AI, Venture Capital, and Startup Resilience with Charlie Federman

David Leichner: Welcome to another episode of Hot in Tech. Today we're proud to have with us Charlie Fetterman. Charlie is a partner at SilverTech Ventures, where he works closely with founders to help them build and grow companies with integrity, resilience, and long-term perspective. SilverTech is known for its founder-first approach, emphasizing respect for the CEO role, thoughtful capital, deep networks, and consistent presence when it matters most. Charlie's career spans multiple technology and market cycles across public and private markets. Earlier, he served as chairman of Broadview International, where he advised technology companies through mergers and acquisitions. helping guide many firms onto the public markets during formative years of the global tech industry. He later became a managing partner at BRM, where he continued working closely with Israeli and global technology companies. During that period, former Jerusalem mayor and Israel minister of economy, Nir Barthat, referred to Charlie as the rabbi of the company, reflecting the trusted role he played in helping founders and executives navigate complex decisions with

Charlie: .

David Leichner: clarity, values, and perspective. Charlie, welcome to the show.

Charlie: Thank you, David. Thank you, Yitzce. It's a pleasure to be here today.

Yitzy Tannenbaum: So I'll start with the first question. Charlie, it seems like you've met so many startups along your career, different types of startups, different types of companies, and I'm wondering if you're able to now identify which of those startups have what it takes to like blow up and become a unicorn and go public and become huge, and those that just are missing that spark. And I wonder if you have, if you're able to identify that kind of it factor.

Charlie: Ahem.

Yitzy Tannenbaum: in a up and coming company.

Charlie: I wish I did, because if I did, it would mean that everything I would do going forward would be successful in business. The answer is, I don't. And because I don't, we operate our business a little bit differently, recognizing it, which is the first thing we try to do if we're interested in what a entrepreneur's perspective is and where they see an opportunity. is to really get to know the person as a person. So when the world has gone fast, we've sort of gone slow. And putting a premium on getting to know the person and the family and the way they make decisions is the way that we do business.

David Leichner: Wow, that's pretty amazing. Tell me, you we actually didn't discuss this previously, but how did you get into this to begin with? You know, maybe a little bit about your personal background.

Charlie: Yeah, my personal background, mentioned Broadview, which emerged as the largest ⁓ &A house in technology. And I was the ninth person there and I was very interested in software. And I started bringing in software clients and senior partners sat me down and said, know, Charlie, I think you're making a terrible career mistake and focusing on software. And he'd been the CFO of ADP.

David Leichner: Hahaha

Charlie: and the early time sharing or cloud companies at those days. And he said, Charlie, the problem on your approach is when somebody buys software, they bought it. It's not like time sharing or what we call SaaS now or professional services. That's recurring revenue. You can't sell much software in this world. And I really saw a paradigm happening. So I said, okay, I'll make the bet. And it worked out. And I rose to the position of leading the firm. And then ⁓ during that span, I had met some people in Baton Rouge, Louisiana, who had a little antivirus company and we met in a diner over breakfast. and became really good friends and I wound up selling their antivirus company to Symantec and a few months later they said, our other little project we've given it a name, what do you think of Checkpoint?

David Leichner: Wow, wow.

Charlie: And so I started going to Israel more regularly as a fellow, Uziel Galeel, who brought me there with Ellie Frukter and Ellie Harry from the early days and Shoal Shani, all these like, people who became icons. And I feel like this delegate of Israeli technology. And then so was with Nir and Ellie for 10 years at BRM. And then Nir went into politics. I left and then I seeded an Israeli company in New York by the name of Paynir. Yuval Tal, it was pre-revenue, it was pre-PowerPoint. And Yuval and I hit it off and he was starting a company which had a debit card for teenage girls.

David Leichner: Yep, small company.

Yitzy Tannenbaum: Absolutely.

Charlie: And his idea was, we'll do is we'll use the internet for distribution. We could reach a lot of people real cheaply. And instead of having $400 to bring in a user, we could do it for $40. And it's a great business. And we did our first emailing and we found out that about 98 % of our applicants for our debit card were fraud. We were using Google maps to check the neighborhoods of the addresses.

David Leichner: Ha ha ha.

Charlie: So that was sort of a problem, but Yuval bounced and did some wonderful things left and right. And we endured a ⁓ few pivots as well as ⁓ there was a problem in ⁓ Dubai where people with tennis rackets got into the news and they all used the Payneer card in Dubai. So we were the only addressed. that people came back to and that was a real problem. And Yuval did an excellent job navigating that. And around that time as well, there's a fellow, Alad Barang. And Alad started a communications company, sold it, started a cyber company that I invested in at BRM. We sold it to Microsoft. It was Microsoft's first cyber acquisition. And a lot, and I had a special magic between us probably because he's so smart and, so withdrawn as well at the same time. He's not an arm waiver. He's just a great thinker and decision maker. And we started a company together, a marketplace, which did not do well at the beginning was like flat for years. And then we did this wonderful pivot where it went true north and when you don't spend on marketplaces and it grows a couple hundred percent a quarter because it went viral becomes special. A lot of nice sold that company at the height of COVID. It was a good thing to do. So between Payoneer and this marketplace, I had a debt to replay. repay to Israeli entrepreneurs who whenever there is a fork in the road did right by me and really cared A about shareholders B they really cared about making the pie bigger and three were terribly lonely people and they were lonely people because they were they had great ideas which for some reason weren't right at the moment and they pivoted left and they pivoted right. They had to say goodbye to early employees who supported them. They had to give bad news to early investors who supported them. And they slogged on and on because they were really determined and both companies became incredible successes and brought me along for the ride. And I felt I owe them something. And so we started Silver Tech Ventures, Larry Wagenberg, myself, Tal Carrot, Guy Vardy. We started this really as we wanted to make a place where entrepreneurs can come and really feel supported. And the word governance is fundamentally unimportant to us. So we never, ever asked to sit on a board.

Yitzy Tannenbaum: Wow.

Charlie: Never. And we started this as a hub, come and sit with us. And if you think that there's getting value, we'll get a little bit of equity and we'll invest it. And you could stop anytime you want, et cetera. And we don't have all these platform people. It's Larry, me and Tal and Guy helping. And that worked out well. And then we started a fund, ⁓ a peanut fund. $10 million and somebody sits with us doesn't mean that they have to take our money. We wait for the entrepreneur to invite us. And if they don't want to invite us, that's fine. We think that the entrepreneurs should be in charge of their cap table just as well they're in charge of their balance sheet and their P &L. Then you need all three elements on the tool you're sitting on to really build. something of consequence. And so, it was working out in the first fund and we've got two companies of unicorns and there's one company which is a near unicorn. And we are so privileged, 45 companies have sat in our hub, 40 from Israel, 17 of women entrepreneurs. And we're referenceable to all of our entrepreneurs, including the four or five who have failed. So to answer your point about what's the magic, I really want to be involved with entrepreneurs who inspire me, who are doing something consequential, change the world a little bit for the better, and who I can build a a relationship with and let's make a difference for each other. Probably a longer answer than your simple question. My apologies for that.

David Leichner: No, that's an incredible story. Incredible. I'm sitting here like in awe, you know, just from the background, from how you treat your entrepreneurs, you know, the success you've obviously had really amazing, really amazing. Maybe by the way, you can say just a quick word about the building that you're that you're based in.

Charlie: Yeah, we said to talk, you mentioned the word rejuvenation and resilience. Well, resilience. I'm sitting in seven world trade center, which is right next to one world trade center. And the Silverstein family purchased the world trade center, the twin towers on August 1st, 2001. And six weeks later, they came down and. Larry and his family made a resolution the next day that their mission in life is to build back better than ever. It was a tragedy what happened, totally beyond their control. But at the same time, they turned this tragedy and made this little area so much more vibrant and better than what it was. And the family's given back to the community. in countless ways on it. And they're a Zionistic family as well. through SilverTech, they feel like they're giving back to the Israeli tech community.

David Leichner: That is incredible. And having been in your offices there, I definitely can understand. ⁓ It's a really incredible place. ⁓ Yes, definitely. So, with that background, you've sat on both sides of the table, also as an operator and as an investor. How did your years helping companies at Broadview help shape the way that you work with founders at much earlier stages?

Charlie: A lot of Heblish in the halls.

David Leichner: even leading to today.

Charlie: When somebody makes the decision to sell their company, it's a real life change for them. sometimes they're doing it under great pressure as well. And it's a very difficult and stressful thing for them to do. And it really informed me about the tension that entrepreneurs feel. And I was able to see the way they could navigate, uncertain and uncertain journey. Now I was just bringing them to the culmination of it. And I, I wasn't there for the, the initial buildings for it. And I left ⁓ &A to go into venture because I wanted to have a perspective, a more informed perspective about the people's full journey. as opposed to the consequential ending of the journey.

Yitzy Tannenbaum: So I think David at the start ⁓ told me that at BRM, ⁓ Nir Bar-Kat referred to you as a rabbi of the company. ⁓ I'm wondering if you think that role today, when founders come to you during moments of uncertainty and they have questions and they're looking for guidance and they're looking for mentorship, can you talk a little bit about what that means to you and what that

Charlie: Ahem.

Yitzy Tannenbaum: Mentorship role looks like with those 45 companies that you're working with

Charlie: You know, it's interesting is is he you're you're you're sort of like putting mentorship up on a up on a pedestal I I I put the entrepreneurs up on the the pedestal I'm sort of a tourist. They're the ones who are making this that the real sacrifices that the personal sacrifices to their families and their emotional well-being, they have a drive, they have an internal clock that's really pushing them. Behind me I have The Man in the Arena by Theodore Roosevelt. I don't know if you're familiar with it, but it says it's not the critic who counts, not the man who points out how the strong man stumbles. It's the man in the arena that really counts. So my relationship with the entrepreneurs is formed on the basis of it's their company. And I am giving them advice usually around how to make the pie bigger. We're not obsessed with what percentage we own at any point in time, nor is the entrepreneur really. They want to make this thing consequential and successful. So your point about ⁓ mentorship, et cetera, my mission is to help the entrepreneurs build the company of their dreams. And when we do that successfully, when we stay true to the mission, what happens is that trust develops. And trust also helps the entrepreneur have support during the lonely times. And my partner, Larry, Tal, Kerit, and Guy Vardy, we all share that common objective. If we do our job, the entrepreneur will tell their friends, these are the people who are with us through thick and thin. And that's how we've Silver Tech Ventures. We've built it through a lot of self-exploitation of our time and our emotions and working with people, knowing that the entrepreneurs will take care of us the same way Elad Baran and Yuval Tal took care of me. And maybe we'll be wrong here or there about that as well, but that doesn't mean you change your perspective on it.

Yitzy Tannenbaum: It all comes down to trust at the end of the day, huh?

Charlie: Yeah, you do the right thing by people. It's sort of like you stand on one foot, recite the Torah, but you know, we're reliable because we've been doing this long enough. We have enough references. And if there's a fork in the road, we will do what's right. And we will support the entrepreneur unless there's something grossly wrong that the entrepreneur is doing. That's not a question of opinion. It's a question of ethics.

David Leichner: Right, interesting. think alongside the trust word, there's the relationship word. And knowing what I've heard about you, Charlie, from some of these entrepreneurs, ⁓ there definitely is a relationship, a close relationship that's being built. I think that's part of it as well.

Charlie: And a lot of it is because I recognize that as their company. And I want to do what's right for their company. I'm sort of like the employee they don't have to hire, they can fire me at will. They're the one who really holds the cards on that whole thing. you know...

David Leichner: Heh

Charlie: traditional investors put the money in and have all these agreements where you have to get investors permission to do A, B, and C, know, all the consents, et cetera. We're not interested in that. In part, we're small investors and we're cognizant that our dollars aren't really gonna make the huge difference when these companies scale up, et cetera, et cetera, et cetera. But that's not important to us. How often do people really use that vote? Let's be realistic. And if they have to use that vote, it's not going well in the company. Let's get into the companies and help support the culture where things will go well. And let's empower the entrepreneur to look in one direction, which is forward, which is building, instead of looking over their shoulder because the people behind them are coming after them who are on their team.

David Leichner: Amazing.

Charlie: By the way, that doesn't say that that's the way investors usually go. I think that there's all types of investors doing all sorts of things and we've seen incredibly successful, supportive investors, et cetera. We love that.

David Leichner: I think a lot of it has to do with also where you came from personally, you know, and the journey that you've had, you know, I think that's a lot about what's taken and helped to form, you know, Silver Tech into what it is today.

Charlie: Yeah, it could be, but let's try to spread it around and let's have more of it. Let's give the entrepreneur more choices to do what's right for them. For some entrepreneurs, silver tech is not the right choice for them. And that's fine too. That doesn't mean anybody's evil, et cetera. Different people like different things. Vanilla, chocolate, strawberry.

David Leichner: Yeah, that used to be easy actually. There were usually only three flavors. Today we have like, I remember. And you get now a hundred flavors or so and ⁓ you can go into actually now there are ice cream shops you can go in and you can actually program the flavor that you want and ⁓ you can, yeah, I've seen it. ⁓ Pretty incredible. Yeah, you know what? Speaking of AI.

Charlie: Baskin or Robbins, man. That AI.

David Leichner: So, know, at Hot in Tech, we always ask our guests the same question. From your perspective as a long time investor and operator, what do you see as truly hot in the tech market for this coming year of 2026?

Charlie: The year that we're in right now, there's a continuation of 2025, which is the cost of capital for companies with revenue momentum is close to zero. When companies get very high valuations, when they haven't achieved that much, it means that they have very low costs of capital and it encourages hyper scaling. That is certainly continuing right now, but capital is a commodity. And we've learned in the commodity businesses like pork bellies, corn and real estate. You live through boom and bust times. Right now, for the most part, in AI, capital cost is so low, you're seeing hyperscalen going on. That will change for sure. Nobody knows when it will change, but it will. The same way that at one point in time, SaaS was the hottest thing in the world, that has now changed. So you're getting these rotations as capital, as technology changes and users gravitate to different solutions.

David Leichner: So, but having lived through the internet boom and bust, ⁓ I don't know. I'm getting a feeling like in the age of ⁓ AI and especially also quantum computing, that maybe this is different. Maybe this is like something that's taking us exponentially into a different, ⁓ I don't know if it's stratosphere maybe is the right word, that ⁓

Charlie: Okay.

David Leichner: things are gonna be changing. It's a kind of, we'll look back in history and it'll be a revolution, not just an evolution or not just new technology coming out.

Charlie: Well, I agree with that. if you look at our industry's history, in our industry, every new generation has cannibalized the generation before it, has eaten it. But every time they've done that, the successive generation has been larger, right? And that has created more opportunities for the next generation of entrepreneurs. The question around AI is when the dust clears, will there be more or less employment in technology because of AI? It is an open question right now whether or not it will commoditize our industry's employment. I will argue that SaaS was not favorable to our industry. It's favorable to our industry from the perspective that it gives you more predictability with the recurring revenue. However, it is not favorable from a cash perspective. We took the golden goose. which was the on-prem pricing, perpetual pricing, where salespeople would have a couple million dollar commissions. And we turned that into a SaaS world where a salesperson would have a half a million dollar quota. ⁓ And so we took an industry which was cash generating and we turned it into cash consuming until they reached hundreds of millions of dollars of revenue. From an economics perspective, I don't think that is terribly favorable. And that's what made our industry cash consuming for many, companies, which is what fueled so much private capital going on in and the thirst for capital. I think that AI, if it does well, will help alleviate that thirst for capital and bring back some sanity in terms of cash consumption for early stage companies. I'm still the believer that investors and entrepreneurs do very well from a stakeholder perspective when you take a number one, two or three position in your market. Below that, it doesn't really make a difference. So let's go for market leadership, but let's try to attain market leadership without being as cash consuming as we're doing right now. To see the AI companies burning billions of dollars per month. gives me pause because in this commodity world, if the cost of capital is no longer a commodity, there will be a lot of pain that will be shared.

David Leichner: When you see these companies coming out of stealth mode, four months old, five months old, having just done an A round of $50 million at a valuation of $250 million, I think that right away puts that in perspective and also the dangers that we've seen in the past of these types of situations.

Charlie: Yeah, the problem could be that they really need the $50 million to even get to the A round or to hit those initial metrics. Some of them will be fabulous investments, great companies, et cetera. But that cash consumption at that magnitude is something that everyone should be aware of, that that creates a potential problem for everybody.

David Leichner: Also, you have the, lot of these companies are built by 30 somethings, let's say, who've either come out of, you know, a university in the United States or maybe even out of the intelligence unit of, of Israel. And they're being handed this enormous amount of money to build companies with so that any kind of mistakes or, you know, wrong directions that they might going could be costly. you know, so costly with these enormous types of, you know, these enormous capital influxes that are coming in.

Charlie: Yeah, these entrepreneurs are under tremendous pressure to do good with that capital, which only exacerbates the loneliness of the entrepreneur. there are tremendous opportunities for the companies. So what I'm sort of looking for right now is that whenever there's been a fundamental technology paradigm shift, alongside of it, there's been a business model shift. So no mainframe company executed on the business of a micro like deck and no micro company executed well the PC business and no PC hardware company really executed the software business, Microsoftware. No Microsoftware company with a potential exception of Microsoft really was the leading internet company. No internet company was the leading social company. No social company was leading. mobile company and no mobile company is the leading AI company. But for each of those other steps, the business changed for them. It wasn't a technology problem preventing one silo moving into the other silo. It was the way that they conducted business became a detriment as opposed to a positive. So I am looking to see How is the AI business going to change? Isn't it amazing what this young Israeli company, Base 44, did?

Yitzy Tannenbaum: It's insane. Insane. One guy in eight months? Is that how that works?

Charlie: Yeah, so I mean, you got one guy in eight months who obviously created a great product, got the distribution, ran his company, et cetera, et cetera. So I mean, we should all be in wonderment of his accomplishments, but we should also think, well, how did he do this? How did he do this? And would it have been a positive if he had had that $50 million? Did he sell to earlier or not? He obviously sold well for him. He did a post the other day, is a really great post. I was sent it and I'll just read it to you. He said, I just heard of a customer that terminated a $350,000 contract with Salesforce. for a custom solution they built on top of base 44. I'm getting those stories on a weekly basis now. So that's a paradigm shift happening, because I don't think that my customer is paying $350,000 for the base 44 WIC system. I don't think they're paying 10 % of that. Maybe they're paying 3 or 4 of that. I don't think there's a direct sales person doing that. I don't think that there's a whole team on implementing. And I think that thing probably got up and running inside of a week or two. So it's very, very different.

Yitzy Tannenbaum: But do founders now, because of the speed and how AI shifted the paradigm, how should a founder approach building and starting a company that will last in the long haul? Does it have to be that rapid and that quick and that crazy and that capital heavy? Or how do you take it easy in a way and build something that will be sustainable?

Charlie: It sort of depends upon the niche, you see. If I want to build a semiconductor company, it's going to be capital intensive. If I'm going to build something at the heart of the enterprise where I'm going to need 24-7 support, et cetera, et cetera, it's going to be more capital intensive than a consumer-ish product where I don't have to see support, et cetera, FAQs, et cetera. And also it depends upon the entrepreneurs aspirations. I don't think that there's been a better time than today to do something more capital efficient, which has as much white space in front of it for an entrepreneur to seize that type of an opportunity. But I'm not saying it's the only way to do it. So I think that early stage small funds have a fantastic opportunity to support the single or two entrepreneurs being incredibly capital efficient. And the larger funds have ample opportunity to support it going another way. I just think that the general rule that you have to raise your $10 million seed round in cyber to be followed by your $50, $100 million round is something that I don't think is going to be long-term sustainable.

David Leichner: due to the fact that the capital or the flow of capital will dry up.

Charlie: It will dry up at some point. That's not a question. The only question is when will it? And what my concern about this is that when it does for those entrepreneurs who are building their companies that way, they're going to be left holding a very difficult bag to solve. And it's going to be the entrepreneurs obligation to solve that. And for some, it's going to be a bridge too far. Now, You can be an optimist and say, look, it's gonna happen, but not on my watch because it's not gonna happen for the next two or three years and I'm gonna get to A, B and C, sell my company or have a big secondary. So it's gonna be somebody else's problem. That's legitimate as well. But I personally love companies that give customers the opportunity to fund the company. which means I love companies that the entrepreneur is building a company that will have high gross margins. And then we'll be able to turn on or off the spigot on sales and marketing and how many initiatives they're going to take on the R &D, the variable expenses, deciding. how to fund those depending upon the capital conditions.

David Leichner: Charlie, I have to say this has been an incredible, incredible session. This episode will clearly be one of the top of Hot and Tech because your experience and where you came from and just your insights from the experience that you've had starting out in your early days in M &As and then going into industry and the kinds of giants that you've worked with over the years in the different companies. and of course the success that you've had in SilverTech. And I think a lot of that again has to do with your perspective. And I really, really like and appreciate how you put the entrepreneurs on the pedestal and that you give them the ability, the capabilities that they need in order to succeed by in many ways leaving them alone, but being the person there when they need them. And I'd like to thank you for being on the show today.

Charlie: You

David Leichner: And ⁓ we wish you continued success with Silver Tech and all your adventures.

Charlie: Thank you very much guys. know, two things I didn't mention were the work that we do with this RSI at next October, as well as what we do with ⁓ Iron Nation, which is around October 7th. We're sitting here in the luxury of being in the States and our family and friends in Israel were such a

David Leichner: ⁓

Charlie: terrible state and being incredibly brave about it. saw Israeli, I saw the best of Israeli society on October 8th. All the factions come together, do really wonderful things while the government was somewhat, maybe paralyzed trying to figure out what was happening. The people weren't figuring it out. And Isar Shai and his family had such ⁓ an incredible loss. And, out of that, he takes the perspective. He's going to try to make the world a little bit better and form the next October. And he's asked me to sit on the steering committee and we've, we've, we've helped them on that. We continue to help them. We encourage all of our companies to be involved on it. We've done sessions for him here. We've taken the whole floor in one of our buildings with hundreds of people in it to support him. here you have an example as far as been an entrepreneur and a funder and a minister and bad things happen and he's looking to do good out of that. Isn't that inspiring guys? And then on Iron Nation, you have three guys who started an initiative, the capital.

David Leichner: He's an incredible person. It is, it really is.

Charlie: dried up in Israel, nobody was visiting, term sheets were being pulled by Israeli VCs, foreign VCs said, know, call me when the war is over and people were getting laid off and stuff. And we raised 20 million dollars very rapidly and with the intention of deploy all the money inside of a year. It's not something which you really try to do in the venture business. But we wanted to do that. And the first question we ask entrepreneurs is how were you affected by the war? And we wanted to hear about the way contracts were canceled, people in reserves and all that sort of thing. And these guys did a wonderful job, both initiatives, which we had the privilege of being involved with. it only heightened our inspiration that Israeli entrepreneurs inform us on a daily basis. And if we're talking about what we do, I don't want to lose that snippet.

David Leichner: Wow. That is definitely a way to close this episode. Charlie, thank you for everything you've done, everything you do, and everything you continue to do. It's been great.

Charlie: Thank you guys.

Yitzy Tannenbaum: Thank you.

Charlie: Take care, be good, bye bye.