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IATI - Israel Advanced Technology Industries
IATI News & Events Daily Industry News Does Israel have what it takes to create the next Instagram or Facebook?

Does Israel have what it takes to create the next Instagram or Facebook?

Mar. 10, 2013

Entrepreneurs and venture capitalists who once dreamed of easy money in the start-up nation are now contending with an industry where funding models are being upended and Cinderella stories are increasingly hard to come by, claims a Haaretz story. Different answers are given to the question, can an Israeli app take the world by storm. 

Aharon Mankovsky, managing general partner of the Pitango venture-capital fund, says, “The number of Instagrams that succeed is close to zero. There’s an illusion in the market that you need less money to succeed in the Internet field. It’s true that on the Internet, you can see at the earliest stages whether your idea is a good one or not, but you still need tens of millions of dollars to build a company. Take Waze, for example. It’s an excellent mobile application, but so far they’ve already raised about $70 million, and I estimate that they’ll need to raise at least another $30 million until they reach maturity or a situation where they can be sold.”

“The biggest change to happen in recent years was the transition from PC to laptop computing,” says Shlomo Markel, VP of Broadcom Corporation. “The sophistication is going over to end devices, which are controlled by a few giant corporations. Companies like TI, which linked their future to Nokia’s, suffered. On the other hand, processor companies such as Qualcomm and Broadcom, whose processors are used in Apple and Samsung products, have thrived.

Today, the development and manufacture of a complex, 22-nanometer advanced-geometry processor requires an investment of tens of millions of dollars and a lot of time. Venture-capital funds and also the entrepreneurs themselves are unwilling to take a risk. It’s easier and nicer to build applications.”


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