Opinion: Israel: ‘We are the startup nation’

My first foray into the world of Israeli ingenuity came, oddly enough, not on the sunny shores of the Mediterranean but in the cool breezes of the Himalayas.

Many young Israelis tend to jet off for a year of backpacking in India immediately after performing their required military service (18 to 21 months for girls, three years for guys). It’s a great way to detach from the near-constant state of military alert in that country, many told me, before they head to university. A great way to rediscover peace within themselves, also.

Perhaps not surprisingly then, Israelis of all stripes, including entrepreneurs, tend to dominate the subcontinental travel and backpacking circuit.

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This usually makes for fascinating discussions, from politics to war to religion to, yes, even business.

Take Israel’s startup scene, for instance, which was outlined to me enthusiastically over a plate of hummus and naan one morning by a young man from Tel Aviv. He’d launched a couple different businesses already, he explained, but both had failed.

He didn’t seem at all deterred, which was the first encouraging sign. Chutzpah, it seems, is a handy asset for any entrepreneur and he wasn’t shy about saying so. But he also enlightened me on some startling facts. Israel, for instance, has one of the highest per-capita number of scientists and startup companies in the world. Did you know that? I certainly didn’t.

It also still attracts respectable amounts of VC financing, unlike some parts of the globe. Indeed, this country of around seven million souls holds around 8,000 patents and last year, over $2 billion in capital was invested in its startups. That cash came mostly from outside the country, predominantly from U.S. investors.

A country with few natural resources, inextricable security issues and a region-wide trade boycott by its neighbours has, somehow, turned itself into an entrepreneurship hub, he explained.

I remember being fascinated at the time, but it just so happens that a similar story is told in the excellent book Start-Up Nation: The Story of Israel’s Economic Miracle, by Dan Senor and Saul Singer, out earlier this month. The book says Israel’s governmental technology networks, open immigration policies, and military service – which brews a unique sense of leadership amongst its offspring – has contributed. Add these to a culture not shy about both challenging and accepting new ideas, and you’ve got the perfect petri dish for new companies in the realms of telecom, biotech, clean technology, software and other spaces.

The same topic came up when I spoke with Ian McWalter, CEO of Kingston-based CMC Microsystems (a funding and expertise vehicle for microsystems research and development in Canada) last week.

“We do an OK job” at commercializing our technology here, but it’s nothing compared to the Israeli experience, he said. “When it comes to commercialization we probably punch a bit below our weight. But Israeli experience seems to have hit a winning formula.

“They’ve got a very innovative culture that’s developed around a series of government programs, to create a knowledge-based economy.”

Indeed, the Israeli government’s national “incubator program” gives companies still in the fetal stages a $350,000 budget to play with over two years. The country also has bi-national R&D agreements with most European countries, Hong Kong, India and the U.S., and features a law for the encouragement of industrial R&D meant to enhance the development of science-based industries.

All valuable take-aways for our own government, one would think, as we round the corner of this recession.

The quotation in the headline, by the way, about being the “startup” nation is a recent one from Israeli Prime Minister Benjamin Netanyahu.

Out of curiosity, when was the last time you heard Stephen Harper even mention that word?

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