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Blog: The rise and fall and rise of the start-up ecosystem in Jerusalem

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By Wendy Kerr

In May I was fortunate to join the Trans-Tasman Business Circle innovation mission to Israel led by Spark CEO Simon Moutter. The purpose of the trip was to understand how Israel has transformed its economy and is now dubbed the “start-up nation”. I was particularly interested as many impressive companies have been spun out of university IP, and I was curious to learn what role innovation and entrepreneurship centres like ours had at those universities.

A noble quest but of course, it is never as simple as programme development and execution to transform a nation’s economy. It is far more complex than that. Squeezing my insights into a 400-word blog is impossible, so this is the first of three blogs I will write. I’ll cover rebellion and ecosystem development, students and universities, and the creation of a single focus economic powerhouse.

“Israel is booming in terms of entrepreneurship because you have a culture that allows you to challenge authority and question everything. You don’t follow the rules.” – Eric Schmidt

Of course the Israeli culture is very different to ours. A people persecuted for centuries, a new nation, hostile relationships with neighbours, conscription and a very wealthy diaspora.

Cultural norms are different – instead of challenge we placate, instead of single minded pursuit of wealth we are content, instead of going global from the onset we start with New Zealand, instead of celebrating success we slay tall poppies.

The start-up nation is not equally created across all of Israel, rather it is fragmented by city, and has been mainly focused on Tel Aviv. The city most closely related to Auckland regarding building a start-up culture is Jerusalem. Now viewed by Time Magazine as number one of the 5 Emerging Tech Hubs From Around the World, its change has been largely organic, supported by a volunteer organisation called Made in JLM. In my discussions with Ben Weiner, founder of JumpSeed Ventures and an adviser for Made in JLM, he described the rise and fall and rise of the start-up ecosystem in Jerusalem.

In the 1990s there were four VCs in Jerusalem and many angel investors. It was very expensive to create a start-up ($1-2 million) but easy to get funds. After the dot-com bubble burst, the Jerusalem start-up scene closed down, VCs left town and went to Tel Aviv. Consequently there was little start-up activity in Jerusalem for ten years.

Home to The Hebrew University of Jerusalem, with a highly regarded computer science department, Jerusalem is also home to 40,000 students. During the time of limited start-up activity, graduates were leaving Jerusalem as there were few opportunities. The year 2013 heralded a change as young people began to start businesses with ideas and little experience.

Ben sees a correlation with the Mayor of Jerusalem’s significant investment in arts, music and culture over the past decade and the thriving start-up scene that exists now. The development of a creative culture encourages young people to rebel through arts and music. It encourages challenge of the status quo, pushing at boundaries and risk taking. All good portents for a start-up culture.

The landscape in Jerusalem is now thriving. In 2013 there were 100 active start-ups which raised $50 million. Two years later 500 start-ups, raising $270 million.

Involvement with the arts is key to building a thriving entrepreneurial culture. A successful entrepreneurial ecosystem is made up of three elements: easy access to capital; know-how (ideas, commercialisation expertise, talent); and rebellion. Rebellion is the attitude that challenges, seeks new ideas, and pushes at the boundaries. Rebellion is difficult to ignite, as it depends on courageous, pioneering individuals who will bear the risks. As Jerusalem discovered, invest heavily in the arts, music and culture then in five to ten years’ time you will see a technological revolution.

Hebrew University of Jerusalem has also been active in bringing together the design and computer science schools. HUJI Hackathon is an event in which computer programmers and graphic designers collaborate intensively to create software products.

Saying that investing more in creativity and the arts is the answer is naïve. Consider though when you were a child, you drew, built, painted and constructed. There were no limitations, no penalties for failing, no “right” way to do it and no criticism for doing it brilliantly.

In my role as Director of the Centre for Innovation and Entrepreneurship at the University of Auckland, I now spend time thinking of how we can continue to create a safe and inspirational environment to allow rebellion and challenge to flourish. Enabling students to build a strong mental muscle for challenging the status quo and being courageous in taking risks I know will equip them with an entrepreneurial mindset they can take to the world.

 

Blog: The rise and fall and rise of the start-up ecosystem in Jerusalem
Blog: The rise and fall and rise of the start-up ecosystem in Jerusalem

social media

By Wendy Kerr

In May I was fortunate to join the Trans-Tasman Business Circle innovation mission to Israel led by Spark CEO Simon Moutter. The purpose of the trip was to understand how Israel has transformed its economy and is now dubbed the “start-up nation”. I was particularly interested as many impressive companies have been spun out of university IP, and I was curious to learn what role innovation and entrepreneurship centres like ours had at those universities.

A noble quest but of course, it is never as simple as programme development and execution to transform a nation’s economy. It is far more complex than that. Squeezing my insights into a 400-word blog is impossible, so this is the first of three blogs I will write. I’ll cover rebellion and ecosystem development, students and universities, and the creation of a single focus economic powerhouse.

“Israel is booming in terms of entrepreneurship because you have a culture that allows you to challenge authority and question everything. You don’t follow the rules.” – Eric Schmidt

Of course the Israeli culture is very different to ours. A people persecuted for centuries, a new nation, hostile relationships with neighbours, conscription and a very wealthy diaspora.

Cultural norms are different – instead of challenge we placate, instead of single minded pursuit of wealth we are content, instead of going global from the onset we start with New Zealand, instead of celebrating success we slay tall poppies.

The start-up nation is not equally created across all of Israel, rather it is fragmented by city, and has been mainly focused on Tel Aviv. The city most closely related to Auckland regarding building a start-up culture is Jerusalem. Now viewed by Time Magazine as number one of the 5 Emerging Tech Hubs From Around the World, its change has been largely organic, supported by a volunteer organisation called Made in JLM. In my discussions with Ben Weiner, founder of JumpSeed Ventures and an adviser for Made in JLM, he described the rise and fall and rise of the start-up ecosystem in Jerusalem.

In the 1990s there were four VCs in Jerusalem and many angel investors. It was very expensive to create a start-up ($1-2 million) but easy to get funds. After the dot-com bubble burst, the Jerusalem start-up scene closed down, VCs left town and went to Tel Aviv. Consequently there was little start-up activity in Jerusalem for ten years.

Home to The Hebrew University of Jerusalem, with a highly regarded computer science department, Jerusalem is also home to 40,000 students. During the time of limited start-up activity, graduates were leaving Jerusalem as there were few opportunities. The year 2013 heralded a change as young people began to start businesses with ideas and little experience.

Ben sees a correlation with the Mayor of Jerusalem’s significant investment in arts, music and culture over the past decade and the thriving start-up scene that exists now. The development of a creative culture encourages young people to rebel through arts and music. It encourages challenge of the status quo, pushing at boundaries and risk taking. All good portents for a start-up culture.

The landscape in Jerusalem is now thriving. In 2013 there were 100 active start-ups which raised $50 million. Two years later 500 start-ups, raising $270 million.

Involvement with the arts is key to building a thriving entrepreneurial culture. A successful entrepreneurial ecosystem is made up of three elements: easy access to capital; know-how (ideas, commercialisation expertise, talent); and rebellion. Rebellion is the attitude that challenges, seeks new ideas, and pushes at the boundaries. Rebellion is difficult to ignite, as it depends on courageous, pioneering individuals who will bear the risks. As Jerusalem discovered, invest heavily in the arts, music and culture then in five to ten years’ time you will see a technological revolution.

Hebrew University of Jerusalem has also been active in bringing together the design and computer science schools. HUJI Hackathon is an event in which computer programmers and graphic designers collaborate intensively to create software products.

Saying that investing more in creativity and the arts is the answer is naïve. Consider though when you were a child, you drew, built, painted and constructed. There were no limitations, no penalties for failing, no “right” way to do it and no criticism for doing it brilliantly.

In my role as Director of the Centre for Innovation and Entrepreneurship at the University of Auckland, I now spend time thinking of how we can continue to create a safe and inspirational environment to allow rebellion and challenge to flourish. Enabling students to build a strong mental muscle for challenging the status quo and being courageous in taking risks I know will equip them with an entrepreneurial mindset they can take to the world.

 


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