Israeli VCs embrace AI tools while maintaining human-first investing

Israeli venture capital leaders are adapting their investment strategies to incorporate AI tools while maintaining that human judgment remains irreplaceable in venture capital decisions. A new survey from CTech, an Israeli technology publication, reveals how three prominent firms—Red Dot Capital Partners, HiCenter Ventures, and Blumberg Capital—are using AI to enhance their operations while emphasizing that successful AI investments still depend on human trust, commercial focus, and long-term defensibility.

What they’re saying: Industry leaders consistently emphasize that AI enhances but doesn’t replace human decision-making in venture capital.

• “AI is already woven into our daily work … helping us process information faster, map markets with more precision, and prepare for meetings with richer context,” said Danielle Ardon Baratz, Partner at Red Dot Capital Partners.
• “At the end of the day, venture capital is fundamentally about people … AI can surface patterns and crunch data, but it can’t replace the trust and conviction that come from sitting with a founder,” Ardon Baratz added.

How firms are using AI: Venture capital operations are being transformed through AI-driven tools that accelerate core investment processes.

• HiCenter Ventures CEO Lior Hanuka noted: “We have adopted AI-driven tools for faster data analysis, benchmarking, and trend identification, which significantly reduced the time needed for initial screening.”
• Blumberg Capital has built “a proprietary AI algorithm to help us identify and evaluate opportunities across markets more efficiently,” which Managing Director Yodfat Harel Buchris said has doubled their pipeline.

The big picture: AI dominance in deal flow is reshaping the venture landscape, with Blumberg Capital reporting that “ninety percent of the companies we evaluate today are AI-focused.”

Investment criteria for AI startups: VCs are applying rigorous filters despite the AI boom, focusing on commercial viability over impressive technology alone.

• Red Dot’s Ardon Baratz emphasized that successful AI startups “don’t just build impressive tech, they solve a real problem inside a workflow, and they think commercially from day one.”
• Blumberg Capital follows the “6Ts” framework: “theme, team, technology, terrain, traction, and terms.”
• HiCenter focuses on “future potential rather than current revenues” when valuing early-stage AI startups, assessing “market size, team strength, and the defensibility of data and models.”

Key investment areas: The firms are targeting specific AI sectors with strong exit potential and infrastructure needs.

• HiCenter sees opportunities in “cybersecurity, … fintech and insurtech … medical AI, especially imaging and clinical decision support, and in energy optimization,” with Hanuka highlighting that “the Blue Economy could be truly transformative.”
• Blumberg prioritizes “startups with access to unique, hard-to-replicate data; products that become more valuable as they’re used; and moats that strengthen with every technological leap.”
• The firm is also focusing on “AI-infrastructure that enables enterprise-grade AI agents, particularly platforms that address latency, cost optimization, observability, and security.”

Market challenges: Israeli VCs face structural obstacles despite the AI opportunity, including “limited domestic compute capacity, underdeveloped model security and governance tools for regulated sectors, and talent shortages in AI-specific engineering.”

Why this matters: The volatile AI landscape requires careful navigation, with Ardon Baratz noting that “infrastructure costs are volatile, regulations are evolving, and new foundation models are released every few months, turning yesterday’s breakthrough into tomorrow’s baseline.”