Catalyst Private Equity Bets on Anti-AI Startups and Vertical Agents

Catalyst Private Equity, a growth-stage investment firm, recently participated in CTech’s VC AI Survey to discuss its unique approach to AI investments. The firm, founded in 1999, focuses on AI, cybersecurity, and mobility sectors, with notable exits like Mobileye and Otorio.

Key Insights from Catalyst’s AI Strategy

1. AI’s Impact on Fund Operations

Catalyst rates AI’s impact on its operations at 6 out of 10, expecting it to rise to 8-9 as AI agents become integral to workflows. The firm uses AI for deal sourcing, market analysis, and due diligence, accelerating decision-making by 25-30%.

2. Focus on ‘Anti-AI’ Startups

A unique trend Catalyst highlights is investing in ‘anti-AI’ startups—companies that protect users from AI threats. The firm believes these startups’ growth may correlate with the rise of AI solutions.

3. AI Subdomains of Interest

Catalyst prioritizes:

• Cybersecurity AI (42% of Israeli tech investments in 2024)
• Computer vision (e.g., autonomous vehicles, medical imaging)
• B2B enterprise AI, avoiding consumer-facing generative AI

4. Financial Risks in AI Investing

Beyond tech risks, AI startups face:

• High infrastructure costs (GPU/cloud expenses)
• Regulatory hurdles (GDPR, EU AI Act)
• Dependency on third-party data

5. Promising Israeli AI Trends

Catalyst identifies strong exit potential in:

• Vertical AI agents (autonomous workflow systems)
• AI infrastructure optimization (e.g., Speedata’s data analytics chips)
• AI security and governance

6. Gaps in the Israeli AI Landscape

Israel lacks:

• Foundational LLM development
• Consumer AI applications
• AI hardware innovation

The firm seeks founders with military intelligence backgrounds or deep industry expertise in healthcare, manufacturing, and finance.

Catalyst executives. (Photo: N/A)

For more details, read the full VC AI Survey.