While Israeli entrepreneurs lack the Swiss professional experience, they are far more ready to take risks. The complementary characteristics provide huge potential for both, writes Shaul Lifshitz on finews.first.
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A staggering number of 6,000 startups are currently operating in Israel according to August 2018 update by Startup Nation Central. This figure is even more impressive when compared with the 20,000 sqm in size and 8.4 million people living in the country.
Indeed, Israel justifiably maintains global position as the Startup Nation and the city of Tel Aviv – as the Startup City. Although having no car manufacturer nor water resources. Israel is leading in innovation in both autonomous cars (Mobileye sold to Intel for $15 billion) and Water management (Israeli icon Netafim, world’s leader in drip irrigation tech, sold to Mexican firm Mexichem for $1.5 billion).
«About 70 percent of the Israeli fintech startups look for partnerships and investors abroad»
Ecosystem 2.0 describes the evolution of the Israeli startup ecosystem, namely the shifting of the Startup Nation to the Scale Up Nation where founders build their second and third startups showing new level of maturation leading to higher funding.
A deep dive into Israel’s fintech ecosystem reveals about 500 startups and total investments of $150 million out of $3.2 billion invested in Israeli tech in the first half of 2018. Challenges abound as in Switzerland, although banks and regulators stopped ignoring fintech, they don't yet fully adopt it. Also the Israeli fintech ecosystem is small, and recently became too dense and too familiar.
Consequently about 70 percent of the Israeli fintech startups look for partnerships and investors abroad, aiming to expand beyond the domestic market. Under these circumstances, Israel certainly offers a tremendous potential for the Swiss financial sector and potential investors.
«A key factor which I find fascinating in this context is the age differences of entrepreneurs»
During my 15 years in international business development mainly involving Israel and Czech companies, I clearly noticed the business culture differences and thus the importance of having a middleman facilitating and advising on construction of business relations. A key factor which I find fascinating in this context is the age differences of entrepreneurs.
While in Israel newly borned entrepreneurs are typically in their 20’s, after 3 years of mandatory military service and often before completing their academic studies. In Switzerland for example they are in their 40’s, already pursuing a successful corporate career.
«While Israeli entrepreneurs lack the Swiss professional experience, they are far more hungry»
Swiss fintech enjoys sandbox policies, a relatively tolerant but passive regulator and an enormous talent pool of ex-bankers and financial wizards. The ecosystem includes the most prestigious banks and financial organizations, blessed with an extremely strong economy and well educated and digital consumers. Moreover, Switzerland has positioned itself as the Crypto Nation and currently considered a global hub for blockchain and crypto companies.
However, there are weaknesses, evidently a high degree of risk aversion that may hinder the progress painting a frustrating picture for Swiss «finteckers».
While Israeli entrepreneurs lack the Swiss professional experience, they are far more hungry and ready to take risks. In addition Israelis welcome experimental approach, acknowledge the chances of failures and successfully handle them.
«The Swiss Embassy in Tel Aviv listed a new position for an innovation officer»
The complementary characteristics provide huge potential for both Swiss and Israeli fintech companies. The Israeli partners may gain access to new European markets while the Swiss fintech companies may scale up their products, gain access to an advance venture capital landscape and enjoy detour to the U.S. market which is closely integrated in the Israeli tech world.
A strong and most welcome support comes also from the governments which are finally making the right steps to establish collaboration in technology innovation. Swiss ministers of economy and finance have visited Israel in 2017 and the later, Ueli Maurer, signed a Memorandum of Understanding (MoU) for fintech development. He will be visiting Israel again in September 2018. The Swiss Embassy in Tel Aviv listed a new position for an innovation officer acknowledging the position of Israel as an innovative power house and joining the 360 multinationals who opened such centres in Israel.
«It is time for Swiss entrepreneurs and investors to scout Israel for opportunities and partnerships»
Since there are no shortcuts, nothing can substitute for direct meetings between Swiss and Israelis. The macro business environment is pretty much the same thus creating familiarity that stimulate the establishment of partnerships and collaborative relations,
One of our main added value in ScoutX is the close acquaintance with the Czech finance ecosystem. The Czech banking sector is highly liquid, innovative ready and most important – the Czech Republic already identified the high potential in working with Israel making our market penetration much easier.
It is time for Swiss entrepreneurs and investors to scout Israel for opportunities and partnerships and we are here to assist and implement the go to market strategy in a simple and far more effective way.
Shaul Lifshitz is an Israeli – Swiss citizen who spent eight years living in Prague, returned in 2010 to Israel and co-founded and managed the Israel-Czech Chamber of Commerce and Industry till 2018. He currently resides in Zurich. ScoutX aims to interlink Israel, Swiss and Czech ecosystems focusing on investments in fintech.
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