How does ecosystem investing work?
Ecosystem investing at Esinli Capital is fundamentally data-driven. We analyze the mathematical reality of where the best returns come from, then allocate capital accordingly. With over 330,000 VC rounds tracked globally since 2018 and more than 250,000 seed to Series A rounds in our database, we have the statistical foundation to make these calculations with confidence. It's surprisingly straightforward once you look at the numbers.
We start by calculating historical IRR data for each major tech hub globally. Tel Aviv consistently delivers different returns than Austin, which performs differently from Singapore. These aren't small variations—they're significant patterns that reflect each ecosystem's maturity, talent density, and market access.
Next, we layer in R&D expense analysis by sector and geography. We examine how much capital flows into cybersecurity development in Israel versus globally, how much goes into fintech in New York versus other markets. This reveals where innovation dollars are most concentrated and where they're generating the highest returns.
The critical insight emerges when we overlay sector concentration data. Israel represents 22% of global cybersecurity investments versus a 4% global baseline, while comprising a tiny fraction of global GDP. New York captures 20% of fintech investment versus 13% globally. These concentrations aren't accidents—they're ecosystem effects creating competitive advantages that show up directly in the returns data.
Our investment approach follows this data. When we identify a promising cybersecurity startup, we know statistically that an Israeli company benefits from talent density, government support, military technology transfer, and customer proximity that simply don't exist elsewhere at the same scale. The 22% versus 4% concentration difference translates directly into superior IRR performance.
Similarly, fintech companies in New York operate within an ecosystem where 20% versus 13% global concentration creates network effects, regulatory proximity, and exit opportunities that benefit all participants.
We track three core metrics across more than 100 million data points updated weekly: hub-specific IRR by sector, R&D expense concentration ratios, and investment flow patterns. When cybersecurity R&D spending in Israel outpaces global averages by 5x while generating IRRs 40% above sector medians, the investment thesis becomes clear.
This isn't about geography for its own sake—it's about mathematical probability. If you're investing in space technology, you want exposure to ecosystems where space R&D spending and startup density create the highest probability of outsized returns. The data shows this happens in specific locations with specific sector concentrations.
Our portfolio construction reflects these realities. Rather than geographic diversification that dilutes ecosystem advantages, we concentrate investments where sector expertise and capital concentration create measurable performance benefits. We're essentially arbitraging ecosystem effects that show up clearly in the IRR data.
The approach requires constant data analysis as ecosystems evolve. Singapore's fintech concentration has grown significantly in recent years, while certain US hubs have strengthened in specific sectors. We adjust allocations based on updated R&D flows, investment concentration data, and performance metrics.
For investors, this approach provides exposure to the mathematical realities of where venture capital generates superior returns. Rather than theoretical diversification that might dilute ecosystem advantages, you're investing where concentrated expertise and capital create persistent, data-proven performance benefits. When 22% of global cybersecurity investment concentrates in Israel while generating consistently higher returns, that's not coincidence—it's opportunity.