Jakarta, CNBC Indonesia – Israel, especially the city of Tel Aviv, is home to the second largest start-up company in the world after Silicon Valley, United States (US). According to reports 2019 Global Startup Ecosystem Report published by Startup Genome and Global Entrepreneurship Network, Tel Aviv even has more startups per capita in the world compared to Silicon Valley in 2019.
Launching from IEEE Spectrum, a series of startup companies based in Israel, such as Google, Nielsen and Nvidia. The companies are said to “operate incubators, accelerators and competitions” throughout Israel. In fact, some people say that Tel Aviv is the next Silicon Valley.
According to the report, Tel Aviv has unique characteristics as a ‘paradise’ for startups. Here are aTel Aviv becomes the world’s startup ‘paradise’:
 Photo: A mini electric car developed by City Transformer drives out of the company’s offices during a demonstration for Reuters in Kfar Netter, near Tel Aviv, Israel November 20, 2018. Picture taken November 20, 2018 REUTERS/Amir Cohen |
1. There is a grant from the government
One of the reasons why Tel Aviv is a startup paradise is the Tnufa National Pre-Seed Fund, a no-risk grant given by the government to Israel-based entrepreneurs to explore innovative technologies.
“However, that is not the only reason Israel is a ‘paradise’ for startups,” the report wrote IEEE SpectrumThursday (26/10/2023).
The senior director of business development for the Israel Innovation Authority’s Startup Division, Karina Rubinstein, explained that another reason startups are mushrooming in Israel is because Israeli society has a high entrepreneurial spirit.
“From a young age, they are exposed to a different type of thinking, that is, they face challenges that have no boundaries at all,” said Rubinstein.
2. Strong network of conscripts
 Photo: Israeli Defense Minister Yoav Gallant meets soldiers in a field near Israel’s border with the Gaza Strip, in southern Israel October 19, 2023. (REUTERS/RONEN ZVULUN) |
Apart from that, another reason is Israel’s mandatory military service. For information, all Israeli citizens are required to serve with the military called the Israel Defense Forces (IDF) at the age of 18 and are required to serve for at least two years.
The benefits of military service for startups, according to Senior director of business development for the Israel Innovation Authority’s Startup Division, Karina Rubinstein, they can build a strong network. Moreover, the IDF also forces all parties to collaborate in high-risk situations. According to him, this is very important for a start-up technology company.
3. Easy to get funding
In terms of funding, many foreign entrepreneurs with no ties to Israel choose to start their startups in this small country. The Israeli Innovation Authority’s Tnufa National Pre-Seed Fund is said to have played a role in the entrepreneurs’ decision.
Tnufa National Pre-Seed Fund finances entrepreneurs, both from Israel and abroad, at the ideation stage as long as they successfully obtain visas with the help of the Innovation Authority. Once their visas are approved, startup pioneers are eligible to apply for funding provided their operations remain based in Israel.
According to reports, the funds injected into the startup were up to 200 thousand NIS or around Rp. 783.3 million (assuming an exchange rate of Rp. 3,917/NIS) for two years. Through this injection of funds, startups can develop their ideas without having to take on debt or venture capital.
4. Cultural reasons
 Photo: A mini electric car developed by City Transformer drives out of the company’s offices during a demonstration for Reuters in Kfar Netter, near Tel Aviv, Israel November 20, 2018. Picture taken November 20, 2018 REUTERS/Amir Cohen |
Israeli entrepreneur and author of the book “Chutzpah,” Inbal Arieli, said that there is a cultural reason behind the success of startups in Israel, namely Israeli parents who always encourage an entrepreneurial spirit in their children.
Arieli calls this passion “chutzpah.” Chutzpah is a Yiddish word that describes someone who has courage, courage, or determination. In other words, someone dares to try something even though there is a risk of failure or facing problems in a way that may seem absurd.
According to Arieli, parents encourage children to build their own campfires, even in Tel Aviv. Children are given complete control over the entire process, from collecting wood to lighting the fire.
“Lighting a campfire is a collaborative experience, children learn to manage risks and build self-confidence through real-world experiments and activities,” Arieli said.
In Arieli’s view, these activities help children to form the skills they need to innovate when faced with life’s challenges.
Additionally, accepting the risk of failure is also a cultural norm in Israel.
Arieli said that making mistakes is very acceptable in Israeli society, allowing people to learn from mistakes.
Regarding Arieli’s statement, Rubinstein admitted that he agreed. According to Rubinstein, Israel encourages failure. In Israel, there is a “try again” mentality that one has the right to fail.
Israeli Startups Begin to ‘Escape’ to the US
Even though Israel is said to have the best ecosystem for startups, many local technology companies are starting to shift to the US due to “uncertainty at home”.
Launching from Reuters, currently more and more Israeli technology startups are joining the US attracted by large US funds and pro-business policies. Apart from that, another reason that prompted the move was the judicial overhaul in the country which shook investors.
“This marks a setback as Israel has succeeded in the past decade in persuading more startups to set up their legal identities within the country,” he wrote. Reuters.
Reportedly, as many as 80 percent of new technology startups in Israel chose to incorporate in Delaware, USA, in 2023. According to a survey by the Israel Innovation Authority (IIA), this figure has increased compared to 2022.
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