Startup Nation Future At Risk

Ask any veteran tech reporter how many European startups there are in comparison to Israeli-born startups, and the answer is sure to make you proud of our small, but very active entrepreneurial nation. Do the numbers, and double-check your findings with a map and it will certainly come as no surprise as to why Israel has been labelled a “Startup Nation”. Sadly, our country’s business model is faulty. As oppose to placing the emphasis on building multi-national companies with Israeli headquarters, a not-so-recent trend has placed more value on exporting our ideas and technology, without focusing on maintaining any company roots in The Holy Land.

Today’s Israeli startups are being born in an era where being an Israeli company is a huge advantage. The startup market has been saturated with many notable Israeli-born businesses, which have paved a path for new home-grown innovations to excel. The problem lies in that the new generation of startups has not been paying homage to the advantage that was given to them by their forefathers. Instead of proudly waving our blue and white flag as we distribute business cards, we are losing focus. Israel currently has an opportunity, and advantage to become much more than just a startup nation, but unless we don’t take the bull by the horns, or so to speak, the opportunity might just pass us by.

Our “Startup Nation” status is more fragile than ever, and not enough people are aware of the issue. I must stress that I don’t stand on the side of the fence that doesn’t believe in Israeli talent. In fact, I am so confident in Israeli innovations that I have no doubt in their capabilities, and strength. Young entrepreneurs and creative thinkers developed the world’s second best startup ecosystem right in the center of Israel. However, this crowded and prospering ecosystem has become infected with a dangerous disease, which may inevitably lead to its demise. Recently Israel’s startupistim have been overly focused on their businesses exit strategy. Turning a startup’s exit strategy into its main strategy is a slippery slope, but ever since the founders of Waze sold their idea for millions, young founders have been remodelling their game plan. Creating groundbreaking technology only to sell it to the highest bidder will not ensure our place as a startup nation, just the opposite in fact, a sell out nation. By continuing down our present path, I worry that we are not likely to see another big name Israeli company such as Teva in the years to come.

So how do we shift from focusing on selling out, to moving forward by investing in? The solution requires more than a united front built by our startup founders. In fact, in my opinion, the problem itself is due mainly in part to the Israeli government. It is my belief that a strong entrepreneurial scene must be based in a peaceful and stable environment in order to prosper. Regional peace will not only encourage nation-wide stability, it will also allow for great economic leaps, and the creation of many new jobs.

The many economic professionals I have conferred with over the years, all led me to the same conclusion. The success of Israeli-born companies is dependent on the calming of our geopolitical condition. By ensuring a secure environment, with safe borders, we will be breaking the ground on a new site in which Israeli companies can freely grow and excel. It seems unreasonable to place the blame on founders of new companies, whose aim is to export their idea out of the country when their companies future in Israel cannot be guaranteed. In the case that peace, and stability cannot be achieved, I  strongly believe that it is the government’s responsibility to start focusing on the little guy. At present our government is giving away sizeable grants and bonuses to business tycoons such as Intel, while the modest-sized Israeli born company investing in R&D is fighting to stay in the game.

Currently, Israel is best known for creating innovative, new technology. However, ask an out-of-towner to name Israel’s top big brand companies and you are likely to get a puzzled look in return. Until we stabilize our surroundings we will not be able to transition ourselves from startup nation to role model nation. Today, there is no shortage of amazing technologies and concepts that are one hundred percent made in Israel. The question then becomes, how long can we milk this cow? By continuing down this path we are likely to keep seeing big name acquisitions, rather than turning our current companies into Israeli trademarks.

I have recently been exposed to this startup predicament first hand with companies such as Kontera, imonomy, and Wibbitz. These three unique startups have all created in-house technologies that scan and understand text. They are changing the way website publishers post news and display ads. The threesome has also managed to change the way users consume content, and interact with advertisements on the web. How long will it be before the suits at AOL, Yahoo or Google decide it is time to start using and improving on these Israeli-born platforms in the big leagues. It is only a matter of time before the internet hot shots come knocking on these startups’ doors with an exit plan, and a briefcase full of Benjamins. This all-too-familiar story is taken from a page right out of Google’s playbook. The global internet tycoon doesn’t want to spend time and energy on R&D, so instead Google sends the startup founders an enticing number with a lot of zeros, and without thinking twice the Israeli company founder graciously accepts the offer. And why shouldn’t he? Unless the government starts giving company owners some real incentive to keep their companies on home turf, this story will continue to play on repeat.

On the off chance that our Minister of Finance, Mr. Yair Lapid, is reading, I do have one humble request; please don’t just be the politician that is known for being up-to-date with his Facebook page. Instead, give our nation the tools, and strength to become home to the next Facebook. Surely we have some fierce competition, but practice certainly does make perfect, and unless we free up the training ground of all the bureaucracy and taxation, we will never be able to win a fair fight. We must work together, and we need the support of our government in order to ensure, and maintain the success of Israeli startups in their homeland. We do not want to be remembered as the washed-out startup nation. On the contrary, we want the world to know that Israeli startups are planting their roots, so watch them grow.

This article was written by Avishai Sam Bitton and edited by Leytal Ross