Vertication 2017 – Tel Aviv, Israel
Perhaps no country overcomes adversity like Israel. Despite being located on lands non-conducive to agriculture and surrounded by adversarial countries, Israelis have managed to build a prosperous economy, driven by high-technology. Israel also referred to as Startup Nation, had more companies listed on Nasdaq than any other country except the United States and China.
For this year’s company trip, we decided to pack our bags and fly out to Tel Aviv, the heart Israel’s innovation hub, to better understand what makes the ecosystem unique. Here are the highlights from our meetings.
Kåre Riis Nielsen, Innovation Centre Denmark, Tel Aviv:
Our first meeting was with Kåre, who lead establishing the Danish Innovation Centre in Tel Aviv back in 2015. According to Kåre, Tel Aviv represents a unique opportunity for Danish companies due to its innovative and entreprenuerial environment. In particular, Israel is known for being an industry leader in IT security and biotechnology. Further, Israel also has close ties to the United States, which provides companies with a base in Tel Aviv with a unique opportunity to get warm introductions to Silicon Valley.
One of the best examples of the talent and innovation present in Israel, is the fact that cutting edge startups from Silicon Valley, such as PayPal, had to acquire talent from Tel Aviv to improve their algorithms. In the case of PayPal, a partnership with a technology firm in Tel Aviv drastically improved their algorithm for financial fraud detection which in turn made them a profitable businesses.
Hila Glick, Tel Aviv University Entrepreneurship Center:
Our second meeting was with Hila Glick. She explained that Tel Aviv has many similarities to Silicon Valley, in that there is an abundance of risk-friendly capital and a concentration of technical talent. In fact, 20% of every resident has a Ph.D. and many of the famous international VCs have offices in Tel Aviv. That said, the entrepreneurial community in Tel Aviv is very accessible. If you reach out to someone, they will usually meet with you the same day and given the relatively small geographic area of the city transportation doesn’t take longer than 20 minutes.
Hilga explained that the government in Israel launched an entrepreneurial fund to foster startups back in the 1990’s. The fruits of this fund was later reaped in the 2000’s where. The support structure is still present today, chiefly through the Office of the Chief Scientist, which uses its annual budget of $450 million to offer up to 85 percent of seed funding for close to 200 incubated companies a year and supports massive R&D projects from larger companies (read more here).
Similar to universities in the US, educational institutions in Israel contribute in fostering entrepreneurship among the students and researchers. This is something we see in Denmark as well, but not the same type of scale and competition as in Israel.
Noa Costo, Google Campus Tel Aviv:
On the 34th floor of a skyscraper located the heart of the city, Google Campus Tel Aviv offers entrepreneurs free office space with a splendid view of the city. Campus Tel Aviv is among five other global campuses. The idea is to foster entrepreneurship and facilitate mentorship in hubs with potential. At the time of our visit, a hackathon focused on online security was taking place in the back of the main room.
SOSA (Mikkel / Motz)
Gabby Czertok, The Bridge (Coca-Cola):
The Bridge is a unique but simple concept facilitated by Gabby through a partnership with Coca-Cola. Here is how The Bridge work: Many startups struggle with on boarding a signature client. That said, one partnership with an international brand can provide the legitimacy that opens doors. However, identifying the gatekeepers and getting an opportunity to present to them can be extremely challenging. At The Bridge, startups relevant to Coca-Cola’s services can apply and get the opportunity to pitch the services to the right stakeholder. Coca-Cola gets early exposure to concepts that might leverage their business and startups get an opportunity to partner with a Fortune 500 company.
There is no question that the startup community in Israel is unique. Check marks can be made for: International mind-set and ambition, concentration of high-technology talent, available mentor programs and risk friendly capital. That said, we didn’t leave with the impression that we in Denmark can replicate the same startup success as in Israel. In fact, many of the professionals we spoke to were impressed with the approach of companies such as MobileLife. Here at Vertical Strategy we look forward to growing the number of entrepreneurial successes in Denmark and abroad.
If you’re interested in learning about the top startups in Tel Aviv, curated by Wired, you can read the list from 2016.