Ariel Sterman believes Israel’s position in artificial intelligence is widely misunderstood. The country may not be producing the foundational models or operating the data center infrastructure behind them, but Israeli founders have repeatedly shown that they can turn global infrastructure into valuable products and businesses.
In an IsraelTech interview hosted by Yoel Israel, Ariel discussed how he entered Israeli venture capital, what Bessemer Venture Partners looks for in founding teams and why customer feedback matters more than a polished pitch. He also shared where he sees opportunities in vertical AI, data infrastructure and Israel’s growing gaming industry.
At the center of the conversation was a practical view of company building: Ambition matters, but founders also need the humility and discipline to test their assumptions, listen to customers and adapt quickly.
What You’ll Learn
- How Ariel built a career connecting American capital with Israeli technology
- What early-stage investors look for beyond a startup idea
- Why rapid iteration is one of the most important founder qualities
- How Israeli directness can improve product development
- Why Israel is not necessarily behind in AI
- Where Ariel sees opportunities in vertical AI and data infrastructure
- How successful Israeli companies are producing the next generation of founders
Table of Contents
- How Ariel Entered Israeli Venture Capital
- What Investors Look for in Founders
- Why Israeli Directness Helps Startups
- How Bessemer Makes Investment Decisions
- Why Israel Is Not Lagging in AI
- Israel’s Opportunity in Vertical AI
- Why Mentorship Matters in Venture Capital
- Gaming and Israel’s Talent Flywheel
- Key Takeaways
How Ariel Entered Israeli Venture Capital
Ariel grew up in New Jersey in an Orthodox Jewish and Zionist household. His mother is Israeli, and regular childhood visits to Jerusalem helped him develop a personal connection to Israel.
By high school and college, Ariel knew that he eventually wanted to build his career and family life in the country. That goal influenced the professional decisions he made in the United States.
Early in his career, Ariel joined Stripes Group, a New York growth equity firm investing in companies at later stages of development. The role exposed him to businesses with measurable revenue, established operations and enough financial history to analyze quantitatively.
At the time, Israeli technology companies were beginning to pursue a more ambitious path.
Rather than developing technology for an early acquisition, more founders were attempting to build independent companies with significant revenue and long-term global operations. Ariel saw an opportunity to specialize in this growing segment of the market.
Building a Network Before Making Aliyah
While working in Manhattan, Ariel positioned himself as the person at his firm focused on Israel. This allowed him to develop relationships with Israeli startups and early-stage venture capital firms while still contributing directly to his employer.
When he later made aliyah, those relationships gave him a way into the local ecosystem.
Ariel’s advice for people trying to enter Israeli tech is to find an organic connection between their current work and the ecosystem they want to join. Rather than waiting until moving to Israel to begin networking, professionals can start by finding ways to work with Israeli founders, investors or companies from their existing position.
That approach creates genuine professional value on both sides. It also gives someone a relevant track record before asking the ecosystem for an opportunity.
What Investors Look for in Founders
Bessemer is a multistage venture capital firm, but Ariel explained that much of its Israeli activity has historically focused on early-stage companies. According to Ariel, approximately 60% of its Israeli investments have been made around the founding or seed stage.
At that point, investors have limited financial information to assess. The quality and composition of the founding team therefore become central to the investment decision.
Founder-Market Fit Goes Beyond Industry Experience
Ariel looks for founder-market fit, but he does not define it only as prior employment in the same industry.
A founder may have experienced a specific problem firsthand. Another may come from a different market but understand how to build a similar type of product, reach the same customer or operate the required business model.
The important question is whether the team has an advantage that will help it understand and serve the market better than its competitors.
This matters because startup ideas are rarely secret. Multiple companies may recognize the same market opportunity at roughly the same time, especially in popular areas such as enterprise AI agents.
Identifying a problem is only the beginning. Founders must investigate its causes, speak with the people affected and understand what customers are actually willing to adopt or purchase.
The Ability to Iterate Quickly
For Ariel, one of the most important founder qualities is the ability to process information without becoming trapped by the original idea.
Strong founders arrive with a clear point of view, build an initial product and then test it against customer feedback. They do not force the product onto the market simply because it reflects their first vision.
“The ability to iterate rapidly” is particularly important, Ariel said.
Rapid iteration does not mean changing direction in response to every comment. Founders need to distinguish useful market signals from individual opinions. They must then test different approaches until customer behavior and business metrics indicate that something is working.
That process requires both confidence and humility. A founder needs enough conviction to pursue an ambitious idea and enough honesty to recognize when the evidence points elsewhere.
Why Israeli Directness Helps Startups
After moving from New York to Israel, Ariel found that one of the most noticeable cultural differences was the level of directness.
Israeli communication is sometimes described as abrasive. Ariel sees it as a potential business advantage, particularly during the earliest stages of product development.
An Israeli startup working with a local design partner can often sit beside the customer and receive unfiltered feedback. The customer may say exactly which features work, which do not and where the product fails to address the original problem.
That clarity can shorten the development cycle.
Honest Feedback Reduces False Signals
In less direct business cultures, a polite response can be mistaken for approval. A customer may avoid criticizing a product, leaving the founders to assume that the meeting went well even though there is little interest in continuing.
Israeli founders are less likely to leave those conversations without knowing what the other person thinks.
Directness alone does not guarantee a good product. Feedback must still be relevant, and founders must decide what to act on. However, clear criticism gives a team useful information earlier, when changing the product is less expensive.
For Israeli startups selling internationally, combining this local feedback culture with access to global customers can be especially valuable.
How Bessemer Makes Investment Decisions
Bessemer’s size does not mean every investment must receive approval from a centralized committee, according to Ariel.
He described a partnership in which individual partners can pursue investments in the areas that interest them. When Ariel presents an opportunity, the broader team can offer criticism, encouragement and additional information, but he retains responsibility for the final decision.
This structure encourages more candid internal discussion.
Colleagues can challenge an investment without being seen as the people responsible for blocking it. Ariel can collect their perspectives, consider the risks and make the decision after reflecting on the complete picture.
The approach combines access to a global firm’s collective experience with individual accountability at the deal level.
Why Israel Is Not Lagging in AI
Ariel challenged the idea that Israel is behind in artificial intelligence.
The perception partly comes from the absence of an Israeli equivalent to the leading American foundation-model companies. Developing those companies requires extraordinary amounts of capital, computing infrastructure, energy and talent.
Israel has not historically built its strongest technology companies at that infrastructure layer.
The same pattern existed during the growth of cloud computing. The largest cloud platforms were American, but Israeli founders used that infrastructure to build globally successful software, cybersecurity and internet companies.
Infrastructure Is Not the Only Measure of AI Success
Ariel believes Israel should be assessed by how effectively its founders apply AI, not only by whether the country produces a major foundation model.
Israeli teams are accustomed to working with limited resources, moving quickly and building products on top of technologies developed elsewhere. Those capabilities are well suited to the current AI market.
“We’re not building the infrastructure, but we know how to take those resources and execute super fast,” Ariel said.
AI can help a small team develop software more efficiently, shorten the time required to launch a product and support services that would previously have required far more people.
It can also change how companies charge customers. Instead of selling access to software through a conventional license, an AI company may charge for the result it produces or connect its revenue to the value created for the customer.
These changes create opportunities, but they also force investors to ask harder questions about defensibility. If products can be developed faster, competitors may also be able to replicate them faster.
Israel’s Opportunity in Vertical AI
Vertical software is designed for a particular industry, profession or category of business. Instead of serving every possible company, it addresses the workflows and requirements of a defined market such as construction, restaurants, healthcare or field services.
Ariel believes Israel largely missed the first wave of vertical software companies.
One reason may have been the difficulty of understanding the scale of specialized American markets from Israel. A category that appears small locally can include tens of thousands of potential customers across the United States.
AI Gives Israeli Founders Another Chance
Ariel sees vertical AI as a second opportunity for Israeli entrepreneurs.
Many established vertical software platforms were built around cloud technology and conventional workflows. AI can allow a new company to automate more of the work performed inside those systems, provide a different customer experience or adopt a business model based on completed work rather than software access.
This does not mean adding an AI label to an existing product. Ariel described encountering companies that include AI terminology in presentations primarily because they believe investors expect to see it.
A meaningful vertical AI company must show why the technology changes the product, operating model or value delivered to the customer.
For founders, that requires detailed knowledge of the market. They need to understand how work is currently completed, where the expensive or repetitive steps occur and which outcomes matter enough for customers to change their behavior.
Why Mentorship Matters in Venture Capital
When Yoel asked what someone beginning a career in venture capital should prioritize, Ariel’s answer was mentorship.
Venture capital can appear to be driven mainly by instinct. In practice, Ariel sees it as a profession that develops through exposure to experienced investors and repeated participation in sourcing, due diligence, investment discussions and board meetings.
An early-career investor should therefore evaluate more than a fund’s name or the size of its portfolio.
What to Look for in a Venture Capital Role
Ariel recommends considering whether senior investors will involve junior team members in the full investment process.
Useful questions include:
- Will analysts participate in diligence rather than only sourcing companies?
- Can junior team members observe how partners evaluate risks?
- Will they have access to investment discussions and board meetings?
- Do the senior investors have a consistent record worth studying?
- Will mentors explain their reasoning and take junior opinions seriously?
The strongest apprenticeship environments allow new investors to hear how experienced partners think, test their own judgment and gradually take on greater responsibility.
Gaming and Israel’s Talent Flywheel
Gaming is another area where Ariel sees a clear Israeli advantage.
Israel has produced several generations of companies and professionals with expertise in performance marketing, analytics, creative production and game development. Employees who helped established studios grow can take that experience into new companies.
This creates a talent flywheel.
Successful companies train people in the systems, standards and decisions required to reach meaningful scale. Some of those employees later become founders, bringing their experience and professional networks with them.
The same pattern can be seen in Israeli cybersecurity and software. Companies such as Wix and monday.com have developed professionals who understand what it takes to build global products from Israel.
AI Will Not Make a Weak Game Compelling
AI can affect how games are designed, rendered and personalized. It may support different environments for individual players or make cloud-based gaming more practical.
Ariel nevertheless emphasized that consumers ultimately want enjoyable games. The use of AI is not enough to make a game successful.
Players may prefer an adaptive experience in one case and a carefully constructed linear story in another. The technology matters only when it improves the final product.
Ambition Is Rising Across Israeli Tech
Each major Israeli technology outcome changes what the next generation of founders believes is possible.
Earlier entrepreneurs may have considered a $100 million or $200 million acquisition a defining success. Later companies reached larger exits and public markets. More recent outcomes have encouraged founders to pursue companies worth tens of billions of dollars.
Ariel believes this growing ambition is one reason the current period is particularly important for Israeli technology.
However, a higher target must still be supported by careful execution. Founders need to translate ambition into immediate milestones, customer conversations, product decisions and measurable progress.
The goal may be a global company, but it is built one stage at a time.
Key Takeaways
- Ariel built his Israeli network by making the ecosystem relevant to his work before moving to the country.
- Founder-market fit can come from industry knowledge, product experience or familiarity with a relevant business model.
- Strong founders test their assumptions and adapt quickly when customer behavior provides new information.
- Israeli directness can help startups identify product problems earlier.
- Israel’s AI position should be judged by its ability to build products and businesses, not only foundational models.
- Vertical AI gives Israeli founders another opportunity to serve large, specialized markets.
- Mentorship and exposure to investment decisions are essential for developing a career in venture capital.
- Successful Israeli companies produce experienced employees who can become the next generation of founders.
Watch Ariel Sterman’s IsraelTech Interview
Watch Ariel Sterman’s full conversation with Yoel Israel on IsraelTech for more on early-stage investing, Israeli AI, venture capital careers, gaming and the relationship between ambition and execution.
