Magazine

Start-up Match-up

An innovative event aims to pair up start-up companies with investors, partners from 15 countries.

Peres Peace House
Photo by: Hanoch Grizitzky
A smorgasbord of technical innovations accompanied the smorgasbord of snacks at the recent Innovation Marathon at the Peres Peace House in Jaffa. Hosting the two-day conference was Bootcamp Ventures (BCV), a global innovation platform that specializes in assisting emerging start-ups in becoming full-fledged businesses. The goal of the marathon was to match up some 34 Israeli start-up companies that have developed game-changing technology, with investors and partners from 15 countries.

Big names from the business world attended the event, including Matt Marshall, the editor-in-chief of the online technology magazine VentureBeat, and Ed Mlavsky, chairman emeritus of Gemini Israel Funds and widely regarded as one of the founding fathers of Israeli hitech and venture capital industries. Also taking part in the event’s discussion panels were representatives from wellknown corporations like Motorola and Lenovo.

With more companies listed on NASDAQ than any other country, Israel boasts the title of being the world’s foremost start-up nation. The Innovation Marathon provided the opportunity for young Israeli entrepreneurs to present their technological brainchildren in the hopes of attracting foreign capital.

SOME OF the more titillating technologies included a smart phone app for snorers that monitors sleep patterns, a completely interactive app for digital children’s books, and an app called “magic mirror” that lends another dimension to retail therapy by providing shoppers with a 360º image of themselves trying on an item of clothing.

One presenter who captured the imagination of the sports enthusiasts in the room promised that his app would spearhead a transition from fans as mere spectators dependent on the whim of sports channels like ESPN, to fans who are in complete control of the sporting content they want to see. For example, type in “Messi dribble,” and at the proverbial click of a button (for the most part, smart phones are touch-screen) the app will provide a catalog of video clips showcasing footballer Lionel Messi’s famous footwork.

Less exciting but perhaps more pragmatic is Ridefrog, an Israeli carpooling start-up that is already in its beta stage in the US. The idea behind it is so simple, it almost defies logic that it wasn’t invented earlier. Ridefrog is integrated into Facebook events so people attending the same wedding or party can carpool.

Not only does the app have financial and environmental benefits, it boosts people’s social lives by allowing them to meet new people and make journeys more interesting.

Ophir Reshef, the CEO and co-founder of Ridefrog, says that sitting in traffic was what motivated the idea. “You see all these empty cars on the road and it’s government to do something about it.”

While actual, tangible inventions are giving way to virtual apps and social networking tools, they’re not extinct just yet. One example at the conference was a footballsized pod that measures air pollution. Irad Kuhnreich, the man behind Airbase Systems, says the pod provides an answer to the basic question of what exactly is in the air that we breathe.

“You know what you eat and you know what you drink, but you don’t know what you’re breathing,” he says. “Whereas nowadays, only governments use air-quality monitoring systems, we’re hoping to change this by bringing it to the consumer.”

The device measures pollutants in the air at any given time and even tells you when to stay indoors and what to do to avoid peak pollution hot spots.

Despite the diversity of the innovations, user-centricity seemed to be the common theme among all of them. Whether in the field of clean-tech, medical or entertainment, the user is fast becoming the sole controller of how he or she wants to use the product. As one young entrepreneur from the health-tech industry says, “Apps are being created that essentially turn cellphone users into doctors. They are selfdiagnosing, and it won’t be long before conventional practices, such as visiting a doctor for every small ailment, will be a thing of the past.”

So what are some of the elements that attract foreign financiers to invest in Israeli start-ups? According to Mlavsky, loyalty and perseverance are two key qualities inherent in Israel’s innovation prowess.

“As a group, Israelis are a hell of a lot more effective than other groups,” he says.

“They are extremely loyal to fellow employees as well as to the company. As such, they can accomplish any tech task – be it in physics, optics or system design – more efficiently.

Not to mention that they are workaholics.”

Mlavsky coined the term “falafel factor” to sum up the Israeli advantage.

“The falafel factor is comprised of three character traits: smarts, chutzpah and the refusal to give up. A working definition of chutzpah is a young man who murders his parents and then goes on to claim orphan benefits from the government,” he jokes.

According to Mlavsky, because Israelis are not overwhelmed by much, their commitment doesn’t run out at the first sign of trouble. This is all part of the country’s national character. Being in a warlike atmosphere means that sabras are more equipped to deal with critical needs in technology.

Add this to the familial factor, and you’ve got a winning formula for success.

The familial factor is evident in a variety of ways: Employees might have kids in the same kindergarten, or they may have been in the same army unit.

Thomas Hoegh, the founder and CEO of Arts Alliance Ventures, is an artist and entrepreneur who has been investing in Israeli companies for years. While he agrees that the camaraderie ethic cultivated in the army contributes to Israeli successes, he is quick to add that it also has its pitfalls.

“If you haven’t been in the right army unit, you’re not part of the club,” he says.

“This sometimes makes it difficult to work with Israeli companies. They might not be interested in bringing in a non-Israeli CEO.

The fact that everyone is trained in the same way is another limitation of the army culture.”

Cesare Maifredi, investment manager at 360° Capital, avers that certain factors in Israel – such as government stipends for new businesses – nurture the Jewish state’s entrepreneurial mind-set. Other countries, like Maifredi’s native Italy, simply lack that mind-set, and the subject of entrepreneurship is never discussed, even in universities.

“It’s a question of stability versus the willingness to take risks,” he says. “While in Italy, people are more interested in the security of having a full-time job in a corporation, in Israel it’s cool to be an entrepreneur.”

But he also laments the Israeli tendency to be clique-y. “At a certain point, you need to be open to new people and new cultures.

Companies here are made up 100 percent of Israeli people. If your end market is foreign, you must have local people in the company, and Israelis are often opposed to this idea.”

ISRAELI STUBBORNNESS extends to other fields too, including market research.

Hoegh admits that the Israeli talent base is extraordinary, but that it consists mainly of people who are pragmatic and mathematical and who have little time or use for creativity.

“They’re not as good in marketing and design,” he says. “Israel has an abundance of clever technologists, but they aren’t particularly keen to listen to what the market wants. Instead, they have a vision about what the customer should want and are offended if the customer says otherwise!” Hoegh says there is a finite pool of talented people in Israel and that many of the big companies, such as Google and Microsoft, will suck that talent in. In order to curb this trend and scale the talent, he believes, Israeli startups will be forced to start looking elsewhere – and not just overseas.

“There’s fantastic growth potential in the Arab sector, and the synergy should start there,” he says.

Dan Stone, the vice president of strategy and corporate development at Lenovo, believes that Israeli tech is far too USfocused.

“They’re missing some crucial points,” he says, “Like the fact that more smart phones are sold in emerging markets than they are in the West. In fact, people are even willing to pay more in those markets than some of the mature markets.”

Stone recommends that Israeli innovators spend more time catering to international markets such as India and China. “In those places, you’re addressing over a billion people at once and they’re all speaking the same language, so it’s a lot more efficient.”

Nazmin Alani is the director of the Business Development Bank of Canada, a financial institution that acts as a complementary lender in the marketplace by taking on higher risk of capital investment than conventional banks. It was Alani’s first time in Israel, and he was astonished by the collaboration capabilities of Israelis in startups.

“The market and talent here is just as credible as Silicon Valley,” he says. “I only ask why you can’t export Israeli talent to the rest of the world. From an entrepreneurial perspective, it makes sense to leave Israel and go to bigger markets. But then, why would you leave? Tel Aviv is paradise.”

Eric Berger contributed to this article.


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