The Other Silicon Valley: The Role Of Multinational Companies In Israel’s Startup Ecosystem
Sep. 21, 2014
Israel’s high-tech scene is famous for its small startup companies that strike it big with sweeping acquisitions, like Waze, acquired by Google in 2013 for $1.3 billion, and more recently, for major international IPOs, like Mobileye, which last month raised $890 million at a valuation of $5.31 billion. But what about the 264, big-name multinational companies (MNCs) that have made their way to Israel to establish research and development centers? How do companies like IBM, General Motors, Qualcomm, Deutsch Telekom and Google fare in the Israeli economy and what is the degree of their contribution to the success of the Innovation Nation?
At this week’s DLD Tel Aviv Conference, the managers of the five MNCs listed above expressed their opinions on the current state and future of MNCs in Israel, or “Silicon Valley: Part II,” as many at the conference like to put it. In fact, Israel was the first place outside of the United States where Fortune 500 companies like IBM and Apple established R&D centers, with MNCs contributing over $30 billion to the Israeli economy in the past decade. Almost unanimously, the members of the panel agreed that the faith of these complex and disruption-driven companies in Israel is due mainly to the undeniable engineering talent here. As CEO of Google Israel Meir Brand put it, “Israel really has superb engineering talent, which is due in part to strong academic institutions and the entrepreneurial and creative spirit that flows here.”
The panelists agreed on other reasons for the MNCs large presence here. One was the business friendly ecosystem, that promotes the venture capital, angel and startup community and is only second to Silicon Valley. Another reason was, as Arik Mimran, CEO of Qualcomm Israel, phrased it, the “can-do attitude,” a sense among MNC international VPs that Israelis are straight-forward, hard workers who are actually very driven and productive. Noting other reasons like the geographic proximity of Israel to Europe and other innovation hubs, many of the panelists agreed that the Israeli government is friendly (in terms of tax breaks) to MNCs eager to take advantage of Israeli technological talents, a facet maybe best manifested in the recent reform to establish a national authority on entrepreneurship and innovation.
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