The one story that has been largely missed despite the extensive media coverage of Israel, is that key economic metrics demonstrate that it represents the greatest concentration of innovation and entrepreneurship in the world today.
Israel will always be a small country in territory and population, so Israel can never become a large market or develop mass industries. But while size grants the advantages of quality, smallness creates an opportunity to specialise in quality. Israel’s only option has been to pursue quality based on creativity.
Something about coming from an embattled sliver of a country — just 1/1000 of the world’s population — makes Israelis sceptical of conventional explanations about what is possible. The essence of the Israeli condition is to be “dissatisfied” and this typifies its national ethos.
Israel is the perfect “beta” country to test ideas — not only is it small, but due to hostility of its neighbours, it’s sealed, physically and logistically. Israelis are naturally early adoptors — they are number one on the time spend on the Internet, and have the highest cellphone penetration rate in the world. Israel also has the highest concentration of engineers and research and development spending in the world.
Technology companies and global investors are beating a path to Israel and finding unique combinations of audacity, creativity, and drive everywhere they look, which may explain why, in addition to boasting the highest density of startups in the world, more Israeli companies are listed on the NASDAQ stock exchange than all companies from the entire European and Asian continents.
Israel is the world leader in proportion of the economy that is spent on research and development – 4.5 per cent of GDP. It’s not just world exchanges that have been drawn to Israel, but also that most critical and fungible measure of technological promise: venture capital.
Since 2008, Israel’s share of global venture capital market has averaged about 15 per cent. There are more new innovative ideas as opposed to recycled ideas — or old ideas repackaged in a new box — coming out of Israel than there are out in Silicon Valley now. And it doesn’t slow during downturns.
Israel specialises in high growth entrepreneurship – startups that wind up transforming entire global industries. High growth entrepreneurship is distinct in that it uses specialised talent — from engineers and scientists to business managers and marketers — to commercialise a radically innovative idea.
In a world seeking the key to innovation, Israel is a natural place to look. The West needs innovation; Israel’s got it! Understanding where this entrepreneurial energy comes from, where it’s going, how to sustain it, and how other countries can learn from the quintessential Startup Nation is a critical task for our times.
The ventures are active in a wide cross section of arenas made possible by the exponential growth in computing processing power, memory and sensors — harnessing capabilities in the realm of Artificial Intelligence, connectivity and big data.
DAVID MATAEN, Director, OurcrowdAfrica - [email protected]