Stretching the boundaries of the Start-Up Nation beyond Tel Aviv

"Israel is such a small country that to talk about a 'periphery' is funny," said Yossi Ackerman, former head of Elbit Systems and co-founder of OpenValley.

AUGUST 8, 2019 17:59

OpenValley co-founders Yossi Ackerman (L) and Ofir Dubovi (R) (photo credit: SHAHAF TOBOL) — OpenValley co-founders Yossi Ackerman (L) and Ofir Dubovi (R)

(photo credit: SHAHAF TOBOL)

Yossi Ackerman and Ofir Dubovi are not just experienced and high-profile figures in Israel’s hi-tech sector – they are also deeply proud of their northern Israeli origins.

They are also proud of their country’s technological prowess, but feel that the so-called Start-Up Nation is not entirely living up to its title.

Ackerman, who grew up in a farming household in Bethlehem of Galilee in the Jezreel Valley, headed the defense electronics giant Elbit Systems for 18 years. Retiring from the defense firm six years ago, he returned to his agricultural roots in the region where he today produces olive oil.

“I realized that the State of Israel and its future stands on three major pillars, and I elected to be engaged in all three throughout my life,” Ackerman told The Jerusalem Post.

“The first pillar is defense of the country. We need a strong, technologically-advanced army. The second pillar is agriculture - if you want to own the land, you must work the land. And last but not least is technology, the Start-Up Nation.”

Dubovi, a former hi-tech executive and co-founder of leading data storage company Kaminario, spent his childhood in Haifa. After working and studying abroad, including several years in London, he returned to Israel in 2013 to build his family home in the Jezreel Valley.

Eager to support early-stage entrepreneurs based on his prior experience, Dubovi – like many involved in hi-tech – commuted several hours daily to meet aspiring, young innovators in Tel Aviv.

“I made some connections and investments but after six to seven months, the commute to Tel Aviv was exhausting,” Dubovi said.

“In my view, it was an oxymoron. People like myself come to this part of the country to gain a higher quality of life but, at the same time, want to become entrepreneurs so they commute to the Tel Aviv area every day.”

While Israel is often coined the “Start-Up Nation” given its unparalleled rate of start-ups per capita worldwide, more than three-quarters of them are located in the narrow coastal corridor between Tel Aviv and Herzliya Pituah.

For Ackerman and Dubovi, their knowledge of the country’s peripheries led them to a single conclusion: there is room for the boundaries of the Start-Up Nation’s boundaries to be stretched both south and north of Tel Aviv.

“We met many entrepreneurs who chose to live in the northern part of Israel, but when they were talking about business, they dreamt about Tel Aviv,” said Ackerman. “Together with Ofir, we decided to try to change this paradigm. You can be successful in the North, not only with zimmers and farming, but in hi-tech too.”

Aiming to foster an environment of support for innovation in peripheral regions, Ackerman and Dubovi established OpenValley, a network of co-working spaces for entrepreneurs. The co-founders have opened three branches since 2016, located in Ramat Yishai, Caesarea and Yokneam, that house 130 post-seed stage start-ups that might otherwise have turned to Tel Aviv.

The company boasts a professional mentoring advisory board with more than 50 industry experts, networking spaces and access to a 1,000-strong investor database. OpenValley's performance is measured, Dubovi said, by its ability to assist start-ups survive the “valley of death,” the notoriously difficult period of time between receiving initial investment and generating revenues.

“Unlike the big players in the co-working space, mostly based in the center of big cities and relying on a real-estate business, starting outside the big cities means that real estate is cheap and we can’t put all our efforts into the real estate business,” said Dubovi.

“Our DNA is a combination of innovative companies, start-ups and companies creating an impact. We need to mentor them, help them develop their strategy, their negotiations, collaborations and funding.”

To date, 27 start-ups supported by OpenValley have achieved Series A rounds of funding, and three companies have secured successful exits.

Given the almost rural location of their co-working spaces, Ackerman and Dubovi soon found large corporates and organizations seeking to rent their facilities for periodic meetings and workshops.

Determined not to become a real estate company or meeting room service, OpenValley decided to embrace the entire innovation ecosystem – including the corporates – by providing their entrepreneurial expertise to a wider market. The company opened its “Academy,” an educational space and program teaching managers and staff of companies of all sizes how to foster internal innovation within their organizations.

“Internal innovation is something that bothers not just corporates, but also NGOs, security services, municipalities and national government,” said Dubovi. “Every manager needs to think about what will happen in the next few years in this changing world.”

OpenValley is already educating a wide range of organizations, including teams from multinational companies, the IDF, Ministry of Defense, academic institutions including the Technion–Israel Institute of Technology, Bezalel Academy of Art and Design, and ORT colleges.

Anxious to spread its support and innovative message to additional locations, Ackerman and Dubovi are now considering establishing a branch in Nazareth to support Arab entrepreneurs, and to open a space in Rehovot, their first south of Tel Aviv.

“Israel is such a small country that to talk about a ‘periphery’ is funny,” said Ackerman. “There are outstanding people in northern Israel, and it is not as difficult as people sometimes think to recruit them and keep them here.”