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A brief encounter with a vibrant start-up scene
Business Intelligence report:
Start-Up Tel Aviv
and DLD Innovation Festival 2015
A brief encounter with a vibrant start-up scene | 1
Rapporten är utgiven av Innovatum AB
Textförfattare: Deborah B Lygonis, CORRIGENDA AB
Utgåva: 01.00, datum oktober 2015
Foton och illustrationer: Deborah B. Lygonis
Kontakt: Sonja Andrén
Inkubator, Affärscoach
Postadress: Box 902, 461 29 Trollhättan
Besöksadress: Nohabgatan 18A, Trollhättan
+46 520 289 300
www.innovatum.se
A brief encounter with a vibrant start-up scene | 2
BACKGROUND
Start Tel Aviv is a global competition held by The Israeli Ministry of Foreign Affairs and Tel Aviv
Global. The competition brings together technology start-ups from 21 different countries around
the world to compete for the opportunity to take part in an intense, five-day start-up experience in
Tel Aviv. The 2015 competition brought together 24 companies from 21 countries.
Friendbase AB was the winner of the Swedish Start Tel Aviv. Participants from Friendbase were
Andreas Rehnberg and Deborah Lygonis.
This report consists of a summary of learnings from a selection of the talks, workshops and panel
discussions we attended.
Photo: The winners of Start Tel Aviv 2015, 24 companies from 21 countries.
A brief encounter with a vibrant start-up scene | 3
TABLE OF CONTENTS
Background 2
1 Talks 4
1.1 A presentation of Tel Aviv – a global startup city 4 1.2 Everything you ever wanted to know about the Israeli Startup Scene 5 1.3 Connecting smart cities 6 1.4 JVP 7
2 Workshops 8
2.1 How to perfect your pitch 8 2.2 Systematic Inventive Thinking 9
3 Panel discussions 11
3.1 The prospect of becoming an Israeli Unicorn 11
4 On a personal note… 13
1 TALKS
1.1 A presentation of Tel Aviv – a global startup city by Ran Natzanson, Head of innovation & Brand Management, Media & Public diplomacy Division at Ministry of Foreign Affairs of Israel
About four years ago Tel Aviv decided to position themselves as a global city with the aim to be
the place to be for start-ups – Tel Aviv Startup City was coined.
There is a strong feeling and sense of diversity in the city. This creates a vibrant mix creating new
ideas. The population has a prevailing “can do” attitude and are creative thinkers. Combine this
with their courage to challenge authority, they don’t take no for an answer and take affirmative
action. This has led to a strong force creating a strong entrepreneurial spirit and many new start-
ups.
The city also realised the importance to support the startups. For instance, there are reduced city
taxes (close to 50% for start-ups).
The government has implemented special start-up visas to fast track talent to work in Israel just as
they put a lot into start-up schools, accelerators and incubators. The city has implemented free wifi
so anyone can work online anywhere.
Tel Aviv wants to be a magnet for the creative class with the guiding words:
Talent - Technology – Tolerance
Talent
Through the military mandatory conscription for both men and women they train their young
people in skills for problem solving, project management and technology. Contrary to what we
perceive as a hierarchical environment, they are taught to question authority and to be brave enough
to question their leaders if they don’t agree with their decision. The military also teach hi tech IT
skills and project management giving the young people a good foundation for when they leave. At
this point, not only do they have a good training, they also will have worked in groups of people for
all different social levels, creating a very interesting foundation for creativity.
Add to this, the aim to involve talent from all over the world. This is one of the reasons they started
with the Start Tel Aviv competition in the first place. A way to get many new budding companies
to come to Israel to understand and of course talk about Tel Aviv as the place to be for
entrepreneurs.
Technology
In the military the young people are taught computer science. For children, there are special
programs for the children that are gifted in math etc.
They have a tradition of working with mentors and fostering talent. To connect people they have
created a start-up online community (see more below about Mememi).
Tolerance
A third of Tel Aviv’s population is between 18-35 years old. It prides itself in being a tolerant and
friendly city whoever you are, gender, your sexual orientation or the colour of your skin. [It’s a city
that never sleeps which was so true when we walked home along part of the 14 km long beach and
even at midnight the beach was full of people playing volleyball.]
There is a very concentrated eco-system with very many investors, start-ups, accelerators,
incubators and multinationals in a relatively small geographical area.
The more experienced entrepreneurs and business leaders encourage people to dare – to try and not
to fear failure.
1.2 Everything you ever wanted to know about the Israeli Startup Scene
by Anna Phillips, Startup Nation Central
Startup Nation Central, http://startupcentralnation.org, is an independent, non-profit organisation in
Tel Aviv. The organisation’s role is to provide international clients with their first tangible
connection to Israeli companies. They design customised engagements for business leaders and
governments connecting them directly to the innovation they need.
They also manage a database with Israeli companies and innovators with more than 4500 entries
across many industries. The database is public and anyone can use it to search for information and
contacts.
Photo: Anna Phillips talking about the Israeli Start-up Eco System
The key ingredients to Israel’s success are;
Government support
Immigrants = entrepreneurs
IDF (Israeli Defence Forces)
Israel is a small country of 7 million people. Surrounded by not so friendly neighbours they have
from the start had to find ways to make things work. With a lot of immigrants there has also come a
lot of entrepreneurship. The Israelis are considered brash, bordering on rude. They have the phrase
“Tachles”, basically meaning What’s the point, Get to the point, “Chutzpah” meaning being bold
and direct [which can be perceived as rude] and “Rosh Gadol” meaning taking responsibility, going
beyond the job description. The latter is a slang phrase originating from the IDF to describe a leader
and someone who isn’t afraid to take risks.
The strong entrepreneurial culture leads to that they like to challenge the status quo. This is also
supported in the military as mentioned above. They are trained to not follow the rules, to complete
the mission and to take command in the field. They are taught to question authority and the
community is non-hierarchical. They say that in the world there is six degrees of separation, in
Israel there are two degrees of separation.
They have the highest density of start-ups in the world with 1 start-up for every 2000 people in the
whole of Israel. In Tel Aviv the number is 1 start-up for every 431 residents! Depending on which
terms to measure, they are fifth in the world in absolute terms. There are 19 start-ups per square
kilometre.
Tel Aviv is a vibrant and renowned start-up city, now other locations around Israel are up and
coming such as Jerusalem.
With their vivid ecosystem, lots of tech talent and being a small home market (have to target other
nations first), they are a huge force to recon with.
Some more metrics;
The R&D is the highest per capita
The venture capital is the highest per capita
Next after the US they have the highest amount listed on Nasdaq.
They have 16 Tech transfer offices.
There are 50 accelerators*, co-working spaces and innovation centres as well as numerus
incubators**.
*An accelerator is a non-profit, non-equity organisation that the start-up collaborates with for 3-6
months. They offer pitch clinics, events, introductions and infrastructure.
**An incubator is usually invests for equity and is sector focused.
Contact information: [email protected]
http://startupcentralnation.org
Recommended reading: “Startup Nation – the story of Israel’s economic miracle” by Dan Senor
and Saul Singer
1.3 Connecting smart cities
by Tal Halevi
Tal Halevi gave a talk about how important it is to have a support system in place to create an easy
contact between companies, investors and entrepreneurs. Tal runs a company that has built a
platform that is a tool and infrastructure for building communities. Tel Aviv has embraced this
platform and they have a now created a community based on this platform enabling the
entrepreneurs, investors, companies, governmental bodies and others to communicate and connect.
Anyone can become a member and anyone can send out requests and information. It may be
requests to connect or post information on upcoming events, talks and conferences. For more
information explore https://memeni.com/communities/telavivcity/tel-aviv-startup-city
Contact information: Tal Halevi www.memeni.com
1.4 JVP
by Uri Adoni JVP Media Labs
JVP is a large investment company in Jerusalem working as an investor running their own
incubation program. They have they own space for the companies they invest in, basically covering
a whole block, the JVP Media Quarter.
Uri, who gave the talk, started off by giving an introduction to the Israeli start-up scene. As most of
the facts and cultural aspects on Israel are covered above, they won’t be repeated here.
In Israel there are several incubation programs run by the government that grant licenses for
incubators running over a period of eight years. Once the incubators identify a good idea the start-
up is granted a $500 000 risk free loan from the government. The loan is repaid through paying 3%
annually of future revenues. In addition, the incubator adds another 15% [$75 000] to cover
development over an 18 month period. In addition there are many government incentives on top of
that. For instance, start-ups can get up to 40% of the salaries paid by the government in some cities.
This is just an example and there are many more incentives.
However, JVP Labs deploy more as they don’t believe it is enough to reach an A-round status.
They therefore add $ 1-1.5M for the 18 months. They have a very intense program divided into
three parts, each six months long.
1) First six month period the start-up has to finalise the minimum viable product
2) Second six month period the product/service has to get market traction, tweak the business
model etc.
3) Third six month period they have to start scaling
This will bring them to the point where they bring in their A-round of investment.
As Israel is a small market, all start-ups not only are encouraged to build their market plan on
another market - they are demanded to. If they bring a business plan based on the Israeli market,
they will not receive funding. It has to be based on either the US market or somewhere else large
enough.
Since statistically start-ups are a failure, they don’t mind investing in someone who has failed.
They invest in the persons’ drive and stamina, not only the idea. Should the idea fail, they know the
entrepreneur will come up with something new.
One reason why there aren’t many large Israeli multinational companies is because they don’t have
a good late stage funding sector. Their talents lie in the early and medium sectors. Another reason
is that many companies are bought before reaching a large size.
Uri’s sees the trends being in Internet of Things, e-health, computer vision, predictive analysis, date
storage and cyber security.
For more information on JVP; http://www.jvpvc.com/
2 WORKSHOPS
2.1 How to perfect your pitch
by Shaun Waksman
Shaun gave a great talk about how to perfect your pitch. We also got the opportunity to do a one
minute pitch where Shaun gave us his feedback. Shaun is a serial entrepreneur running a company
called Coupon Roller. He pitches frequently and has won several pitch competitions.
His main tips boiled down into bullet points are:
Think about how you will stand out
Engage the audience (ask questions)
Make them laugh
Tell your story
Who are you selling to
Know your competition
Show high energy and smile
Get to the point – fast!
Shaun talked about Guy Kawasaki who framed his 10-20-30 Rule for PowerPoint as: 10 slides are
the optimal number to use for a presentation. 20 minutes is the longest amount of time you should
speak. 30 point font is the smallest font size you should use on your slides.
The recommended structure for a pitch should be:
1) Problem
2) Your solution
3) Business model
4) Underlying magic/technology
5) Marketing and sales
6) Competition
7) Team
8) Projections and milestones
9) Status and timeline
10) Summary and call to action
Shaun ended off by saying that at the end of the day, that one pitch doesn’t matter. So don’t be
nervous - just go out there and have some fun!
Contact information: Shaun Waksman, [email protected]
Recommended reading: The art of the start by Guy Kawasaki
2.2 Systematic Inventive Thinking
by Sinai Gohar Barak and Shiri Yardeni
The workshop was run by Sinai and Shiri from the company Systematic Inventive Thinking. The
workshop they held gave us an introduction to a method they use called AVM (Attribute Value
Mapping), a tool to teach you to sharpen your message. This is an excellent tool to for instance
sharpen your message to differentiate from your competitors or find a new segment.
We enjoyed the exercise a lot and found it very useful for the cases we chose to work with!
This is a brief description on how to work with AVM.
So what is the difference between Attributes and Values?
For example;
An Audi car can drive 33 kms on 1 liter of gas (Attribute)
If you buy an Audi car your will save on gas (Value)
Or,
The AVM work process
Work with a large white board with different coloured pens or post-it notes in different colours.
1) Write down the attributes of your product
Must be objective and describes the product
2) Choose and define target audience
Could be customers, investors, partners etc
3) Develop the values by asking “So what”
The answer is based on the perspective of the target audience. So what if the car doesn’t
use more than X gallons / mile or So what if Spinach has vitamins
4) Draw interconnections between values and other values and attributes
With this map, the analysis can be made. The so called orphan values and attributes can be
removed (they don’t connect to anything) and the map should lead to that you find the focal points.
These focal points are then used to create the messages.
Their recommendation is to:
STOP – doing stuff ad hoc and shooting from the hip
START – using models and actually use them to structure your messages
CONTINUE – having fun doing it!
Contact information: Sinai Gohar Barak [email protected] and Shiri Yardeni [email protected]
Recommended reading: “Inside the box, a proven system of creativity for breakthrough results” by
Drew Boyd and Jacob Goldberg
3 PANEL DISCUSSIONS
3.1 The prospect of becoming an Israeli Unicorn
Moderator: Rubi Suliman, Hi-tech leader, PwC Israel
Uri Levine, entrepreneur and mentor, co-founder of Waze
Dov Moran, Founder & Managing partner Grove Ventures, inventor of the USB flashdrive
Saul Singer, Co-author Start-up Nation
Shahar Waiser,, Founder & CEO Gett
Elchanan Jaglom, Chairman of the board, Stratasys Ltd
Learnings
Although there are very many start-ups in Israel, there seemed to be a lack of interest of building
big companies historically. The companies often tended to sell to others before becoming a large
company. However, now there is a shift, with close to 20 unicorns coming out of Israel.
The shift is attributed to that every success brings more entrepreneurs. The more successful the
higher the aspirations become. There are thousands of serial-entrepreneurs that all want to give
back into the system that also breeds an eco-system for success.
Uri Levine:
Questions you must ask yourself if you want your business to grow and succeed are;
Is my product/service solving a big problem for a lot of people?
Who would be out of business if am successful?
To become a unicorn you need to disrupt a mass market. Examples of mass markets being food,
telecom, transport. Becoming a unicorn isn’t an end goal, just a milestone.
As an entrepreneur you must have a passion and a dream to create change. It is also crucial that you
can delegate as your company grows.
The ability to change is also important to be able to shift perspective and grow.
Shahar Weiser:
When you are excited by building the company, the numbers don’t matter [evaluation].
As an entrepreneur you must be over-optimistic by nature. You must know you will overcome the
obstacles. Be a charismatic person and gain a good, strong team around you. You must also have
really good execution skills.
Elchanan Jaglom:
Building a unicorn requires time and patience.
Dov Moran:
You have to address a large market and solve a big problem. It also requires a lot of patience. Not
only for the entrepreneur, but also for the investors. It is important to invest in talent.
As an entrepreneur you must find a way to succeed despite failure. Couple that with a great EQ and
you can make a difference.
Saul Singer:
When imagining unicorns we think of the “Facebook model”. They built Waze a different way by
not going to the US first. There is a new world out there that isn’t US first, we are actually moving
towards a less US centric world. Slowly markets like Brazil, China and Indonesia are becoming
more important than the US for expanding your business.
Photo: Dov Moran, Founder & Managing partner Grove Ventures, inventor of the USB flashdrive
3.2 The multinational’s role in Israel Panel Discussion Moderator: Steve Linde, Editor in Chief the Jerusalem Post
Maxine Fassberg, president Intel Israel
Rick Kaplan, Country General Manager IBM Israel
Yoelle Maarek, Vice President of research EMEA, Yahoo Labs
Harle Iftar, Country Manager, Amazon Web Services
Adi Soffer Teeni, CEO Facebook Israel
Why so many multinationals in Israel? There are very strong ties to the US with several bridges
between Israel and Silicon Valley as well as New York. The culture is similar and there are a lot of
personal ties.
The multinationals want to be part of building bridges and encouraging entrepreneurship. There are
people working in Israel solely with the purpose of building bridges between the Israeli startups
and their home countries.
They support accelerators, incubators and startups.
There are 49 Foreign R&D centers in Tel Aviv employing just under 5 000 people. 43% is in the IT
& Enterprise Software Sector. Other key sectors include Internet (27%) and Communications
(14%).
Examples of multinationals recently opening in Tel Aviv are; Deutsche Telekom, Google, LG,
Facebook, Samsung, Microsoft, Yahoo, 3M, eBay, Coca-Cola.
Advice for young entrepreneurs -
Yoelle Maarek:
Talent and creativity is good, but attitude is best. Study and build your foundation and expertise.
Maxine Fassberg:
Don’t build for an exit, build for the next milestone. Set your sights as far as you can.
Adi Soffer Teeni:
Don’t build for an exit! Build a big consumer brand.
Study yes, but you also need to be bold, run fast, be first.
You need to be able to get s*t done! [execution, execution, execution]
4 ON A PERSONAL NOTE…
If was a week full of new impressions, new knowledge and new friends from around the world! A
city with great food, a mix of old and new. The 14 km beach running along the whole city is
amazing.
When summarising the success factors in their start-up eco-system and reflecting on Sweden in
general there are a few things that stand out. I write Sweden in general, because we mustn’t forget
we don’t need to look far to find another very vibrant start-up city, Stockholm. A city that is also up
right at the top under Silicon Valley depending on which metrics one uses. Other cities in Sweden
are also working hard to create entrepreneurial landscapes with several successes.
Some similarities are:
Accelerators and incubators with focused programs and schedules
Co-working spaces
Events / happenings showcasing successful companies and entrepreneurs
Collaboration with successful entrepreneurs / mentors / fostering
• Building bridges with larger markets ie Vinnova’s office in Silicon Valley
• Seed funding and soft loans through governmental support (even if it is lower than Tel
Aviv)
The differences are, and will take a lot of willpower and effort to shift in a short period of time:
• Governmental support. Sure there are soft loans available as well as R&D support through
Vinnova but large subsidies for start-ups. We certainly don’t see that there are huge tax
cuts for start-ups. Instead the Swedish government chose to again align and raise the social
service contributions for the young.
• Fast track visas for talent – what a great idea!
• Changing the tax system for stock options and other reward systems for attracting talent
• Early IT/ computer/tech education at schools
• And last but not least, the questions remains – are the Swedish angels more risk averse? An
Israeli investor we met at another occasion summed it up as; The Swedish business angels
like riding the merry-go-round. An Israeli investor loves riding the roller-coaster.
The lasting impression is that everything is so much MORE. The seed funding is so much higher,
the government is so much committed for small business growth, the impact is so much higher
because of the intensity and density of multinationals, venture funds, accelerators, incubator etc all
crammed in to a small geographical region.
It was a great week in so many aspects. From a business point of view, even now the contacts we
got during the week are creating new contacts for us with investors, journalists and possible
partners. I would highly recommend a visit and most definitely recommend start-ups to apply for
the Start Tel Aviv competition.
A trip not to be forgotten in a very long time.
Photo: Andreas and Deborah outside the DLD Festival entrance
Rapporten är finansierat av: Innovatum AB
