Israel the Startup Nation

How Israel became the startup nation.

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Made in Israel: An engineer in one of the world’s largest desalination plants, located in Israel, where even waste water is reused.By CAMERON COOPER its population is just 8.5 million, but Israel has become a high-tech start-up powerhouse and is attracting major Japanese and Chinese players on the hunt for ingenuity.To begin, to understand Israel’s remarkable rise as a magnet for technology start-ups, it is worth listening to serial entrepreneur Eynat Guez.“In Israel, you execute first. You say ‘I can deliver this’ and you think about how to do it afterwards,” says the founder of Papaya Global, a Tel Aviv business that automates international companies’ workforce and payroll management.

Guez is one of a large cohort of intelligent, ambitious business people in Israel who are cementing the small Middle Eastern country’s status as a serious rival to other technology and venture capital ecosystems such as California’s Silicon Valley, Shanghai and London. Just don’t expect the focus in Israel to be on carefully executed business plans. The Israeli emphasis is on ideas, speed and roll out. If that means the innovations are slightly unformed, so be it. If that means some entrepreneurs crash and burn, no problem.“You can say it proudly,” Guez says. “Failing in a venture in Israel is not something you try to hide. It’s part of your growth.”Eighteen months after its launch, Papaya Global has plenty of customers on its books, but it’s now finalising a Series a round of financing (the first significant round of venture capital funding) to help its workforce management platforms become a big international hit.

It is the latest venture for Guez, who says start-ups in Israel are willing to take “very big risks”.“They will not spend their time on risk management – only the really necessary things that they need to do,” she explains.A start-up formula made in Israel the formula is working for Israel. Despite having a population of just 8.5 million people and once being better known as the home of the kibbutz, the nation has developed more high-tech start-ups than all of Europe in recent years, and trails only the US on that score.Silicon Wadi (wadi means valley in Arabic) is an area around Tel Aviv on the country’s coastal plain that has a cluster of high-tech industries built around military, start-up and venture-capital communities. 
The Da-Vinci drone from Eibit Systems is displayed at the Israel Homeland Security and Cyber 2016 conference in Tel Aviv. Israel is a world leader in drone technology.

Dun and Bradstreet counted 4750 high-tech start-ups in Israel in 2016, and those start-ups are clearly on the radar of the world’s tech giants. In March 2017, Intel bought Mobileye, a leader in computer vision for driverless car technology, and paid US$15.3 billion, the biggest high-tech deal in Israeli history.Companies such as IBM, Google, Facebook, HP and Oracle have a presence in the region and are using their ties with Silicon Wadi enterprises to enhance their innovation, and research and development strategies.

Rising stars of the digital world are also taking their cues from Israel. Tim Fung, co-founder of Australian mobile marketplace Airtasker, visited Israel a couple of years ago on an Investec Global Entrepreneurs rip, organised by Investec and the South Africa-Israel Forum. He was impressed by the ambition of his Israeli counterparts, and the integration of the military and technology sectors.Related: 10 daring thinkers who defied the rules“People in Israel really support each other’s companies,” he says. “They believe they can make it, and talk about success a lot. This is a super-important factor and I think something that we Aussies can improve on.”Fung adds that Israel has the chutzpah of superpowers such as the US and China and knows it must pursue international business products and services.

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