Israel: Second only to Silicon Valley?

November 17, 2016

When you think of the tech hubs of the world, you think of Silicon Valley; maybe New York, London, or even parts of China, Japan and Korea would come second to that. However, Eric Schmidt, former CEO of Google and current tech executive, said in June this year that Silicon Wadi, a technologically concentrated area of Israel, was second only to Silicon Valley. He also added that Israel is punching well above its weight in technological advancements; but is this true? Paul Steele, co-founder at TDi and Benefit Capital, let us know what he thinks.

Paul says: “I don’t think he [Eric Schmidt] is right.

If you actually look at the numbers, there are probably centres in Australia that actually have greater levels of innovation and investment, if you look at some spots in Europe it would be true too.

I’m really not sure where Eric gets the idea that Silicon Wadi is second only to Silicon Valley; in fact I would probably argue that New York would come second to Silicon Valley quicker than Israel.

I think what Eric’s observing is the rapid rise in Israel; its not so much that its big now, but you essentially have a start up culture embedded in a start up nation.

So you’re dealing with a group of people that firstly, all have military service so they’re generally quite disciplined, and secondly, absolutely consider themselves a start up nation; that’s kind of embedded in them as a people. So then when you move to the start up space, it translates quite well.

Not withstanding all of that, there is a very strong, very well developing start up community growing in Israel”.

 

The start up space is more globalised than ever. Australian start-ups are moving to the US, Israeli start-ups are moving to Australia. Start-ups go where the capital and industry are. So how does Israel as a start-up economy and environment weigh up against our own and the ‘land of opportunity’ US?

“I’m not sure they’re quite the economic engines that we make them out to be.

We’re seeing lots of Israeli companies come here, because the infrastructure isn’t mature enough, their market is not big enough, raising capital is not quite there.

But for whatever reason then it means you’ve taken what was a nice piece in Israel; and had it stayed there would’ve had great benefit for them.

Where Australia, and I think Israel lose is start-ups tend to move offshore, to the US. There’s definitely a lot more capital in the US, but its spread over a bigger pool. So it’s actually a lot more competitive, so it’s probably easier to get capital in Australia.

Getting capital is always hard, so I think people look at the US thinking its an easier environment. The numbers are just astonishing, but they hide the effort that has to go into getting that kind of money.

On the other hand, Australia is probably one of the best places in the world from a research and development perspective, especially for the start up base”.

 

So what is going on in Israel? Paul let us in on an enterprise that is making waves.

“We’re working on an enterprise that’s focused on stem cell research. So we’re working with a bunch of medical researchers in Israel who have worked out how to harvest stem cells in a new way.

At the moment its mainly a mechanical process, but they’ve found a biological mechanism, it’s the same mechanism that causes cells to die in your body naturally when we need them to. They’re using that same process to separate stem cells from mature cells, so they’re getting a much high purity and quality of stem cells, and its much less labour intensive.

So really interesting technology, great innovation. They’ll probably go to the US for capital, and come to Australia for research and development”.

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