With must-see European tech capitals like Berlin and London already ticked off the list, I landed early last Sunday morning into Tel Aviv for two and a half days of listening and learning.
A couple of the conversations I had there were truly illuminating, starting with a meeting at OCS, the Office of the Chief Scientist.
OCS is a government agency similar to Enterprise Ireland, and it was interesting to learn how they approach challenges that echo our own: a small domestic market, startups emigrating or exiting too early, multinationals scooping up valuable teams and IP.
OCS has over 40 programmes supporting Israeli tech companies at every stage in their development. I was particularly impressed to learn about their early stage incubator programme. It looks like this:
-There are 19 incubators across the country. The majority of them are wholly or partly owned by international angels, VCs and multinational corporations.
-Each incubator is sector specific and all are for-profit entities.
-OCS provides $600-800K in funding per company and takes no equity.
-To win an OCS tender, the incubator must prove its reach into global markets and access to global customers.
-Each incubator must also have a follow-on fund.
-The funding given to startups is a conditional grant to be paid back at a rate of 3.5% a year upon generating revenue.
-There are penalties for leaving Israel. If a company gets acquired abroad they reimburse OCS up to 6 times the value of their grant. If the IP remains in Israel they pay it back 3 times.
For me, the genius in this programme is the incubator ownership. As OCS explained it, In 2011 we realized that the mechanism for accessing foreign markets was foreign owned incubators in Israel. So, they put big money down and found the partners their startups needed to be global from day one.
OCS talked about how they drive innovation by funding R&D collaborations between Israeli and foreign startups, Israeli startups and multinationals. And they say that entrepreneurs are talking more and more about building big companies from Israel. Why? Because the local ecosystem is now mature enough to support them at every stage of their funding and global development.
Finally, OCS told me that in Israel, there is a complete legitimacy to fail. To be sure, were much better at acknowledging the value of failure than our European brethren, but have we reached the point where its completely legitimate?
Its good to be back. Now lets keep talking.