As an Australian, there are many things I’m proud of that my country is known for, yet with the current hype and media attention on Australia’s innovation agenda, it also brings to light areas we continue to lag behind. According to the World Intellectual Property Organisation, quoted in a post by Leigh Kelson, we rank 73rd in terms of our innovation efficiency. (Perhaps this falls in the category of ‘not so proud’.)
As a humble student of everything in life, I thought it’d be appropriate to contribute to the on-going dialogue by looking to other successful innovation ecosystems and glean what best practices, attitudes and mindsets can be shared. I recently spoke with Shelly Hod Moyal, Founding Partner of iAngels, a platform connecting global investors to Israeli startups. As we speak about the driving force behind the success of Israel’s vibrant startup ecosystem, naturally, I think about how Australia can learn from their success.
How did you get into the world of entrepreneurship and angel investing?
“I came from a financial background, and spent time on Wall St with a hedge fund and an investment bank,” explained Shelly, “I always knew that I would eventually do something of my own and take an entrepreneurial path after several years in the finance industry.”
As the co-founding Partner of iAngels, Shelly has unique access and perspective to the Israeli ecosystem. Combined with her longstanding exposure to international investors and corporates, she has an intimate understanding of the global standards and best practises needed to successfully connect between investors and entrepreneurs from around the world.
Despite her passion for life as an entrepreneur, she’s deeply attached to the skills and training gained from her corporate career. “I loved the work I did in my ‘past life,’ at UBS and Avenue Capital and Goldman Sachs, and wouldn’t change the experience for a second. Entrepreneurship is different though – it’s very exciting, but holds a lot of personal responsibility and risk. It’s not for everyone, but I enjoy that aspect.”
What are some of the industries of unique strength in Israel?
Israel has excelled in areas of software and technology, with a particular focus on sectors like cyber security and compression. “iAngels invests across different sectors. However, we have a strong focus on software as it’s an area where Israel excels and has a lot of know-how and understanding,” said Shelly. “We also look for business models that are scalable and not too capital intensive that would be attractive to angel investors.”
“There has always been a real need to innovate in Israel from a survivorship perspective.”
“Whenever there’s a need, people are naturally resourceful in finding specific solutions. This explains Israel’s longstanding track record in defense security, including cyber, storage and compression. These are technologies that have been employed successfully by Israel’s intelligence agencies and defense forces, creating a deep well of expertise among Israeli engineers.
Another area that Israel has excelled in over the last couple years, developing a market-leading position globally, is agricultural technology and water conservation. Again, this strength stems from a shortage of natural resources, which has driven the brightest minds to develop technologies to make best use use the available resources.
“When I was child,” Shelly recalls, “there was a huge marketing campaign to save every drop of water. It made people very conscious about their water usage.” Over time, Israel developed technology to assist with water conservation. Today, watershortages and restrictions are no longer an issue. It’s another strong example that when “there’s a real pain, people are able to develop technology and build substantial businesses around it.”
In a country such as Israel, the creative and entrepreneurial citizens innovate to accommodate for resource shortages and survivorship.
For a country with a population of around 8.5M, Israel has the highest density of startups, VC’s and scientists per capita. What is the secret sauce in growing such a vibrant ecosystem for a relatively small country?
“Israel’s economy alone is not big enough to justify the presence of global businesses, not from an economic and funding perspective,” said Shelly. “Therefore entrepreneurs think global from day one and never target the Israeli market alone.
“Also from a funding perspective, Israelis have understood that it takes long term partnerships and champions from all over the world to create major successes, and are therefore focused on creating long term business relationships and advocates early on.”
We’ve all heard the flagship names that have heralded from Israel’s successful startup scene, such as Wix, one of the world’s leading cloud-based Web-development platforms – worth over $1B, and Waze, which was acquired by Google for $1.15B, making it the first Israeli consumer-app company to be bought for over $1 billion.
In drawing comparisons with how Australia could emulate similar success and visibility, Shelly’s suggestion for Australian entrepreneurs is to look into areas and industries where Australia has a unique and leading edge over other countries.
“Look for big markets and big problems,” she said, “it is no different from what I would say to an Israeli entrepreneur.”
And upon identifying the problem in your respective market, one of the most important aspects of startup mentality is speed. “Stay lean and move fast. Idea is to reach product-market fit as fast as possible. It’s better to make wrong decisions fast than to make right decisions slow because mistakes lead to faster iterations and a steeper learning curve ” said Shelly, in describing the process of getting to market.
How would you describe the culture and mindset of Israeli startups?
“Israeli entrepreneurs see themselves in many ways as an extension of the US tech scene. There’s a sense of drive, youthfulness and passion that’s very similar to what you’d expect to find in Silicon Valley or New York,” said Shelly. “The key drivers for the strong Israeli ecosystem are quite unique, which creates a very local attitude to problem-solving and flexible thinking.”
Despite Israel being both a very small and relatively isolated region, Shelly explains that a “large part of the whole national business ethos is built on how it can overcome these challenges, by using whatever tools are available, including technology, to access larger global markets.”
Between the aforementioned qualities, and having a real cultural desire to expand their world, Israeli entrepreneurs are admirable competitors who seek to prove themselves on a global scale.
There really is a lot to admire about how the Israelis have grown and developed their ecosystem. There are many variables that influence this, from one’s mindset and attitude towards entrepreneurship, to the importance of forging strategic partnerships and alliances. As Australians, we’re all in this together to support, share and educate. Why fight over a bigger piece of the pie when we can build the pie factory together? (Then export it for global consumption 🙂 )