When anyone mentions successful innovation and startup ecosystems, our first thought always flies to the famous Silicon Valley. But, did you know – Israel’s startup ecosystem has 6000 active startups? Top companies like Google, Apple and Facebook have their R&D centres in Israel? Despite being a conflict zone, 1300 new startups are founded every year? And, that Israel’s expenditure on R&D investment is 4.3% of its GDP – the highest in the world?
For the longest time in modern history, Israel has been a conflict zone. It has fought two major battles – The Six Day War and the Yom Kippur War. In the early days since being declared an independent state in 1948, Israel was a farming community. The farming was done in communities also known as Kibbutz. Led by Zionist, Ben Gurion, the Israelis transformed the Negev desert into a self-sustaining oasis. The determination, enterprise and hard work of the people has helped transform Israel from its agrarian roots to a hi-tech innovation ecosystem that has seen it ranked 10th on the Bloomberg Innovation Index.
There are a few standout features of Israel’s rise as a technology and innovation pioneer. Saul Singer and Dan Senor captured the growth of Israel as an innovation and startup hub in the influential book ‘The Start Up Nation’. We look at some of these features and the lessons they hold for countries like India who have had similar humble beginnings.
Crucible of Military Training
Due to its location in a conflict zone and the constant military intervention required, Israel has made it mandatory for every youth, once they turn 18 to serve at least 2 years in the armed forces. During these two years young Israelis are exposed to opportunities to work on important national projects. In fact Israel owes it global expertise in cyber security and telecom to its military research programme. This experience of working on high technology projects, rubbing shoulders with experienced scientists, engineers and military veterans leaves an indelible mark on the youth. They carry this experience and the contacts they make into their civilian life where this ‘one degree of separation’ network is more than handy. Adam Neumann, co-founder of WeWork and Uri Levine co-founder of Waze are two famous Israeli ex-army men leading successful startups.
Culture of Open Innovation
Israel is home to the Research and Development centres of many Fortune 100 companies. Microsoft, Facebook, Amazon and Nielsen are among some of these companies who have set up R&D labs here. Maya Grossman, head of communications for Microsoft’s accelerator program, describes their move to Israel, “Innovation is not easy. If you want to stay close to innovation, you need to stay close to startups.” As pointed out earlier, Israel has a booming startup culture which is attracting many talented professionals and entrepreneurs. In fact, many of these are Israelis going back to their home country after gaining experience in places like Silicon Valley.
Office of the Chief Scientist
Israel Innovation Authority is a part of the country’s economic ministry and helps design innovation policy which is seen to be central to economic policy. Heading up this body is the Chief Scientist, a position currently held by Avi Hasson. The Office of the Chief Scientist was set up 45 years ago when Israel suffered an economic meltdown in the aftermath of the Yom Kippur War in 1973. This office has been instrumental in helping create a robust and sustainable startup ecosystem in Israel to complement the major policy and economic overhauls the country was going through.
Public Private Partnerships
Avi Hasson, the Chief Scientist says,
Our philosophy is that the government should embrace failures and bet on the riskiest of ventures where the private sector will hesitate to go.”
This has been the cornerstone of the revival and growth of the Israeli economy. Its debt to GDP ratio has declined from 93% in 2004 to 62.1% in 2016. Net assets have grown from $-51.2 billion in 2000 to $95.6 billion in 2016. While the government has led the growth and investment in infrastructure and technology, it has also stepped aside and let the private sector lead with its experience and expertise. The government has also been enabler by designing an interdisciplinary university education system which allows students to mix courses like social sciences and linguistics with core science disciplines like robotics.
The Forbes 2016 Billionaire list had 17 billionaires from Israel. Many Jews settled in various part of the world have strong ties with their native land. Many of them contribute financially, through grants and trusts, towards Israel’s growth. Ben-Gurion University received one such financial legacy from a California-based Jewish couple. Others contribute through their expertise and various other enabling platforms.
India shares its socialist roots with Israel, however, unlike Israel, our startup ecosystem is still in its infancy. Israel, who is also looking to venture into South Asia, sees India as a huge opportunity for Israeli startups and investors looking to expand. The two countries are exploring various strategic partnerships. In fact, a recent NASSCOM delegation visited Israel to discuss the prospects about strengthening the existing alliances between the two countries and seeking new partnerships. This might just give Startup India the boost it needs to achieve its potential.