Hitchhiker’s Guide to Accelerator Nation

In Tel-Aviv of 2016, it is rare to read a tech blog or attend an innovation-related conference without bumping into a freshly created start-up accelerator. Without proper industry standards it is hard to determine the number of existing accelerators let alone to assess or rate their quality. Some experts speak about 70, other advance figures higher than 120 which include hubs and co-working spaces, I believe that the real number is around 40 to 50. While accelerators are major stakeholders of the early stage start-up ecosystem today in Israel, it is hard to believe that none of them existed five years ago.

Mentorship session at Google Campus Tel-Aviv. (Patricia Lahy-Engel)

Accelerators need to be distinguished from (the government-funded) incubators which started much earlier in Israel and played a major role in promoting Israel as the Start-Up Nation it is today. The Technological Incubators Program was established in 1991 and is administrated by the Office of the Chief Scientist in the Ministry of Economy. The primary goal of the program is to transform innovative technological ideas that are too risky for private investments, into viable startup companies that should be able after the incubator term to raise money from the private sector and operate on their own. The secondary goals of the program are: promoting R&D activity in peripheral and minority areas; creating investment opportunities to the private sector, including venture capitalists; transferring technologies from research institutes to the industry and fostering an entrepreneurship culture in Israel. To date there are 24 existing technological incubators across Israel.

While incubators in Israel are government-funded and operated by private entities, generally focused on biotech, medical devices, clean-tech or product-centric companies; accelerators focus on a wide range of industries, can be either privately or publicly funded, equity-based or nonprofit models, and generally operate short-term (between 3 and 6 months), cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day.

Demo Day TheHive April 2016. (Debbie Zimelman)

The first and most famous accelerators (YCombinator and TechStars) started in the Silicon Valley around 2005-2006.Their success inspired the creation of Israeli initiatives and the first accelerators opened doors to their first cohorts in 2010-2011. The Junction was founded by Genesis Partners VC as part of its efforts to support the entrepreneurship community and encourage Israeli innovation.  8200, the elite technology unit in the IDF’s Intelligence division also started its own accelerator: 8200 EISP (entrepreneurship and innovation support program), in which alumni of 8200 volunteer to mentor early-stage startups. TheHive, created by Gvahim a nonprofit organization dedicated to supporting highly-skilled immigrants to fulfill their professional potential in Israel, operates two accelerator programs in Tel-Aviv and in Ashdod. Microsoft Azure Accelerator, one of the most recognized programs in Israel started in 2012 in Israel and since then was deployed worldwide.

Following Microsoft, most of the accelerator programs that open since then are initiated by large corporations looking for disruptive technologies or breakthrough innovation: AlphaZone (IBM), CitiBank, Barclays (operated by TechStars), Samsung, Orange, Intel (Ingenuity Partners), AOL created Nautilus and Yahoo! and Plus Ventures joined forces to create Sigma Labs.

Other initiatives are attempting to bringing digital innovation to various industries (TheBridge of Coca-Cola and Turner), Vertical Engine operates Cockpit (El-Al’s Accelerator), CreateTLV of Terra Ventures connects between individuals and multinational corporations (Bosch, Visa, EdP..) to create technological ventures.

Equity-based for-profit accelerators include Upwest Labs which brings Israeli start-ups to seek funding and develop their market in the Silicon Valley and Elevator.

Other non-governmental organizations aim to develop innovation in their area of focus. Braininnovations is the accelerator of Israel Brain Technologies a non-profit organization which mission is to bring doctors, innovators, researchers, entrepreneurs and investors in the BrainTech arena together. EcoMotion created by the Fuel Choices Initiative and the Research Institute for Transportation Innovation focuses on smart transportation. MindCET, the accelerator of Matah (The Center for Educational Technology) aims at developing innovations in Educational Technology. TechforGood / Rally and Social 8200 focus on social entrepreneurship.

International Label accelerators are joining the race: Techstars is recruiting for Barclays its 2nd cohort in Tel-Aviv with focus on fintech and MassChallenge Launched its first program in July in Jerusalem.

Municipalities are also opening or supporting their own accelerator programs: Siftech (Jerusalem), HAC (Herzliya), TheHive Ashdod (Ashdod) or investing in co-working spaces in order to facilitate exchange and encourage young entrepreneurs: TheLibrary (Tel-Aviv), Mesh (Modi’in), Hubanana (Raanana), Streets (Rehovot) and more.

Coworking space at TheHive Ashdod. (Gvahim)

Universities and Colleges have their entrepreneurship centers: StartTau (Tel-Aviv University), Zell (IDC), ACT (Shenkar), BizTec (Technion), AtoBe (Azrieli College of Engineering), HaMitham/StartHub (Tel-Aviv Yafo College), Inno-Negev (Ben Gurion), Novus (Rishon College of Management), Baba (Bezalel) etc..

Some programs focus on reinforcing a population which is less represented in the workforce or more challenged in accessing capital. TheHive focuses on international entrepreneurs (new immigrants and returning citizens) in two programs in Tel-Aviv and in Ashdod. A growing number of programs target the Arab population; the most notable initiatives are in Nazareth, Israel’s biggest Arab town (NBIC (Nazareth Business Incubator Center) or NaserahTech (operated by PresenTense) and more). Other focus on women entrepreneurs (Yazamiot) or on start-ups of Haredi (ultra-orthodox) founders (KamaTech).

While the rhythm of accelerator creation is on the rise, there is a need to measure the impact of this model on the ecosystem in general and its contribution to the start-up life in particular. Is it a hype of a meaningful long-term evolution? Will the growing offer encourage sector concentration and increase quality? Like the start-ups they incubate, accelerators are in perpetual validation phase in the search of a viable and scalable business model.