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A Unicorn? In Israel? Advantages and Challenges for Israeli Startups

Noam Bardin recently compares  the shock displayed by most members of the venture capital community at the Waze $1.1 billion exit to The shock displayed by the British Officers at the thought of finding “a Tiger, in Africa?” in Monty Python’s “The Meaning of Life”. It shows that people still falls for stereotypes even in the field of entrepreneurship.

After defined what is a Unicorn, Noam Bardin shows us a well-known fact that “Unicorns are notoriously hard to find. In the last decade, the US produced 39 of them; that is 0.07% of start-ups (which hints at these companies’ irrational nature.) The US market is usually considered to be 50X that of Israel so if we normalize markets, one would have expected 0.8 Unicorns to have been founded in Israel to the US 39 (50X), so our “1 unicorn” exit makes sense.”

So the paradox lies in front of us will be the difficulties of finding a Unicorn and the good environment in Israel that suppose to cultivate more Unicorns. Here are some advantages he listed.

The Lean Start-Up movement embodies the Israeli culture --

The Lean Start-Up movement embodies the Israeli culture --

the fundamental principles of modern start-ups, loosely defined as the “Lean Start-Up”, seem to have been built for Israel’s strengths.

Modern platforms’ APIs replace the need for “connections” –

Modern platforms’ APIs replace the need for “connections” –

we do not have the American networking infrastructure needed in the past to gain access to users. But we do have a maniacal focus on our technology and product. Modern platforms, such as Facebook or App Stores, allow us greater access to users through APIs and not our Ivy League college roommate’s father.

The Israeli Consumer Start-up niche -

The Israeli Consumer Start-up niche -

Waze has been at the forefront of a new category for Israeli start-ups – Consumer tech. We are consumer facing, enjoying our newfound product excellence, leveraging our deep technology expertise from day one and solving a real world problem that is easy to relate to. In other words, being able to wrap a very complicated technological challenge into a consumer friendly experience with clear tangible value.

There are also challenges Israeli startup companies facing during its growth that will possibly prevent the company to become a Unicorn. Some challenges are listed as follows.

Dreaming big, executing small –

Dreaming big, executing small –

start-ups win by dreaming big from day one, imagining changing the world but yet executing small, getting things done. As Israelis, we are very good at the “execute small” but really lack the “dreaming big”. This is a cultural DNA from a small country with lots of security issues and a fear of the future. This is one of the core areas Israeli start-ups need help from Americans (or Chinese).

Being far from Silicon Valley –

Being far from Silicon Valley –

what makes Silicon Valley so unique is its concentration of people who have lived through a success, actually seen a Unicorn in the wild. 70% of Unicorns were based in Silicon Valley. This eco-system of Entrepreneurs, Engineers, Product Managers, Marketers, PR people, Investors, Mentors – this, I believe, is the secret sauce of Silicon Valley.

Experienced investors -

Experienced investors -

every founder anywhere has her share of investor horror stories – it is part of the reality of the investor/founder relations. That being said, Israeli investors have produced fewer Unicorns than Americans and do have some special traits. When I say Israeli Investors, I mean people working in the Israeli venture industry and geographically located in Israel regardless of the brand written on their door.

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