — Its tech might have been worth 10x more had it remained independent.
Undercode believes scale will define national competitiveness — Israel must avoid capping its biggest companies too early.
The goal must be independence, not just survival — Scaleups with long-term vision outperform those optimizing for near-term gains.
Funding models need reform — LPs should support secondaries, not just exit multiples.
Corporate governance must evolve too — Boards should reward scale, not premature monetization.
The $100B company is within reach — With proper alignment, Wiz could be the first of many