A few months ago, in preparation for my post “Off to Silicon Wadi”, I did some research on the Israeli startup scene. The startup-relevant facts and figures I turned up on Israel – and especially on Tel Aviv – were downright amazing. The Israelis are hot on the heels of Silicon Valley. Berlin is rather far behind, although our capital has been progressing quite respectably and has become a noted startup hotspot in its own right. The truly global success stories continue to be written in the U.S., however. International networking, with a focus on synergies, could well be the key to competing with the big American players.
In a panel discussion in our series telegraphen_lounge, “Vernetzte Startups – Mehr Wachstum durch internationale Kooperationen?” (“connected startups – more growth through international cooperation?”), Shelly Hod Moyal, co-founder of the iAngels business-angel network, reported on how Israel can be the key to success for international cooperative ventures. She is intimately familiar with Israeli high-tech companies and high-tech-oriented investments. Hemdat Sagi, Commercial Attaché at the Israeli Embassy in Berlin and Head of the Israel Trade Center, was also able to provide excellent insights into Israel’s startup scene. Together in a discussion with Matthäus Krzykowski, co-founder of the “Twin Tech Towns” Initiative and Dieter Janecek, Member of the German Parliament (MdB) and Spokesperson for Economic Policy of the Parliamentary Group of B90/DieGrünen (“Green Party”), the two women explained why Israel’s startup scene is thriving the way it is. They also looked at the different strengths that Israel and Germany have and the types of obstacles cooperative efforts involving the two countries face.
State support provided by dedicated government programs is one of the key factors that have made Israel such a hot center for startups, noted Shelly Hod Moyal. What is more, she explained, Israel has a wealth of talent with “world class” education and “hands on” experience. Many of its talents have emerged from the Israel Defense Forces’ (IDF’s) elite Unit 8200, where people learn “to take on significant responsibility, and to manage groups, by the time they are 25.” What is more, Hod Moyal reported, many Israelis go out into the world and then come back with international experience that they put to use to Israel’s benefit. “They are passionate about their country.” And she pointed out that the initiative many people take in addressing problems is also an important reason why Israel’s culture is so entrepreneurially oriented. “When they see a problem, they immediately want to solve it,” Hod Moyal added in discussing the “startup spirit” in her country.
Hemdat Sagi stated that Israelis are so successful because they have “chutzpah” and are quick to question hierarchies. And they are really “pushy” about their business ideas. “They’re not patient like the Germans are,” she explained. She then noted that while people in the two countries are different in other ways as well, many synergies are based on such differences. “Israelis are faster in bringing things to market, since they think globally from day one,” Hod Moyal noted. And they are very agile, while Germans tend to be very structured. As a result, the two countries can complement each other and develop strong connections, Hod Moyal emphasized. Dieter Janecek also pointed to differences between the mentalities of the two countries’ populations. “Germans want security when it comes to their jobs.” But that is going to have to change if Germany is to play any sort of a leading role in digitization, he added.
Matthäus Krzykowski is convinced that the two ecosystems – Israel and Berlin – will need to cooperate if they want to succeed in the global competition. Israel is ten years ahead of Germany in the area of high-tech business, Krzykowski explained. On the other hand, young companies in Israel do not locate financing as easily as many people think, he added. That process is easier in Germany – at least for companies with solid business ideas, Krzykowski said. The financing climate in Germany is difficult only for risky, “crazy” things, he explained. Such things can get off the ground easier in Israel, he noted. In sum, he wishes that more Berlin startups would try their luck in Israel.
He explained that while companies can often locate sources of financing in Germany, they often have to wait and wait before the money actually starts flowing. “Because of all the bureaucracy, it can take a long time for the money to actually reach entrepreneurs,” Hod Moyal pointed out. For cooperation between the two countries to really take off, there have to be fewer restrictions, she added. The issue of taxes in the two countries plays a particularly important role for investors, she also noted.
Matthäus Krzykowski found another “plus” for Berlin. Thanks to German labor laws, Berlin is the best place to hire people for startups, he explained. “If I need someone from Russia, for example, I know just who to call in Berlin, and I can get all the necessary papers together within two weeks,” he reported.
“Berlin is an outstanding place for startups, and it’s getting even better,” Dieter Janecek emphasized. That said, he tempered the euphoria in discussing the prospects for a burgeoning startup scene in his home country. No Silicon Valley is yet in sight, Janecek cautioned, even though many major companies are very active in Berlin, and even though many companies have been establishing incubators, such as Deutsche Telekom with its hubraum. What is more, he added, this is not just about Berlin. “Berlin is already an outstanding place for startups. But Germany is not just Berlin,” he noted.
When asked by moderator Volker Wieprecht whether the weight of history would burden cooperation between Israel and Germany, Hemdat Sagi responded without hesitation: “History doesn’t play much of a role where business is concerned.”
Our Netzgeschichten next week will take another look at this issue, with statements from our “telegraphen” speakers.