The OneRagtime team headed to Tel Aviv for a whole week from Monday 4th September to Sunday 10th September to attend DLD and jump into the Israeli tech ecosystem. DLD Tel Aviv is a small event in itself but many side events gravitate around it as the the city is one of the most dynamic tech hubs in the world. The Wall Street Journal even named Tel Aviv the second most innovative city in the world in 2015. There are multiple reasons why.
First, Tel Aviv hosts more than 6,000 start-ups. As a point of reference, France counts approximately 10,000 start-ups but with a population 8 times larger. Israel is indeed the country with the highest number of start-ups per capita. Amongst those 6,000 start-ups, 400 alone were created in the mobility sector this year. The government has played a major role in making Tel Aviv a tech hub in the past few years. Indeed, it removed all red tape and revamped its tax legislation to support businesses and investment.
It’s hard not mention the education, military and intelligence sectors when explaining Israel’s successes. Israel is home to excellent universities such as Technion, University of Tel Aviv and University of Jerusalem who provide high quality education to engender an extremely tech-savvy population. The army also plays a great role in training young Israelis early on to take responsibilities. Indeed, citizens over the age of 18 have to go through conscription for 2 years (and an additional 8 months for men). Unit 8200, an intelligence corps unit working on the collection of signal intelligence (SIGINT) and code decryption, is the largest unit in Israel’s Defence Forces and a real “start-up machine”. The unit scouts the best talents by identifying high-school students with higher analytical capabilities, drive, team-spirit and assertiveness. The culture that Unit 8200 creates, fosters talents with a professional experience and superior technical skills enabling individuals to learn new technologies very quickly. As a result, after finishing their service, many settle on to create their own start-up. CheckPoint, Imperva, Nice, Gilat, Waze, Trusteer, and Wix all, as a matter of fact, find their roots in this intelligence defence forces unit.
It’s not a secret, Israel has massive R&D capabilities. This is why many foreign Internet multinationals choose to install their R&D centers in Israel. This is the case for Intel, for whom Israel is the second employment market. Recently though, the acquisition of Israeli tech companies – $3.5 in 2016 according to PWC – has decreased sharply in 2016 due to a rise in private investments. On the contrary those have increased by 27% from 2015 to total more than $4 billion. A few exceptions remain: in March 2017 for example, Intel acquired Mobileye for a mighty $15.3 billion, one of Israel’s biggest tech exits ever. Major acquisitions of Israeli tech companies such as Intel (Mobileye), Google (Waze), Facebook (Onovo) or Apple (PrimeSense) take place outside of Israel though. And usually, start-ups are sold to multinational corporations long before they reach a valuation of $1 billion, which is why only a dozen start-ups are currently valued at $1 billion.
Finally, Tel Aviv counts numerous incubators and accelerators, 50 to be precise. Those include The Junction, Sosa, and The Time. Whether they are sponsored by the government, a venture capital firm or or a multinational corporation, they provide start-ups with valuable financial resources and mentorship. Israel is also the home of world-class VC funds like Magma Ventures, JPV, Pitango…
Back to our Start-up Hunt and DLD. France was strongly represented with Mounir Mahjoubi – French State Secretary for Digital Affairs, and Bruno Le Maire – French Minister of the Economy, who were amongst DLD’s nine thousand visitors. Featured on the FrenchTech stand, we officially launched our Start-up Hunt 2017!
The conference hosted many B2B and deep tech start-ups, probably mostly because there is almost no consumer market in Israel. The trends we observed were mainly around VR and AR with start-ups such as Anzu.io and TexelVR.
Finally, we hosted an event on Thursday evening, gathering members of our investor community, media, entrepreneurs, VC friends and actors of the Tel Aviv ecosystem. Great to reconnect with our Tel Aviv friends!
All in all, the Israeli model of start-up development is a very inspiring one for us at OneRagtime. It follows exactly our investment thesis: tech teams in locations with strong R&D capabilities and a reasonable cost of labour, and commercial teams tackling large consumer markets such as the US or Asia. The Israeli population also encompasses what we look for in entrepreneurs thanks to superior training: ambition, an international vision, a strong propensity to technology and passion!
Next stop, Nantes!