Innovative region: Israel

“If you are going to the Middle East to look for oil, you can skip Israel; if you are looking for brains, look no further,” said Warren Buffett, chairman and chief executive of US-headquartered conglomerate Berkshire Hathaway. “Israel has shown that it has a disproportionate amount of brains and energy.” Israel has the largest number of startups per capita in the world, according to cloud computing conference CloudFest copywriter Jordan Yerman’s article, A Startup Nation: Why Israel Has Become The New Silicon Valley, and its level of innovation is only behind the San Francisco Bay Area. 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%), according to consultancy Deloitte. 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 the Israeli ecosystem’s strong suits: “First, a unique entrepreneurial culture: Israelis are very practical and agile in their problem-solving attitude, seeking a way for fast implementation of new concepts and technologies. They are more open to taking risks and be the first to operate in blue ocean, emerging domains. “Second, relevant knowledge and expertise: The brightest minds that serve at Israeli Defence Forces have access to leading-edge technology and opportunity for high-scale implementation, and the very active and vibrant local tech scene with thousands of funded startups and over 350 multinationals’ R&D centres. Also, academia is very strong in multiple domains, such as computer vision – the foundation for [chipmaker Intel’s Israel-based autonomous vehicle subsidiary] Mobileye. “For this reason, we see a lot of interest in Israel from foreign VCs. In fact, more than 75% of the direct investments in Israel are by foreign investors, whereas in Europe, traditionally the majority of capital invested was local. Moreover, the magnitude of venture funding in Israel is very high – Israel alone attracts more venture capital dollars than most large European nations. “Israel follows Silicon Valley and is probably ahead of Europe in the maturity of the venture ecosystem. Earlier in this century, Israel had strong sources for early-stage financing; however it lacked the capital needed to fund growth. This resulted in early exits at relatively lower valuations. Over the past decade, we have seen many growth-stage players attracted to Israel, allowing liquidity to the early investors and growth capital to the companies,…

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Edison Fu

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