Israel From Socialism To Startup Haven

2013, by Elena Donets

The  Beginning…

Israel is widely hailed as a startup nation, hosting more NASDAQ-listed companies per citizen than any country. But not so many years ago, it was the opposite of that—a country that prized socialism and distrusted capitalism. Entrepreneur par excellence Eli Hurvitz, the legendary CEO of Teva Pharmaceuticals, grew up in a Labor Zionist household and was a member of Kibbutz Tel Katzir before leaving for the world of business.

‘Yozma’   The Government Support

In 1991, Israel had almost nothing in the way of venture capital. Today, it has a host of local VC funds that together invest nearly twice as much per capita as those in the United States. In 1992, Yozma set aside $100-million to attract experienced international venture capitalists to Israel. To qualify for the program, they had to raise roughly $12-million in private capital and had to team up with a local Israeli who would become a partner in the VC fund. Yozma would then provide $8-million in matching investments to those who qualified (with a capped upside to attract venture capitalists and private investors)

Venture Capital

Israel’s venture capital industry has approximately 70 active venture capital funds, of which 14 are international VCs with offices in Israel. VC funds raised $607 million in 2012. Among the leading funds, Sequoia V, Pitango VI and Magma III raised a combined sum of $450 million, 74 percent of the total raised by all Israeli VCs in 2012. Micro-VC funds continued to attract investments with six micro funds raising a total of $83 million, nearly 14% of total capital raised.

Total Capital Raised

Source: IVC Research Center

The Israeli Economic Success Story

Israel has the highest ratio of university degrees to the population in the world. Israel produces more scientific papers per capita than any other nation by a large margin -109 per 10,000 people - as well as one of the highest per capita rates of patents filed. In proportion to its population, Israel has the largest number of startup companies in the world. In absolute terms, Israel has the largest number of startup companies than any other country in the world, except the US (3,500 companies mostly in hi-tech). Israel is ranked #2 in the world for venture capital funds right behind the US. Outside the United States and Canada, Israel has the largest number of NASDAQ listed companies.

The Israeli Economic Success Story

Israel leads the world in the number of scientists and technicians in the workforce, with 145 per 10,000, as opposed to 85 in the U.S., over 70 in Japan, and less than 60 in Germany. With over 25% of its work force employed in technical professions. Israel places first in this category as well. The cell phone was developed in Israel by Motorola, which has its largest development center in Israel. Voice mail technology was developed in Israel. Both Microsoft and Cisco built their only R&D facilities outside the US in Israel. An Israeli company was the first to develop and install a large-scale solar-powered and fully functional electricity generating plant, in southern California's Mojave desert. Israel's Given Imaging developed the first ingestible video camera, so small it fits inside a pill. Used to view the small intestine from the inside, the camera helps doctors diagnose cancer and digestive disorders.

It’s  the  Culture…

“Chutzpah” Mixed Culture Military Service It is all about the people!

Israeli Entrepreneurship Eco - System

Hi Tech Scene

‘Silicon Wadi’ The first hi tech company was founded in 1961: ECI Telecom Around 60 foreign R&D centers are engaged: IBM (since 1949), Motorola (since 1964), Intel (since 1974), Microsoft (since 1989), Cisco (1997), Google (2006), eBay (2005), Apple (2012) and more.

Israeli Entrepreneurship Eco - System

Made In Israel

Founded by Dr. Gavriel Meron in 1998, Yokneam-based Given Imaging revolutionized the world of gastrointestinal diagnosis by developing a miniature camera in pill.

The Disk–On–Key was developed by M-Systems, a company founded by three israelis.

In Israel, everyone remebers the story of ICQ, the instant messaging computer program

Made In Israel

The Great Failure 2013

Five years ago, Shai Agassi turned up amid a small pantheon of celebrity technologists who seemed to be leading the way to a new electric age. The idea caught fire with serious investors such as HSBC, Lazard, General Electric, Morgan Stanley and Israeli billionaire Idan Ofer, who gave Agassi $850 million in funding. Renault’s Carlos Ghosn climbed aboard by outfitting a $38,000 Fluence to carry Agassi’s swappable battery, and promising to build 100,000 of them. The pioneer rarely wins, except in the movies On May 26, Better Place announced that all its money is gone. It was a full seven months after Agassi himself was forced to resign—the signs already glaring in October 2012 that the company was in grave peril.

The Great Success 2013

Founded: 2007 2008: Waze received $12M in Series A funding 2010: Waze Cruises Past 2 Million Drivers, 250 Million Kilometers Logged 2010: Waze received $25M in Series B funding 2011: Waze received $30M in Series C funding 2012: Waze Doubles From 10 To 20 Million Users In 6 Months June 2013: Waze was acquired by Google for $1.1B

The Billion Dollar Navigation App: The Waze Success Story

The Great Success 2013

Founded: 1999 2006: Mobileye received $15M in Series A funding 2007: Mobileye received $100M in Venture Round Funding 2013: Mobileye received $400M in Private Equity Funding To date, Mobileye’s technology has been launched by BMW 5-Series, 6-Series, 7-Series, Volvo S80, XC70 and V70 models, and Buick Lucerne, Cadillac DTS and STS.

Mobileye is a pioneer in the development of vision systems

for on-board Driving Assistance Systems

The Great Success 2013

Founded: 2006 2006: Trusteer received $4M in Angel funding 2008: Trusteer received $6.1M in Series B funding August 2013: Trusteer was acquired by IBM for $800M

Trusteer helps online banks, brokerages, and retailers

secure the consumer desktop from financial malware attacks

and fraudulent websites.

Thank you

Elena Donets VP, Operation and Strategic Planning StarTAU, Tel Aviv Uni. Entrepreneurship Center elenado@startau.co.il