Monday, December 12, 2016
As published in Irish Tech News 11 December with a contribution from associate Mattan Lass
For a long time Israel has been touted as the startup nation to watch, in terms of the number of startups and their financial worth. At the same time however it is now possible to suggest Ireland is doing many things very well too. We recently visited the DLD Tel Aviv Innovation festival at the same time as the Irish – Israeli Trade mission which provided some interesting insights into potential opportunities for both countries.
Ireland can learn a lot from Israel, as Clare McDonald, from Stelfox.ie and member of the Irish Israeli trade delegation observed. “There are numerous shared services space options for start ups, (and) Israelis spaces offer more networking opportunities and expert services creating a more syngergistic environment.” McDonald continued “I was impressed with their concerted effort to introduce technology into their education system, something Ireland needs to put more of an emphasis on.”
Israel’s branding as a startup nation is well deserved. There is a hive of activity as many, ex-military, colleagues work together to develop ideas, often for hardware needs. Brian Seidman from Seidman & Co advisors, explains “Israel does start-up and early-stage development incubation and acceleration very well. They have developed a true value added eco-system providing start-up and early-stage companies with access to many of the world’s leading VC’s and technology companies. (Their) incubators and accelerators are not simply “co-working” spaces, but real eco-systems with networking, services and expertise to give companies the best chance for success.”
When in Israel you will frequently hear about the impressive levels of Research and Development spending. Generally the figure quoted is of 4.5% of annual GDP spent on R&D. This is an impressive amount and increases the potential for tech spin offs and startups. Another contributing factor you frequently hear mentioned is the positive impact of time spent in military service. It’s certainly the case many tech spin offs resulted from ideas first developed in the military. The recent US – Israeli announcement on September 13th to supply Israel with approximately €38 billion in military aid over the next ten years will also help to continue to prime that pump. This is of course one angel investor Ireland won’t have access to. Unsurprisingly this is not a factor mentioned as loudly if at all.
Looking at what Israel and Ireland can do well together Eugene Gibbons, Irish – Israeli trade delegation member explains “there is ample opportunity for both communities to complement each other in the business world due to similarities in mindset, culture, innovation, highly educated workforce and a drive to succeed.” He explained, it is a great help for startups to have “the ease of access and openness to VC’s, company founders, strategic advisors to share their stories of success, failure, ambition and innovation.”
Ireland and Israel have a lot of well documented similarities. Both are small countries, outward facing, with a well educated, young, English speaking workforce. For a long time however, or perhaps because of this, Israel has not seen Ireland as a natural place to look to expand its businesses into. Why, the thinking goes, should a country of 7 million people want to set up new offices in another country of less than 5 million? Israel is now beginning to realise however that Ireland does certain things well. Israel has a fantastic reputation for building hardware. Ireland though, say it quietly, and then later louder perhaps to an Israeli (we’ll discuss chutzpah in a moment), just might do scaling up and internationalisation a lot better than Israel. Brian Breslin from the IDA certainly feels there is an opportunity as “Ireland does well at bringing innovative Israeli research to market”.
One degree of separation and chutzpah
During our time in Tel Aviv we frequently heard reference to, and explanation of the value of the Israeli characteristic of chuztpah. Others have referred to this attribute as being pushy. While in Israel you begin to warm to the concept. Around you, and as clearly articulated by Israelis too, anyone, and everyone is entitled to have an opinion, and it’s quite likely they will share it with you. Furthermore while we might celebrate the fact that Ireland is a small place, and everyone is only two phone calls away. In Israel they claim it is only one degree of separation, that everyone is likely to know someone who can help them. With this degree of connectivity, it makes sense to have some get up and go, and try things out. There is less fear of failure, which is naturally a good attribute if you are aiming to foster innovation, creativity, and taking risks, all necessary for a vibrant startup culture. Fortunately it is a quality we are already seeing in Ireland as well, as more incubators, hackathons and startup weekends take place.
What the future holds for the Irish – Israeli relationship
We asked Mattan Lass Israeli/Irish Hi Tech and Startup Lawyer with Philip Lee Law how he saw the Irish Israeli relationship developing in the future. “To date, Israeli tech investments in Ireland have mainly come via acquisitions of Irish companies, such as the recent acquisition of Brite:Bill by Israeli giant Amdocs. As Israeli companies continue to grow internationally, we expect to see future investments come by way of establishing European HQs and undertaking R&D in Ireland. As with large US multinationals, they may come here for sales and marketing, but end up undertaking R&D as well. We expect to see Israeli companies that are scaling internationally from Israel using Ireland as a pivot or base to grow into Europe and to North America.”This is a story that Irish backers are realising they need to communicate to Israeli companies considering whether to move to Ireland. Read more about this here.
Brian Seidman is optimistic about Ireland’s future growth as a successful startup hub. “I believe Ireland has all of the pieces to create a comprehensive eco-system for success similar to Israel, it is a question of bringing them all together, and making sure entrepreneurs are aware of their availability.” Read more about this here.
We are at an interesting, exciting time for Irish – Israeli relationships, as the implications of these developments play themselves out. The IDA (Irish Development Agency) is visiting Israel on frequent basis, looking to communicate the advantages of an Irish base for Israeli companies looking to expand. The message is that Ireland is not merely a destination of choice based on tax breaks, but one with many structural and cultural advantages too. Irish prospects have also not been harmed at all by the self inflicted damages of Brexit on the UK’s prospects as a potential location either. Read more about this here.