Israel’s Local Start-Ups See International SuccessNov. 5, 2012
It is hard not to be impressed by the sheer width and depth of the Israeli start-up community. For a country of just under eight million people, Israel punches considerably above its tech weight. According to the Israeli government, the country has the most scientists and technicians in the world per capita, and the largest number of start-ups per capita.
Unlike other nations, Israeli start-ups aren’t concentrated in e-commerce, but rather are typically sophisticated engineering-driven companies such as traffic service Waze, water distribution monitoring service TaKaDu or Soluto, a suite of PC management tools.
Unlike other nations, Israeli start-ups are also global right from the first day. “Israeli companies go global because we have no local market, not in Israel, and not around us because of the political situation,” said David Zvilichovsky of the faculty of management at Tel Aviv University. “You need a market that is at least half a billion dollars in sales at the minimum. Obviously that market does not exist in the Middle East.”
“Innovation is global, but entrepreneurship is very local—it requires access to capital, it requires access to talent, it requires access to mentors,” said Innovation Endeavors managing partner Dror Berman, who runs the venture capital fund for Google Executive Chairman Eric Schmidt. “When you start a company the biggest supply of capital is in the U.S., so if you are thinking about financing then that is a very big consideration. For start-ups based in Israel they want to target the biggest market, they want one size fits all. That is the U.S. market.”
But it isn’t just the money. After all, per-capita funding in Israel is 2.5 times that of the U.S., and some 30 times that of Europe. No, what you hear time and again from Israeli entrepreneurs is the size of the Israeli diaspora in the U.S. “The ties between the U.S. and Israel have been going on for the last 20 years,” said Mr. Zvilichovsky. “If you look at the propensity of being an Israeli entrepreneur in the U.S. it is 60 times higher per capita than being a Chinese entrepreneur, and 15 times higher than being an Indian.”
That gives visiting Israeli entrepreneurs a huge leg-up from the start. “It is part of the community,” said Ron Levy, CEO and founder of Flayvr, a photo sharing start-up based in Tel Aviv. “There is a community here in Israel but there is also a huge community in New York, in Boston, or in Silicon Valley.”
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