Seed rounds, data infrastructure, and what comes after cyber

At CyberTech TLV, Hetz general partner Pavel Livshiz sat down with Gat Megido of The Bull and the Bear to discuss seed market dynamics, the emerging data infrastructure wave, and how the Israeli ecosystem is evolving. Below is an edited summary of the conversation.

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Seed rounds are bigger, and that's not a bad thing

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"Investing today in a company with a total round below $7 million would be fairly irresponsible. It's simply not enough money."

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The average seed round in cybersecurity has roughly doubled since 2021, moving from a range of $6 to $8 million to somewhere between $8 and $10 million today. Pavel sees this as a structural shift rather than froth. Higher engineering costs, a weaker dollar, and the real capital required to reach product-market fit all justify larger checks. His view: a company that raises too little at seed is unlikely to survive long enough to prove its thesis.

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Valuations have also risen, and Pavel acknowledged they have likely reached a peak at the seed stage, for both first-time and repeat founders. That said, Hetz's average check from its own balance sheet runs $5 to $7 million, with total rounds frequently larger.

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The repeat-founder dynamic

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"In 2025, four out of six of our new investments were in companies led by founders who had previously sold their businesses for between $50 million and $400 million."

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The volume of exits in Israeli tech over the past five years has created a deep bench of experienced operators returning to build again. Pavel estimates that at least 50% of Hetz's new investments in 2026 will go to repeat founders. The appeal is straightforward: higher expected returns, compressed timelines, and more sophisticated go-to-market instincts from day one.

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One of the ways Hetz evaluates founder-market fit at seed is by connecting founding teams with its network of more than 150 C-level executives across cybersecurity and data, including CISOs, CDOs, and CTOs. The goal is not to validate a product that doesn't yet exist, but to pressure-test the problem. Does the pain resonate? Is the proposed solution directionally right? The live reaction from potential customers tells Hetz more than any pitch deck.

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Data infrastructure is the next cyber

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"We believe data infrastructure is going to be the next frontier in venture capital — capable of generating the kinds of returns that cybersecurity has delivered over the past fifteen years."

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Pavel laid out a three-part thesis for why Hetz is building its data practice with the same intentionality it brought to cyber. First, data spending is now the second-largest line item in enterprise IT budgets after cloud, and it is growing exponentially. Second, the chief data officer role has followed a trajectory almost identical to the CISO: from informal function to board-level mandate, with real budget authority. Third, the acquisition market for data companies is finally emerging. Snowflake, Databricks, and others are buying actively, and AI-adjacent deals like NVIDIA's acquisition of Run:ai signal that acquirers have deep pockets.

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The Israeli talent pool supporting this thesis has more than doubled in the past two years, Pavel noted. Veterans of Israel's military tech investment during the recent conflict are now entering the private sector with deep expertise in data infrastructure and AI optimization. Add to that the first wave of Israeli data startups producing early employees who are now founding their own companies, and the conditions look similar to what cyber looked like a decade ago.

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Hetz has already seen this thesis produce results: Prompt Security, a portfolio company operating at the intersection of cybersecurity and AI, was acquired by SentinelOne for $250 million in 2025.

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On market correction risk

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"If and when a reset happens, many of the people who were here between 2020 and 2023 will still be inside the ecosystem. I'm hopeful that we've all learned from that cycle."

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Pavel does not think a correction is imminent, but he does expect one before 2028. His reasoning: AI is a genuinely transformative technology with real enterprise adoption, but some of the valuation signals visible today resemble 2021 more than is comfortable. When the reset comes, he believes the Israeli ecosystem is better positioned to navigate it than it was in 2022, simply because more people will have lived through a cycle. That institutional memory, he argued, is itself a form of resilience.

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Competitive dynamics and Hetz's positioning

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"We almost never see generalist Israeli VCs competing with us in these verticals. The only way they can win is to overpay — and even then, a check from a generalist isn't the signal a cyber or data company needs when raising its next round."

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The competitive landscape at seed has intensified, with more capital flowing in from US funds in particular. Pavel's view is that Hetz's vertical focus is its primary advantage: deep relationships on both the founder side and the buyer side, a repeatable platform for helping companies scale from seed to Series A to B, and a growing co-investment track record with strong industry-specific firms. For founders building in cyber or data infrastructure, the signal from a specialist matters downstream. It shapes how Series A investors read the cap table.

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Watch the full episode (in Herbew) below:

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