Never Mind the Valley: Here's Israel - ReadWriteStart
Never Mind the Valley: Here's Israel
Written by Dana Oshiro / January 21, 2010 9:00 PM / 2 Comments
This post is part of our ReadWriteStart channel, which is a resource and guide for first-time entrepreneurs and startups. The channel is sponsored by Microsoft BizSpark. To sign up for BizSpark, click here.
Israel isn't just an emerging tech hub, it's a hotbed of activity and has been for many years. Per capita, Israel has the most startup companies and spends more on research and development than any other nation in the world. Israelis lay claim to the invention of Intel's Pentium 4 microprocessor, CheckPoint's firewall, Comverse's voicemail, Amdoc's telephone billing system and a ton of VoIP technology through companies like Audiocodes and Vocaltec. Between a value for innovation and a great funding scene, Tel Aviv and Herzliya are ripe with startup entrepreneurs. ReadWriteWeb caught up with some influencers to hear their thoughts about the country's tech scene.
A Culture of Learning
TechAviv founder and serial startup entrepreneur Yaron Samid launched BackWeb in Silicon Valley, Pando in New York and now CrowdSpot in Tel Aviv.Says Samid, "Tel Aviv melds the best of both the Valley and downtown New York; a rich tech talent pool obsessed with entrepreneurship, in the heart of a 24/7 popping cosmopolitan town filled with beautiful people, artists, musicians and world travelers. Add year-round sun, outdoor cafes and beaches everywhere and you've got yourself geek heaven."
For all of Samid's reasons, Israel has given rise to a diverse range of startups including face recognition service Face.com, IM / VoIP provider Fring, web analytics service ClickTale, gift-giving platform The Gifts Project, image attribution giant PicScout, gadget guide Walyou and Q&A repair service FixYa.
Samid's TechAviv organization is one place where leaders from these companies can meet and share advice. Since 2007, Samid's organization has grown from a simple invite-only meeting of founders into a global network with a separate founders club, angel club and business workshop. In addition to TechAviv, Israeli entrepreneurs and technologists have the opportunity to learn from informal events like GarageGeeks and VC meet ups. The Zell Entrepreneurship Program has also proven to be an amazing resource for early-stage entrepreneurs. This formal and informal culture of shared learning is maintained by some of the countries most successful entrepreneurs.
Ariel Finkelstein, CEO of feedback analytics company Kampyle recognizes the community's contributions. Says Finkelstein, "Other entrepreneurs helped Kampyle when we were growing and we feel strongly about supporting the new startups... It's important for a growing team to get good advice and to understand fully the commitment and hard work that goes into launching a global company."
In addition to sitting on several boards, mentoring at the Zell program and participating as an active TechAviv member, Avichay Nissenbaum is well known for orchestrating two lucrative exits including the sale of SmarTeam to Dassault Systemes and most recently, question and answer site Yedda to AOL.
Says Nissenbaum, "What characterizes Israeli entrepreneurs is passion and dedication, high technological skills, openness and directness, and in a formal sense - the willingness to take reasonable risk."
While he argues that Israelis have the advantage of a global view and the creativity to solve problems under pressure, he also recognizes the challenge of many entrepreneurs targeting an American market from abroad.
The Globetrotting Leader
Shuly Galili, Executive Director of the California Israel Chamber of Commerce, is often approached by entrepreneurs to help in the US launch process.Claims Galili, "In terms of mentorship, Tel Aviv lacks serious angel investors/mentors to guide entrepreneurs with their launch and market positioning. This is one critical need that is missing and is very evident to us at the California Israeli Chamber of Commerce."
Entrepreneur Yaron Galai has found a dual-city operation works best for him. After moving his Quigo research team to New York, he found that to his dismay his team's focus changed from innovation to basic maintenance. After selling Quigo to AOL, Galai's new content rating company Outbrain maintains engineering, quality assurance and research in Israel, with sales, marketing and product in the US.
Galai has found a way to stay close to the company's target market while still keeping productivity and innovation high. Says the CEO, "I think Israeli entrepreneurs should be thinking about how to mix both things: Build companies that are based in Israel, but that can operate and communicate effectively with strong global sales/product/marketing teams in its core markets."
The State of Funding
Israel is ranked second in the world for venture funds next to the US. Although we recently reported that Israel's funding saw a sharp descent in 2009, the dollar values raised for a country the size of New Jersey with a population of only 7.5 million citizens is indeed impressive.A number of legendary angel investors including Dr. Yossi Vardi, Zohar Gilon and Rami Lipman hang their hats in Israel. Meanwhile, some of the notable angel resources include Israel Seed Partners, TechAviv Angels Club, AfterDox and Startup Factory. Entrepreneurs can also approach firms like Carmel Ventures, Gemini Israel Funds, Sequoia Capital and Bessemer. Another avenue is the Ministry of Industry, Trade and Labor's Chief Scientist Program for seed funding, grants and access to 24 tech incubators.
Daniel Cohen of Gemini Israel Ventures remarks that Israel's mandatory military service may contribute to startup leadership qualities. Cohen explains that because young people are placed in management roles at a very early age, these skills may contribute to innovation and problem solving abilities in business leaders.
Says Cohen, "The scene here is vibrant. There are hundreds of new companies that launch every year. Israelis have seen their fair share of funding and exits, Israel's challenge is building longer lasting companies. "
Agrees Yaron Galai, "We might be starting to see the signs of change in the quick exit mentality with second time entrepreneurs coming back to the game. [They're] free from having to focus on locking in an early sale, and really focused on building bigger, longer-term, sustainable companies. "
Photo Credit: Or Hiltch
