Here, Star­tups are Re­ally Star­tups

The Economic Times - - Breaking Ideas - Ambi Parameswaran

A re­cent trip to Is­rael was an eye-opener. As we went about meet­ing the tech star­tups as a part of our study tour, it dawned on me that there was some­thing that was hap­pen­ing in Is­rael that we are not see­ing in In­dia, de­spite all the hoopla around star­tups and unicorns.

Is­rael ranks No. 2 in in­no­va­tion, ac­cord­ing to the World Eco­nomic Fo­rum. It pro­duces 1,000 star­tups a year. The to­tal num­ber of ac­tive star­tups are any­where be­tween 4,300 and 6,000. Now to the surprises. None of the 20-plus star­tups we vis­ited had any­thing to do with e-com­merce. You could say: Is­rael is a small coun­try, so what are they go­ing to sell and to whom? While Is­rael has strong links to Sil­i­con Val­ley in the US and could well be work­ing on e-com­merce op­por­tu­ni­ties to be ex­ploited in that coun­try, we did not meet one.

We kept hear­ing about the startup pipe­line be­ing sup­plied through the army — which while in­sist­ing on army ser­vice, iso­lates the nerds to do its own com­puter work, only to let them go back to the world of com­merce to do their own star­tups. No won­der cy­ber se­cu­rity is a hot area for Is­raeli star­tups.

The in­cu­ba­tor ecosys­tem in Is­rael is sec­ond only to the one in the US. The num­ber of ac­cel­er­a­tors has grown from one to 186 in just 10 years. The coun­try ranks No. 1 in star­tups per capita.

Is­rael not only has ro­bust an­gel-in­vest­ing and ven­ture-in­vest­ing sys­tems — in­clud­ing some won­der­ful crowd­fund­ing or­gan­i­sa­tions — but the ‘exit sys­tem’ is equally ro­bust. There were $10 bil­lion worth ex­its in 2016. In 2017, the to­tal has al­ready hit $17 bil­lion with the ac­qui­si­tion of Mo­bileEye by Intel. (Intel has ac­quired 30 Is­raeli star­tups in the last decade.)

Old age is no sin. Sev­eral Is­raeli star­tups are by se­rial en­trepreneurs, some in their 50s. I am told that in In­dia, no ven­ture cap­i­tal­ist (VC) will look at you if you have a head full of grey hair. Some of th­ese vet­er­ans in Is­rael we met were ready to ad­mit that they may have gone wrong with their lat­est en­ter­prise, but with their char­ac­ter­is­tic chutz­pah were ready to sell and start again.

Is­raeli star­tups are be­ing built to scale up rapidly. In a sense, they are all look­ing to sell to US com­pa­nies who can take their tech­nol­ogy and forge ahead in the large grow­ing US mar­ket.

Fi­nally, in Is­rael, you can’t con­fuse star­tups with mi­cro, small and medium en­ter­prises (MSMEs). By def­i­ni­tion, a startup is an en­ter­prise that can scale up rapidly, probably by adding a stack of servers, or more space on the cloud.

And all the Is­raeli star­tups we met were all fo­cused on break­through tech­nol­ogy. We heard terms like Edge Com­put­ing, Deep Think­ing, Aug­mented Re­al­ity, In­ter­ac­tive Hand­held De­vices, Drone Gam­ing, End­point Se­cu­rity….

I was left wondering if the In­dian startup ecosys­tem is also throw­ing up such hi-tech com­pa­nies. So, I sent this in­nocu­ous ques­tion to a few of my friends who are ac­tive in the startup scene here in In­dia: ‘I was in Is­rael last week and met many star­tups. I got a feel­ing that In­dian star­tups are not play­ing in the high-end tech space at all, un­like the Is­raeli star­tups. True?’

I got a range of re­sponses, from ‘Un­for­tu­nately, yes. Our ecosys­tem likes trans­ac­tion busi­ness mod­els. Things that re­quire R&D are not en­cour­aged as valu­able busi­nesses’ and ‘The ecosys­tem of univer­sity, gov­ern­ment and ven­ture cap­i­tal for hi-tech star­tups is fan­tas­tic there. The tech stays in Is­rael, and mar­ket­ing goes to the US’, to a very terse and telling, ‘Yes. Very True.’

One more thing we learnt: Is­raelis are not only breed­ing su­per in­tel­li­gent young star­tups, they are also happy with large fam­i­lies with kids, the larger the bet­ter. At least that sounded oddly com­fort­ing and fa­mil­iar.

The writer is founder, brand-build­ing.com

Yet an­other Tel Aviv en­ter­prise

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