Few places in the world produce technology at the rate Israel does. A country of fewer than ten million people has become one of the most important sources of innovation in cybersecurity, software, fintech and beyond. The harder question for investors is how to find the real winners in that ecosystem, and how to pay a sensible price for them.

My guest this week has spent his career on that problem. Gilad Shany has worked across early-stage and scale-up technology investing, and across both public and private markets, a combination that is rarer than it should be.

Gilad began his career in New York at Baron Capital, where he spent seven years researching and helping the firm invest in the technology and energy infrastructure sectors. He then moved to Israel to become a general partner at Magma Venture Partners, where he focused on some of the country’s biggest technology opportunities. Magma was an early backer of Waze, one of the best-known Israeli success stories. After a year there, he joined ION in 2020, and today he runs ION Crossover Partners.

That path gives him an unusual vantage point. He has seen how institutional investors in New York think about growth and valuation, and he has seen how Israeli founders and venture capitalists build companies from the ground up.

In our conversation, we start with the big picture. I ask Gilad what drew him to the sector and what he brings to the table in spotting opportunities and avoiding traps. We discuss whether the global political backdrop has affected the flow of capital and ideas into Israeli tech, and what keeps the country’s engine of innovation running. I also push him on a provocative question: if US capital disappeared, would Israeli tech leadership fade?

From there we move to the current trends in Israeli venture capital and how he is positioning to take advantage of them, and then to ION Crossover Partners itself. Gilad walks us through the lifecycle of a typical investment, from sourcing and due diligence to what the firm does once it has backed a company through its growth.

We also dig into the mechanics of the strategy. ION Crossover invests across public and private markets, two disciplines with very different expectations around liquidity and duration, so I ask how that works in practice. On valuation, we explore how he measures the right entry price for businesses that are often still early stage, and which metrics matter most.

Finally, with so many excellent venture firms in both Israel and the US chasing the same opportunities, I ask the question every allocator wants answered: where does his edge come from, and how does he get access to the ideas that generate alpha?

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US inflation continues unabated, with higher fuel costs now feeding through into logistics. CPI is running at 3.7%, with energy costs up 5.3% on the back of oil rising more than 9% on the month. This week we look at whether US manufacturing PMIs can sustain the recent momentum in industry, and in the UK, we get the latest unemployment and inflation prints.

On rates, Warsh’s first October decision comes with a twist. Once rates start moving in one direction they normally keep going, but not this month (we think!). We also look at the UK’s plans for an expanded social security scheme, which will carry a cost in both tax and debt, pointing to weaker growth, higher inflation and a softer pound.

We then turn to the likely outcome of the US midterms. A blue wave that flips Congress to the Democrats should have little effect on the legislative agenda, as the administration will veto and Trump will lean harder on executive orders. The real friction would come at state level, slowing planning for data centres and potentially leading to lower 2027 capex guidance, which markets might take well. It would also kick off the presidential election cycle and move the debate on from cost of living.

The second half of the show is a deep dive into Meta’s Muse. It is an autonomous, goal-executing platform rather than an interrogative one, which makes it always-on, memory-heavy and expensive in tokens. Deep app integration, password access and the ability to pay for services autonomously make it powerful, which is why Amazon is saying no while Shopify stands to gain from more merchant transactions. The key question is the economics.

Reaching a long-term 15% ROIC likely requires $20-a-month subscriptions becoming the norm plus a share of merchant revenue. Jefferies’ forecast of 1bn users by end-2027 with 3% on subscriptions gets to $10.8bn, which isn’t enough; reaching $50bn needs the merchant rev share. Compute costs imply lower operating margins than today’s ad business. In short, Meta has to earn historic-level returns just to stand still.

We close with what to watch when Meta reports on Wednesday: 23% YoY revenue growth, early commentary on Muse subscriptions, take-up and retention, and capex confirmed at high levels with free cash flow still under pressure. If the Muse discussion is vague or ling-dated in terms of potential returns, that could mean weakness for a stock that has priced in a lot since launch.
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The Fed raised rates after all last week. Our expectation of political expediency and therefore a hold pose was set aside by a more pragmatic FOMC fearing persistent and non transitory inflation in the system.

The 10 year US Treasury blew through 5% and the yield curve steepened. Ie the long end rose faster than the short. The implication is a recession or at least an economic slowdown.

Whilst Brent crude declined back below $100 per barrel last night, thanks to expectations of resolutions to be agreed at this week’s UN summit in New York, we are of the view that the reality on the ground is worse than it has been since the start of the conflict with Iran.

The blocking of the Strait of Hormuz resulted in disruption to 20% of the global demand for oil. The escalation in the last 2 weeks by Houthi rebels and Iraqi militias allied to the Iranian regime, has resulted in a further 10% of global demand disappearing from markets. With a 1/3 of global demand now disrupted and the US’s Strategic Petroleum Reserve (SPR) down to lows not seen since 1982, we see significant upside risk to the oil price.

With Brent Futures contracts exchanging hands at $120+ per barrel and the northern hemisphere heading into winter, the inflationary impact cannot be underestimated.

A $130 Brent price implies a $5+ gasoline price in the US, significantly above the current level and more than double pre-war levels. This would contribute 0.75-1% to inflation. Add in the impact of logistics cost increases and jet fuel, and the impact is even more severe.

Inflation of 4.5%+ implies a further 50bps of Fed rate hikes over the next 5-6 months leading to a slowdown in US GDP toward 1-1.5%.

Furthermore, the rate increases would bring already insipid capital expenditure (ex AI spend) to a virtual halt and would severely hamper the housing market facing 30 year mortgage rates of 7.5-8%.

The implication for risk-assets is clearly not a positive one. We remain sanguine over the long-term positioning in equities. We are in the midst of one of the most consequential Industrial/Digital revolutions that mankind has hitherto been exposed to. There will be major winners and to a large extent we can already see who those may be.

However, near-term, the inflationary impact of higher energy prices and no discernible off-ramp for the Mid-East war will only raise investor concern and angst leading to higher volatility and near-term market correction.

If you're enjoying this content, please comment, like, and subscribe to see our videos every week!

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Always do your own research or seek the advice of your professional financial advisor.

You can find us on LinkedIn and YouTube, Money Matters, Ben Hakham CEO at Traderoutes Capital.