Israel: a true startup nation.

With just over 9 million citizens, Israel is by no means a large country – in fact, recent counts have London as being more populous. With one startup for every 1,400 people, (for comparison, the UK has 0.21 startups for every 1,400 people), it is safe to say that Israel, and more specifically Tel Aviv, is an innovation powerhouse. Why then, does Israel punch so far above its weight on the global startup scene?

  1. Culture

Israeli culture promotes the exact kind of behaviour that produces robust and successful startups; a healthy scepticism of authority, where questioning the norm is encouraged, and an unapologetic sense of urgency, pushing individuals to move quickly, try new things and learn from their mistakes. This mode of working demands constant innovation to ensure longevity and growth. Failure is seen more as a rite of passage than a reputation-damaging event: Israeli founders are often described as having ‘chutzpah’, a Hebrew word that conveys a sense of audacity and willingness to challenge convention.

  1. The Israeli Government

In 1993, the Israeli Government introduced Yozma, an initiative giving favourable tax laws to foreign venture capital investment, as well as a promise to double any funds invested. This led to a boom over the following decade, with 4.5% of GDP spent on R&D annually (the highest proportion among any nation on earth), and a sustained focus on creating a tech-led, innovation-conscious nation.

In recent years, the former President of Israel, Shimon Peres, opened the Israeli Innovation Centre to showcase Israeli technological breakthroughs and, more importantly, to keep driving innovation forward: “The primary focus will be on the path to the future. We will prove that innovation has no limits and no barriers.”

  1. Talented Technologists

The policy of military conscription has a profound effect on the skillset of Israel’s young adult population. The best and brightest spend several years working on government funded technology programmes that produce ground-breaking technology.

During the recruitment process for the Israeli Defence Force (IDF), candidates are segmented by ability and the top tier are filtered into the elite cyber units. By the time they join the workforce, they have four years worth of experience in harnessing this cutting-edge technology and have a platform from which to go into tech-based startups including cloud infrastructure, adtech, voice, video image processing, and the latest in AR/VR.

With such an abundance of high-quality startups, the Tel Aviv ecosystem can be hard to navigate for large corporations seeking innovative solutions. To streamline this intensive process for our global Partners, True works with Vintage Investment Partners, a renowned $1.8 billion fund of funds. Due to the unique structure of Vintage, which includes fund-of-funds as well as late stage co-invest funds and secondary funds, it has unparalleled access to an array of VC portfolios – amassing a network of 6,500 companies in total. This means they can select best-in-class examples from every subset in the Tel Aviv ecosystem.

Via our deep relationships and understanding of our Partners’ priorities, we are able to curate a bespoke programme, harnessing Vintage’s unique local network, to address pre-identified challenges and opportunities. One recent example of this collaborative approach was with Abercrombie & Fitch Co (A&F) – in early 2019, the apparel company travelled to Tel Aviv to meet with Israel’s startups and experience the breadth of innovation which is delivering disruptive technologies that align to A&F’s identified priorities across its brands. Given the calibre of the startups and high level of due diligence, meetings with 18 selected startups involved in-depth, technical discussions that culminated in meaningful strides towards proof-of-concept trials and eventual full implementation.

True’s ongoing collaboration with Vintage will allow our global Partners to gain a ‘full-view’ of innovative companies from Israel. As the Israeli startup ecosystem goes from strength to strength, creating bold new technologies, we will continue to leverage our relationship with Vintage to ensure our Partners stay at the front of change with us.

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12 September 2019