Innovative region: Israel

Israel has the largest number of startups per capita in the world, according to consulting firm Deloitte, which explained that factors such as Israel’s creative and flexible society and culture, technology entrepreneurs and investors’ global-first approach, strong economy and government support are contributing to the ecosystem’s success. The country also produces the highest number of engineers per capita and has the world’s second-highest research and development (R&D) spending as a percentage of the gross domestic product (4.3%), Deloitte added in its article, The Israeli Technological Eco-system. David ‘Dede’ Goldschmidt, Israel-based vice-president, managing director and head of Samsung Catalyst Fund (SCF), a corporate venture capital (CVC) vehicle for South Korea-headquartered consumer electronics conglomerate Samsung, pointed out several key attributes that make Israel unique within the worldwide startup community. Goldschmidt said: “An entrepreneurial culture – Israelis tend to be practical and agile in their problem-solving attitude, seeking ways for fast implementation of new concepts and technologies. They are open to taking calculated risks and being the first to operate in blue ocean, emerging domains. Considering the limited size of the local market, entrepreneurs adopt a global-first approach when launching new ventures. “Relevant knowledge and expertise – The brightest minds that served in the Israeli Defence Forces have access to leading-edge technology and opportunity for high scale implementation. This active and vibrant local tech scene has thousands of funded startups and more than 350 multinationals’ R&D centres. Academia also plays a prominent role in Israel’s startup culture with multiple, strong domains, such as AI and particularly computer vision – the foundation for Mobileye. Other leading applications areas include cyber security, cloud & datacentre, 5G, sensors and automotive. All these market segments are of interest to the Samsung Catalyst Fund. “Culture – In general, Israelis have lower fear of failure. Failure provides another chance to learn a lesson and try again. It is not uncommon for most startups to fail or at least not be successful. Typically, nine out of ten startups do not succeed. It is important to be in a culture that appreciates the experience gained in previous attempts gained by serial entrepreneurs.” For these reasons, many foreign VCs are interested in Israel, Goldschmidt added. “In fact, more than 70% of the direct investments in Israel are by foreign investors, whereas in Europe, traditionally the majority of capital invested is local. To put this in perspective, the magnitude of venture funding in Israel alone exceeds most larger European nations.” Israel is probably only second…

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Edison Fu

Edison Fu is a reporter and Asia liaison at Global Corporate Venturing.