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Startup Nation: Going Global From Day 1
© bringga Content Board| PUBLISHED ON October 02, 2022
“Startup Nation” – Israel can teach a lot about globalization.
Since my time at KVIC, Israel has been a benchmark for a thriving startup ecosystem, if not a blueprint. It’s no coincidence that Israel has been nicknamed the “Startup Nation.” There is approximately one startup for every 1,400 people in Israel, and Israel has the highest number of startups, unicorns and R&D centers per capita in the world. It is estimated that there are more than 6,500 startups in Israel. [1][2]
It was a great decision made by my colleagues at KVIC and the officials at the Ministry of SMEs and Startups. They all did a great job in structuring and establishing the first Korean fund of funds, VC, the most significant multi-manager investment vehicle in Korea for the government and other institutions. Since then, the initiative has driven the growth of the startup economy and indirectly launched numerous successful startups that are now leaders in many industries and have launched more startups than ever before. Thanks to support from the highest political, regulatory, and infrastructural levels, Korea has positioned itself as a leading startup platform – until now, anyway. With the global decline in growth support from powers and investors, I am writing these lines to provide a broader picture of where we stand in the world of innovation and globalization.
So what can we learn from our Israeli counterparts? Many years have passed since I asked myself these questions. However, as I embarked on my new entrepreneurial venture, I realized that there is still much to learn, especially in terms of globalization and scaling our business.
As one of the world’s leading high-tech and startup producers, Israel has succeeded thanks to its unique society and culture, strong economy, government support and “global-first” market attitude, which is essential for any successful startup. Perhaps it was Israel’s early days, harsh environment and lack of resources that forced the country to be creative, fast and self-sufficient. These characteristics became part of the country’s DNA and led to a thriving network of innovative companies and R&D activities. Today, the Israeli technological innovation ecosystem is the engine of the Israeli economy. It employs more than 10% of the population and is responsible for 54% of exports. Israel has the highest number of PhDs per capita and ranks fourth in the world in terms of research personnel. The ecosystem provides the most fertile ground for research and innovation. [3][4]
Let us examine how Israel’s technological innovation ecosystem contributes to the success of the country’s entrepreneurs.
Go global from day one
A primary reason for Israel’s success is that startups go global from day one. This contrasts with startups in other countries, which often focus on their local markets first. In terms of geography, Israel and Korea are in many ways, similar. We share a border with an unfriendly neighbor, and most of our remaining sides face the sea and ocean. As 21st-century economic powers, both countries have come a long way. When it comes to government assistance, we have world-class help on both sides to aid new businesses to get started and grow. The worldview of entrepreneurs and the market size are among the most important differences between the two countries.
Startups in Israel know they must be innovative and creative and expand globally to succeed. A startup with 9.5 million people in one country is unlikely to make it big because of the small market size, so they need to develop a global mindset from the start. For this reason, the Israeli government offers extensive support to startups expanding internationally. For example, the Israel Innovation Authority (IIA) offers initiatives and programs to help startups go international, enabling Israeli tech companies to collaborate with companies, corporations, public bodies, and leading research institutes worldwide. Israeli technology companies can quickly enter various global markets with matching grants and the use of numerous other tools.
The IIA funds and invests in new technology incubators, among other things. It recently announced winners in the bio-convergence, climate, food tech, and space categories. The IIA expects that these operations, with a budget of about $150 million, will help create about 150 innovative and disruptive startups in areas that will help grow Israel’s innovation ecosystem. [5] Compared to other incubators supported by public agencies, this model is very concentrated, especially in technology and research-oriented sectors.
In addition to government support, several NGOs and private sector initiatives help startups internationalize. One of these initiatives is Start-Up Nation Central (SNC). SNC is a non-profit organization that strengthens the Israeli innovation ecosystem and connects it to global challenges and stakeholders. Their experience in the Israeli tech ecosystem enables them to identify high-growth sectors and help them scale. Many global brands also contribute to Israel’s diverse innovation ecosystem, including Amazon Web Services’ headquarters in Tel Aviv, where an entire floor is dedicated to community events. The largest employer in Israel, Intel, also actively supports diversity initiatives. [6]
Adopting a gobal mindset
Israelis know that a global mindset makes a big difference for successful startups. Everything is planned and executed with a global perspective, from the big problems they are trying to solve to the size of the territory they cover. Since the U.S. remains the primary market and standard for technology products and services, they often look to the U.S. market for the right product-market fit.
Companies that focus on local markets, especially startups, have difficulty thinking globally. However, it would be beneficial to put this into practice. Growing is a good thing. Companies need to have an unlimited vision for their business in order to continue to make profits, add value, and achieve a wider reach. Israeli startups are doing this from the beginning. This article cites a hard-to-find analysis by Index Ventures, cited by Angular Ventures. Both investors deserve great respect and credit for sharing these valuable insights. [7]
Embrace change and adapt to differences
Adapting to differences and change requires insight, foresight, and courage. Unexpected obstacles and challenges are not uncommon on the path to scaling a business. Hiring the right people with the right global mindset, onboarding them properly, and engaging everyone else are essential to taking your startup to the next level. Companies that get it right can drive innovation and better business results by increasing diversity, sharing different perspectives, and discussing new ideas and strategies – with respect and vigor.
Network, communicate, and engage
A startup or company that wants to succeed needs to build relationships with key audiences and people. Global ambitions make this even more important. Beyond personal acquaintances, word-of-mouth, and testimonials, cultivating and engaging with potential customers, investors, and partners on LinkedIn and other B2B channels is probably the next best way to build your global value proposition and present yourself to a larger, global audience.
Israeli startups have a more extensive global network as more investors, multinationals, customers and other Israeli startups have been discovered, supported and promoted. With an innate drive to achieve the impossible, much like their Korean counterparts, a more extensive networking pool to collaborate, share and entertain mutual opportunities can benefit all parties and help companies expand their global business framework in the right direction. In addition, there are other valuable insights, such as “Expanding to the US,” put together by some wonderful folks at Index Ventures. [8] Please take a look at the book. I highly recommend it.
Proof-Positives
All the initiatives by the government, internal NGOs, and domestic and foreign investors and companies to invest in Israel’s most valuable asset, human capital, have resulted in a large number of Israeli startups. The numbers speak for themselves.
The number of Israeli startups is about 3.5 times the number of unicorns and the amount raised in Korea in 2021. That is indeed impressive. What does this mean for the global potential of startups? Well, everything. Startups in Israel could never have reached these numbers if they had not planned and acted globally from the beginning.
Final Thoughts
I wrote this article in hopes of gathering facts and shedding light on why Israelis are natural entrepreneurs. I also discussed how they know how to expand globally in their relentless pursuit of success. We need to scale our businesses and emphasize the importance of going global. But wait a minute! Does not that sound similar to our fellow Koreans and the culture we know and love? Yes, it most certainly does. Throughout history, both countries have had to overcome harsh climates and survive. They are leaders in many industries and serve as role models for business, economy and culture. This is due to their recognition, appreciation and positive influence on the global economy.
However, we must remember that Israel’s population is less than one-fifth the size of Korea’s. Consequently, the market for all products is much smaller in comparison. Despite its smaller population and market size, Israel produces about 3.5 times as many unicorns and makes about 3.5 times as many investments. I could not help but reevaluate my fascination, interest and respect for Israel and its entrepreneurs. I was also amazed at how successful startups are and how they are being built around the world. While less than 1% of startups worldwide are successful, in Israel about 2% of the startup population are considered unicorns. That’s insane. I mean, insane praise. If these estimates are correct, as listed by CB Insights, Israel’s 92 plus some unicorns make up nearly 10% of the 1,100 plus some unicorns worldwide. [9][10] Okay, that’s beyond crazy; it’s incredible.
So what is the missing link, and what can we learn from our friends in the Middle East? In the context of this article, it’s about expanding globally to drive business at scale. As someone with experience in IT, VC, FoF, PE, manufacturing and startups, and with a lot of empathy, I can well understand this. Many Korean companies, especially startups, cannot suddenly decide to expand globally when their market, human capital and product are local. Whether companies admit it or not, their products become more local over time because most of their customers are local. It’s important to meet customers’ needs and solve their problems, but once the product or service is too localized, the scalability of the business is also at risk. This is a major challenge, especially when you consider language and cultural barriers, infrastructure and markets, time and cost differences, and limited networks.
But so did the Israelis. They all faced similar challenges and overcame them to achieve incredible, amazing results – and that should inspire and motivate all of us to achieve similar success as we move forward. Israeli startups may have gone global from the start, but success did not come overnight. Accordingly, our global ambitions may not have started on day one, but they can start tomorrow.
I hope you enjoyed the article and found it helpful. If you want to take the global initiative more seriously, you must first properly promote the vision, the product and the people in your company. That’s why bringga is here to make your global initiative smoother and more efficient. In the few weeks since our inception, we have already brought on board publicly traded and emerging industry leaders to scale their businesses globally.
Talk to us when you are ready to explore your options and take your business to the next level!
References:
[1] A 101 of The Startup Nation: https://bit.ly/3K2cCCe
[2] Innovating in Israel: https://bit.ly/3c3FqOk
[3] Innovation in Israel: https://bit.ly/3K2fO0J
[4] Israeli Innovation for the world: https://bit.ly/3pL1ikZ
[5] Israel Innovation Authority launches tech incubator program: https://bit.ly/3Asjc1W
[6] Tel Aviv on Floor8: https://bit.ly/3Aw5GKs
[7] The Startup Nation goes to America: https://bit.ly/3SW3xz9
[8] Expanding to the US: https://bit.ly/3CgW9IQ
[9] Israeli Unicorns: The Next Billion-Dollar Startups 2022: https://bit.ly/3Ka96WM
[10] The Complete List Of Unicorn Companies: https://bit.ly/3PxyBCc
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