How Israel Became the Startup Nation of the World

Monday, May 21, 2018 at 1am

If the sparkling coastline, blue skies and world-renowned food scene aren’t enough to convince you to book a one-way ticket to Tel Aviv, take note: Israel is the startup nation of the world.

Entrepreneurship has become the national pastime in Israel, with hundreds of venture capital firms and thousands of startups, shared working spaces and startup accelerators flocking to Silicon Wadi, Israel’s very own coastal version of San Francisco’s Silicon Valley.

Last year, Israeli tech startups raised more than $5 billion in venture capital, and 2017 saw serious-money acquisitions by the likes of Apple, Snapchat and Intel, the latter buying the autonomous driving company Mobileye for a towering $15.3 billion.

Given this interest from some of the world’s biggest companies, it’s no surprise outlets like Forbes, TechCrunch and WIRED regularly publish new rankings of the most illustrious and up-and-coming companies in Tel Aviv tipped to eat up the market.

In February 2018, the automated public transport app Moovit was the focus of a lot of media attention after it raised $50 million from Intel, the tech giant’s second big-acquisition in Israel in less than a year, after Mobileye. Moovit has in the past also received investments from Ashton Kutcher.

Why are they drawn to Israel? Well, the country’s extensive tech and engineering expertise, as well as outstanding universities like Tel Aviv University, have to help. In 2017, the independent private equity and venture capital research firm PitchBook ranked Tel Aviv University ninth in the world for producing venture-capital-backed entrepreneurs and the Coller School of Management came in eighth place for its number of unicorn startup founders.

Together, these factors have helped make Israel a startup powerhouse that’s able to compete on a global scale.

Husband and wife Yoav Barlev and Dr. Mor Bar Ilan, who had their first child earlier this year, started Mint-Clinic in August 2017, a mobile dental clinic which sets up shop in different tech offices every day to provide care for busy, overworked executives.

It’s still early days for Mint-Clinic, but the freshly-minted pair have been in talks to provide their dental clinic services to Microsoft and Wix.

Mor and Yoav got the idea for their business while they were living in Panama, where Mor was volunteering as a dentist for Floating Doctors, a non-profit which provided medical assistance to underserved communities in remote parts of the country.

Yoav, 34, said: “My wife volunteered for an organisation that would go into the jungle and set up pop-up clinics in areas only accessible by boat.

“They brought all their equipment with them and generators and set up field clinics to local communities. So, we thought we’d set up something similar in Israel, but target high-tech companies.”

Mor graduated with a Doctor of Medicine in Dentistry from the Hebrew University of Jerusalem, and her husband graduated with an MBA from the Sofaer Global MBA at Tel Aviv University’s Coller School of Management.

Yoav said: “When I got to the MBA, it was amazing to see the different areas I had no idea were so important to running a business, from accounting and the theoretical part of marketing, to the organizational structure of a company and how things work at different levels.”

A tight-knit community and low running costs

When it came to choosing a location for their first startup, Yoav and Mor, who hold dual Israeli and US citizenship, were drawn to the low cost of living in Tel Aviv.

Yoav said: “My wife and I were originally thinking of moving to New York, but we decided to start our business in Israel because everything is possible here. It’s a very developed, high-tech startup nation, and you can pretty much start here and beta test your concept at a very low cost.

“We’re starting this whole company on US$60,000. This allows us to scale inexpensively and test our business, before raising venture capital. It’s relatively cheap money, and if everything goes well, we could easily roll out services in the US and Europe.

“Even though I didn’t grow up in Israel, it’s so easy to get to something - even just from my alumni network at Tel Aviv University through the MBA program. It’s easy to get to people and build relationships. I can get to every HR manager in the Tel Aviv area that I want from either LinkedIn or the alumni program.”

Dr. Iris Ginzburg, head of the Sofaer Global MBA at Tel Aviv University's Coller School of Management, said stories like Mor and Yoav’s are common in Israel: “As small as it is, Israel is at a unique intersection of cultures, where old and new meet, that rose from the ashes.

“The belief that we can change the world is ingrained in us, as part of our national culture. Our aspirations together with our creativity and desire to excel in research, science and technology, brought us to this place, where we keep innovating and building new things. That’s all we know.”

 

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