Referring to Israel as the “startup nation” is hardly original now. Having first arisen in 2009 with the publication of Saul Singer’s and Dan Senor’s book Start-up Nation, the nickname has remained associated with the country – and not without good reason.
In spite of having a population of just 8.5 million people, which places it 100th globally, Israel has one of the world’s most developed and active startup and venture communities.
With startups estimated to number between 4,000 and 5,000, and the world’s highest concentration of them – one startup per 400 people and one every 20 or so square kilometres – the Israeli ecosystem is considered to be the fastest-growing after Silicon Valley, and incidentally as one of its most serious contenders apart from far larger peers, such as China.
According to figures published by the Israel Venture Capital (IVC) Research Centre, between 1997 and 2017, Israel was home to 356 incubators and accelerators and 365 foreign research and development (R&D) centres. Throughout the period, exits in the country generated an estimated $143bn in capital, including $132bn through M&A transactions and $11bn through initial public offerings (IPOs). Around $20bn of capital was raised by VC funds, while 1487 life sciences companies raised $13.5bn, 505 cybersecurity companies raised $5.6bn, and 16,000 high-tech companies were established, 8,000 of which remain active.
According to IVC estimates, Israeli startups raised $5.24bn of capital in 2017, up from $4.83bn in 2016. Deal numbers, however, dropped from 673 to 620 last year, evidencing an increase in the average funding round size. Meanwhile, VC funds raised an estimated $1.3bn. According to IVC, Israeli startups had already received more than $1bn in capital in the first quarter of this year – $260m in January, $500m in February and $330m in March. This represented a slight increase of $60m compared with the first quarter last year.
A third of the $330m figure recorded in March was the $100m round raised by Cyprus-based social trading platform eToro, led by China Minsheng Financial and joined by SBI Group, Korea Investment Partners, World Wide Invest and others. Other noteworthy funding rounds that month included a $30m Maverick Ventures-led round raised by cybersecurity company BioCatch, with participation from American Express Ventures and online lending platform CreditEase. The artificial intelligence (AI) medical diagnostics firm Medial EarlySign also raised $30m from a consortium of investors including the Hong Kong-based investment firm Horizons Ventures. Finally, the software-as-a-service (SaaS) security platform Luminate Security raised $14m from investors including software provider Microsoft’s Microsoft ScaleUp accelerator.
The year 2017 also gave way to a few mega-rounds – those above $100m – such as a $400m round for $4bn Comcast-backed home improvement image and services platform Houzz, a $250m Daimler-led round for ride-sharing company Via, and a $150m private equity round led by investment firm CVC Capital Partners for the cybersecurity technology provider Skybox Security, backed by trading and technology firm Susquehanna International Group.
Israeli startups were also subject to some major acquisitions, including the purchase by electronics specialist Sony of Altair Semiconductor, which develops long-term evolution chipsets, for $212m. A few months later, Cisco Systems followed suit, purchasing networking chip developer Leaba Semiconductor for $320m.
But the highlight of 2017 was certainly the acquisition by US-based chip maker Intel of autonomous driving technology developer Mobileye for an estimated $15.3bn. This transaction was the most significant acquisition of an Israeli technology company by a foreign group to date.
Looking at corporate venture capital (CVC) more specifically, Israel has had much to offer corporate investors from around the world, as reported in a recent GCV data overview ahead of GCV’s first Israel event in Tel Aviv this year. Since 2011, GCV Analytics tracked 222 corporate venture deals, with a clear upward trend over the past two or three years.
Nine years after it earned the nickname “startup nation”, Israel still seems to have a healthy and fast-developing ecosystem. What is its recipe for success?
Startup culture
When analysing a country’s venture ecosystem, it seems crucial first to understand its culture and its relationship with innovation, startups and risk-taking.
In Israel’s case, one fundamental element is that its people do not just “do” startups – they live and breathe startups. Israel may be the country where startup culture is the most strongly imprinted on people’s minds, and where people abide by it most.
In a recent interview with San Francisco-based VC firm Index Ventures, Shimon Schocken, professor of information technologies at Interdisciplinary Centre Herzliya and the founding dean of the Efi Arazi School of Computer Science, made the following analogy: “At Harvard, when you ask a student what they want to do when they grow up, they invariably tell you something like ‘I want to be a senator’ or ‘I want to be a CEO’ or ‘I want to go into investment banking’.
“Very few students will tell you ‘I want to start up my own company’. It is not something which is expected, whereas in Israel it has somehow become almost the normal thing to do. The Jewish mother who wanted her son to become a doctor or a lawyer, now wants him to become an entrepreneur.”
Larry Loev, who for the past five years has been CEO of Ariel University’s tech transfer office Ariel Scientific Innovations following a seven-year stint at Tel Aviv University, where he was director of business development for the university’s tech transfer office Engineering at Ramot, has his own way of explaining the rise of Israel’s startup scene.
He said: “I can see the difference in terms of how innovation is inherent to the culture here. A country’s role models often determine the direction in which education is geared. Here in Israel, the role models are often successful entrepreneurs – people who launched a business, who completed a successful exit. That is what is headlined in the news, and that is what is considered success.
“It is a strongly ingrained belief that the way we measure success here is not by whether or not someone has earned an MBA or completed other business qualifications – it is relative to their path through innovation.”
This mentality, Loev added, can largely be attributed to the environment in which Israelis are born and raised. “Because we do not have a lot of natural resources and land area [around 21,600 sq km], the only thing we can rely on is pretty much brain power. The fact that we are surrounded by non-friendly states has also forced us to reach out internationally across continents – to the Far East, Europe and North America – which I think has helped us develop a sort of breakout mentality.”
But it is not just Israel’s geographic position that is at the root of what is referred to by authors Senor and Singer as an “adversity-driven” culture. It is also the unique history of its people, inseparable from the Holocaust and its memory.
As I spoke to Loev on Yom HaShoah (Holocaust Remembrance Day) on April 12, he continued: “We have a very close-knit society, and one that is very much built on the idea that it is us against the world, which in turn creates a sense of having to show everybody how good we are. It is a way of saying that we have to be those achievers, we have to justify our survival.
“These are values and principles that can hardly be duplicated in any other country around the world. Certain things are just ingrained, inborn, and are just part of a population’s DNA.”
Another typical national feature is the so-called “chutzpah” – translating as nerve, impudence or audacity – which is generally associated with a risk-taking, rule-breaking, a can-do attitude, and with the idea that people should never be satisfied with what they are given and should always look for improvement. It is also synonymous with the belief that failure is an essential part of one’s path to success.
Quoted by Index Ventures, Gilad Japhet, founder and CEO of online genealogy platform MyHeritage, said: “Chutzpah in Hebrew and Yiddish is that feeling that I can do something, even if you tell me that I cannot. Israelis are very creative problem-solvers – they just improvise and break the rules, and breaking the rules means you do not follow protocol. If the standards and norms are blocking your growth you invent new ones. Chutzpah, I think, really characterises Israeli entrepreneurs. They never take no for an answer. If something seems impossible, they just find a loophole and solve it that way.”
In their book, Senor and Singer expressed a similar thought in a somewhat more lighthearted way: “When an Israeli man wants to date a woman, he asks her out that night. When an Israeli entrepreneur has a business idea, he will start it that week.”
All the different aspects that characterise Israel’s population seem crucial to understanding the success of its venture ecosystem. “All this has contributed to creating an atmosphere that lends itself very well to the spirit of venture, entrepreneurship and innovation,” Loev added.
Another parameter is, however, paramount in understanding the shaping of Israeli culture: the central role played by its army.
The military
Israel is one of the few countries where military service is mandatory for both men and women. Men have to serve for three years, women for two. This rite of passage constitutes a milestone in every young Israeli’s life.
Speaking to GCV following her nomination as a 2018 Rising Star, Merav Rotem Naaman, managing director at Verizon Ventures Israel, said: “[In Israel] 18-year-old kids have to serve in the military and take on responsibilities that for most people take decades. I grew up in this environment idolising my parents, grandparents and the other pioneers who lost everything in the world wars and came to Israel to rebuild their lives and a new home.
“From a very early age, I was determined to create my own path, to define my own destiny and to take advantage of the opportunities that life presented. Asking questions and trying and failing were the norms. Entrepreneurship was everywhere and in everything, and in me.”
Rotem Naaman’s statement is testimony to the way the army can contribute to shaping young people’s minds in Israel.
Ariel University’s Loev added: “A lot of our relationships are forged during our military service. We have an extremely advanced army, made of few soldiers but very strong on the high-tech front. Many connections – on the human and technological fronts – are built through the army system, so much so that after release, these relationships often continue within the high-tech community and we benefit from them on many levels.”
Aside from the impact it has on young minds, the Israel Defence Forces also plays a key role in stimulating technological innovation in the country. Several intelligence units have, for instance, been created within the army, aiming to train cybersecurity experts and hackers.
The most famous of these is probably Unit 8200, founded in 1952 and whose main role is to collect signal intelligence (sigInt) and code decryption on Palestinian territories and in the wider Middle East. Thanks to the tech training received in such units, army veterans frequently go on to create successful businesses. This was the case for Gil Shwed, who founded the cybersecurity group Check Point Software Technologies, or for Uri Levine, who developed the traffic navigation app Waze, sold to Google in 2013 for $1.3bn.
According to Forbes, around 90% of Israel’s intelligence material currently comes from Unit 8200, and an estimated 1,000 companies have been founded by its alumni.
As a side effect, investments in Israel’s cybersecurity sector keep expanding, with over $800m raised and 60 startups launched in 2017 alone.
Cybersecurity is far from the only thriving sector in Israel, so it is worth looking at the bigger picture.
Corporate venturing
CVC activity in Israel has been subject to a consistent rise over the past few years. Between 2014 and 2017, deal volume grew from 21 to 61 deals, while deal value progressed from $359m to around $1.02bn, according to GCV Analytics. In terms of worldwide ranking, this positioned the country as ninth in terms of raised capital, right after Germany ($1.04bn) and before Canada ($914m), and seventh in terms of deal volume, between Japan (72) and Canada (50).
Other corporate-backed initiatives have also been abundant during the past decade. According to data exclusively released to GCV by Israel-focused non-government organisation Start-Up Nation Central, since 2008, 17 corporate accelerators have been launched, while 26 CVC units were created between 1995 and 2016. Those included the venturing units of household global brands, such as Qualcomm Ventures, Merck Ventures, GE Ventures, Johnson & Johnson Development Corporation (JJDC), Intel Capital, Samsung Catalyst Fund and Sony Innovation Fund.
According to GCV Analytics, in 2017 alone, 10 new corporate-backed funding initiatives arose, including four VC funds, one CVC unit, one accelerator and three incubators. So far in 2018 one VC fund, one CVC unit and one incubator have been launched.
GCV Analytics data shows that in 2017, the top five areas of investment were IT with 14 deals worth a total of $202m, healthcare with 13 deals worth $247m, industrials with nine deals worth $164m, transport with seven deals worth $155m and services with six deals worth $85m.
In recent times, Israel has also shone through its achievements in new technology areas such as agtech, watertech and biotech. Companies such as Waze, Mobileye and Moovit also bear testimony to the country’s significant contribution to the automotive industry.
Looking at VC investments at large, the software, life sciences, AI, automotive technology and cybersecurity areas topped the list according to IVC, with $1.9bn, $1.2bn, $1.1bn, $810m and $791m respectively committed to each sector last year. The cryptocurrency and blockchain market also gained in popularity, with 10 Israeli high-tech companies having raised $480m through initial coin offerings.
Between 2011 and 2017, GCV recorded 42 deals closed by Israel-based CVCs domestically and abroad – a relatively small number if one considers the total 222 transactions recorded during that period. Those 42 deals were primarily made in Israel and US-based companies, as reported by GCV.
Units that topped the list included BRM Group, which closed 12 deals for a total $288m, Elron Electronic Industries, which made nine commitments for a total $76m, Elbit Imaging and Israel Growth Partners with four deals each and $241m and $148m committed respectively, and Teva Pharmaceutical Industries, which completed three deals for a total of $195m.
But the impact that Israeli CVC units have on the local venture market cannot be compared to the major influence exerted by international corporations. It is estimated that around 350 multinational R&D centres are currently based in the country. According to Loev, “almost every major international company now has a development office or R&D centre in Israel”.
The list of Fortune 500 companies with an established presence in the country keeps expanding, while all the global technology giants, such as Google, Intel Capital, Samsung, Microsoft or Hewlett-Packard, set up a local presence some time ago.
According to GCV Analytics, among the top 15 corporate investors in Israel-based companies last year, only two – BRM Group and Elron Electronic Industries – were based in Israel. The rest came mostly from the US or Asia. Qualcomm and Samsung topped the list with 20 and 18 deals respectively, immediately followed by Mitsui, General Electric and Johnson & Johnson, which all closed nine deals over the period.
According to IVC, of the estimated $5.24bn raised by Israeli startups last year, 84% stemmed from foreign investors, meaning Israeli VCs chipped in a meagre 16%. This substantial gap has existed for a number of years, as Israeli contributions have not exceeded 16% since 2014.
A lot has also been said about the prime place that China has taken as an investor in the country over the past few years. As mentioned in a recent Forbes article, according to IVC, Chinese investments in Israeli startups ranged between $500m and $600m a year between 2015 and 2017, representing an average 12% of the total capital raised during those years.
An evident conclusion from all this may be that Israel’s venture ecosystem would certainly not be what it is without the contribution of foreign investors. For Anya Eldan, vice-president of the startup division at the Israel Innovation Authority (IIA), some changes should be encouraged on that front. She said: “One of my goals is to get Israeli corporations to work with startups. Multinationals already know their way through our ecosystem but Israeli companies, surprisingly enough, are much less active.”
This, Eldan suggested, has become one of the IIA’s main tasks.
Government support
It is largely considered that the very first steps of Israel’s venture industry were initiated by the Yozma Group – a government program launched in 1993. Yozma – which in Hebrew signifies “initiative” – started with a single venture fund, Yozma I, which subsequently gave way to Yozma II and III as well as to a number of drop-down funds.
Frequently labelled the “catalyst” of Israel’s VC market, Yozma seemingly helped lay the first foundations of what was to become the world’s second-largest ecosystem after Silicon Valley.
To this day, the Israeli government remains a key supporter, contributing much to the ecosystem’s development. About 4% of the country’s GDP – about $320bn in 2017 – is invested in the military and in research and development every year.
Government support takes different routes in Israel, including investment programs and public-private initiatives. The Ministry of Defence, the Ministry of Science and the Ministry of Economy are all involved at different levels.
“The Ministry of Economy has programs for funding research at universities, encouraging them to partner with companies, which is a great thing,” said Loev. “The government has shown enough foresight to see the interest there is in funding applied science. Although many of the projects they support do not reach a successful outcome, they do understand that to find a diamond, one has to fund the copper and the lead as well.
“The security needs of our country are also a big determining factor, as the threats we face guide us in deciding which areas to support.”
The largest government supporter in Israel however remains the IIA. Launched in the early 1970s and previously known as the Office of the Chief Scientist, the IIA is an independent public agency responsible for the country’s innovation policy. With an estimated budget of S1.6bn (around $446m), the entity describes its role as “nurturing and developing Israeli innovation resources, while creating and strengthening the infrastructure and framework needed to support the entire knowledge industry”.
The institution is currently divided in six divisions, each one of which caters to different needs. These include an advanced manufacturing division, an international collaboration division, a societal challenges division, a growth division focused on R&D funding, a technological infrastructure division, which manages the Kamin, Magnet, Magneton, Nofar and Meimad programs, and a startup division focusing on technology incubators and early-stage funding, and managing the Tnufa incentive program.
A landmark investment made by the IIA in the past was NeuroDerm, a pharmaceutical company developing treatments for central nervous systems disorders. Founded in one of the IIA’s technological incubators in 2003, it received its support for seven years, eventually leading to a sale to Japanese pharmaceutical group Mitsubishi Tanabe Pharma for an estimated $1.1bn last year. The transaction was reportedly the largest purchase yet of an Israeli healthcare company.
The IIA also supported the development of Waze, to which it reportedly lent about $1m for a $3m return made through the Google sale in 2013.
The IIA’s technological incubators program is one of the agency’s landmark structures. Targeting early-stage concepts often deemed too risky by VCs, the program incubates startups for two years, providing funding of $500,000 to $800,000. Around 85% of the funding comes from the government, while the remaining 15% is provided by the incubator’s operating company.
To date, the program has funded around 1,500 companies and launched 25 incubators, the majority of which are technology-focused, while a couple of them support the biotech and industrial sectors.
One of the best-known incubators launched by the program is FuturX. Currently the only government-backed biotech incubator, it was established in 2014 as a partnership between the IIA and three CVC units – Johnson & Johnson’s corporate venture arm JJDC, Takeda Pharmaceutical’s venture unit Takeda Ventures, and biopharmaceutical group OrbiMed’s OrbiMed Israel Partners. In light of FuturX’s success, the IIA recently announced its intention to launch a second biotech incubator in northern Israel (see FuturX – an IAA initiative).
Anya Eldan said even more cooperation should be encouraged between the government and local as well as global corporations. “Corporations have to be much more present in the open innovation and startup scene. At the moment, M&A departments seem to be more active than CVCs in Israel, but I think growth in venture investments will come from corporates in the future.”
She added: “But in order to benefit from the entrepreneurial economy, corporates have to engage in much more than just periodic sculpting. The ones that do [such as Takeda, Johnson & Johnson and Merck] participate in our programs and use government money to engage with the ecosystem.
“A lot of multinationals currently engage with us through their venture arm, but I would say the smart ones will be present both through their venture and innovation groups.”
Eldan also described the cooperation between the IIA and corporates as a “win-win” that hugely benefits the local ecosystem. “While we know how to solve problems quickly, it can be more difficult to understand business models in their early stages, or issues related to scaling up and building strategic partnerships. That is where large corporations can be really helpful.”
University venturing
Israeli universities also play a major part in supporting the ecosystem. The country currently has nine universities, including the prestigious Tel Aviv University (TAU), the Weizmann Institute of Science (WIS) in Rehovot, and the Hebrew University of Jerusalem (HUJ). All of them have tech transfer offices.
In 2004, the US-Israel Science and Technology Foundation formed the Israel Technology Transfer Organisation (ITTO) – an umbrella organisation for Israel’s technology transfer companies, all affiliated to a specific university or research institution. The ITTO currently has 14 partners, including BGN Technologies, affiliated to Ben-Gurion University of the Negev; BioRap Technologies and T3, attached to the Rappaport Research Institute at Technion-Israel Institute of Technology; Birad, associated with the Ramat Gan based Bar-Ilan University; University of Haifa’s Carmel-Haifa University Economic Corporation; Yeda Research & Development Company, commercial arm of WIS; and the tech transfer offices Yissum at HUJI and Ramot at TAU.
“I would say the big spur within the university system came around 1995 – that is when it really got off the ground,” said Ariel University’s Loev. “Although the Israeli government does support local universities through its own funding programs, most of them also apply abroad for funding, through structures such as the National Institutes of Health [an agency of the US Department of Health and Human Services] or Horizon 2020 [a €79bn ($94bn) European funding program for research and innovation].”
Five binational science foundations also exist between Israel and partner countries to support basic research, including the United States-Israel Binational Science Foundation and similar partnerships with Germany, France and the UK.
According to Loev, the more established universities – among which he includes HUJ, WIS and TAU – give birth to around 12 to 20 new startups a year, while smaller institutes, such as Ariel, produce a couple each year. He added: “The focus on startups is generally very high within universities. All of them have courses focusing on entrepreneurship and innovation as part of their academic programs. The whole innovation and venture concepts are strongly recognised and acted upon.”
Earlier this year, HUJ launched an Israel-based seed-stage incubator in partnership with crowd equity platform OurCrowd. The incubator, which forms part of the IIA’s incubator program, will invest in up to 100 companies over 10 years, focusing on AI, deep learning, autotech and smart cities.
HUJ also partnered the Germany-based Fraunhofer Institute for Secure Information Technology (Fraunhofer SIT) at the end of last year to launch Hessian Israeli Partnership Accelerator for Cybersecurity (Hipa). Hipa has selected 16 cybersecurity teams from Israel and Germany to receive three months of training in R&D, entrepreneurship and cybersecurity. HUJ and Fraunhofer SIT had already partnered through the Fraunhofer Project Centre for Cybersecurity in 2015.
One significant piece of news that recently made the headlines was the introduction by TAU of its own venture fund, TAU Ventures. The initiative – the first of its kind in Israel – received initial commitments of $20m from Singaporean investment fund Chartered HighTech, Los Angeles-based investment firm Maxim Capital Group, and several US and Canada-based investors, as reported by GUV.
TAU Ventures, which was reportedly modelled after similar initiatives at US universities, including the Massachusetts Institute of Technology, University of California Berkeley and Stanford University, should be running for seven years. It will operate a variety of incubation programs in collaboration with strategic partners, the first of which will be the Japanese IT services and products provider NEC Corporation. It will invest in startups set up by university graduates or students operating within various technology fields, avoiding sectors requiring longer-term commitments such as biotech or cleantech, TAU announced.
Perfect picture?
In many ways, the Israeli venture and innovation ecosystem seems to form a perfectly running and well-fuelled machine, where all the necessary organs and actors – corporates, government and universities – are in place and contribute.
But could Israel eventually become the victim of its own success? In a recent interview with Index Ventures, Ron Gura, who runs e-commerce platform eBay’s innovation centre in Tel Aviv, warned of the risks of having a hyperactive ecosystem such as Israel’s. “There are hidden dangers in the glittering success, such as the way the ecosystem feeds off itself, breeding exit-focused entrepreneurs and an M&A culture.
“The fact that there is more VC money in Israel, second only to Silicon Valley, not just per capita, but in absolute numbers, that alone explains why you see so many startups here, because there is demand on both sides.
“I would argue that that is not necessarily a good thing. We have so many people opening businesses, that maybe we have crossed a line and now there are too many. Exits, in themselves, should never be the goal, and in my short experience, I do not know anyone yet who had a successful exit when that was their goal in the first place.”
A shared feeling among local VCs is also that the abundance of new businesses may exacerbate human resources issues. A source told GCV: “Until about three or four years ago, there were two major bottlenecks in Israel – one was funding and the inability to get significant rounds, and the second was the lack of good experienced managers. Over the past three years, however, the funding gap has been progressively closed, although to an extent, we do still lack very large funding rounds, leaving the management issue to become the most prominent one.”
This, according to sector players, is particularly the case for biotech, where there is a shortage of quality C-level managers such as chief scientific officers, chief technology officers and heads of R&D. Another source said: “Because of the abundance of innovation here, and the important number of companies, there is a very fierce competition to get good managers. Although the innovation coming out of universities and research centres is of a very high quality, we still need people with a lot of experience to make good products out of it. We tend to have more innovation here than our managers can handle, and that is an issue.”
Ariel University’s Loev, meanwhile, identified another aspect that could be improved. He said: “One thing we could definitely work on is streamlining bureaucracy, which at industry level means minimising reporting constraints and reducing the approvals necessary for starting companies, which is still pretty convoluted.”
Conscious of the geopolitical tensions affecting Israel and the surrounding territories, Loev also said innovation could be used as a tool to encourage more integration in the region. He added: “More needs to be done to bring other social sectors of Israeli citizens and ethnic minorities – including the orthodox and Arab communities – into the high-tech and innovation fast-track, which in turn, would facilitate integration.”
Although there are few signs that Israel’s “success story” in the world of startups will soon come to an end, political tensions and military conflict could modify the picture very quickly.
FuturX – an IAA initiative aiming to retain innovation
Founded in January 2014, FuturX is the result of a partnership involving three corporate players and the Israeli Innovation Authority (IAA). With a provisional lifespan of eight years, the biotech incubator awards an average $2.3m to selected startups, covering three years of R&D activities. Startups can get additional funding of up to $500,000 through a separate dedicated biopharmaceutical fund.
Esther Lukasiewicz Hagai, CEO at FuturX, said: “We take projects at an early stage, based on scientific research sourced from academia, and aim to bring them within three years to an inflection point that will help them raise more funding in the future, making sure that they can continue their development activities after they graduate from the incubator.”
To date, FuturX has incepted 11 companies based on university research from Israel and abroad. According to Hagai, two of its biggest successes are BiomX, sourced from the Weizmann Institute of Science and developing bacteriophage-based therapeutics to treat cancer and chronic diseases, and Mitoconix, a Stanford University spinout aiming to treat neurodegenerative diseases. Both groups succeeded in raising money from VCs during their first year in the incubator, with the former hitting $27m for its series A and the latter $20m.
“For us, this is a confirmation that the technologies we choose to support, even if selected at an early stage, are very promising, and that their field of application is of interest,” said Hagai.
She added: “Having our three founding partners [JJDC, Takeda and OrbiMed] as part of the incubator is a big advantage, as they provide us with a lot of insight into the industry, and with useful guidance and mentoring on our many activities, making sure we are going in the right direction. It is interesting for them in turn because it gives them access to early-stage cutting-edge projects, which they can afford to wait and see develop while we nurture them. It is a different way for them to look at the ecosystem.”
One of FuturX’s main goals, according to Hagai, is to promote innovation in Israel and build out the biotech ecosystem. “By funding these early-stage projects that large VCs or biopharmaceutical companies would usually not be interested in, what we try to do is keep technologies and innovation in Israel rather than selling them to foreign groups.
“The whole concept of the incubator is really down to creating value in Israel and making all the efforts we can to keep our companies here, or at least their R&D units. The companies we incubate usually develop very specific knowledge in very specific fields, which means they are not always easy to export. We would really like to see them grow here, and stay.”
Although the situation is constantly improving, there are still gaps that need to be bridged in certain fields, according to the CEO. “This is for instance the case for bioanalytics or medicinal chemistry,” she said. “Having more facilities and experts in those fields in Israel would be a great progress, and something the sector would greatly benefit from.”
