Post #4: Travels to start-up city - Heptagon Capital – Production

Business trips to Tel Aviv are always enjoyable. Of course, there is the sun (apparently 300 days of it annually) and sea as well as some of the most impressive…

Post #4: Travels to start-up city

Business trips to Tel Aviv are always enjoyable. Of course, there is the sun (apparently 300 days of it annually) and sea as well as some of the most impressive cuisine globally. But perhaps of most note is the fact that the city produces more start-ups per capita than any other in the world.

This ranking comes courtesy of the Global Start-up Ecosystem report published last year. What is interesting to us is both the breadth of sectors Israel’s start-ups span and, more importantly, why the country is able to produce so many dynamic businesses. Israeli companies capitalised at over US$15bn can be found in sectors as diverse as generic pharmaceuticals (Teva) and cybersecurity (Check Point). Many household names also began their life in the country before being acquired by larger corporations. Mobileye currently holds the title for the most lucrative acquisition of an Israeli business, given the US$15.3bn paid for it by Intel in 2017. Elsewhere, other large US corporates have acquired Israel organisations in fields including traffic management (Google’s purchase of Waze), robotics (Medtronic acquiring Mazor Robotics) and food innovation (IFF gaining control of Frutarom). 

Why is there such a strong start-up culture in the country? Some of it simply reflects a self-sustaining ecosystem of experienced investors and academics/ scientists and strong university programmes. The government has also played a notable role, reducing corporation tax for start-ups, removing bureaucratic hurdles and making a clear commitment almost to double the number of skilled personnel employed in the tech sector to 500,000 (or more than 5% of the population) during the next decade. We remain highly impressed by the entrepreneurial and international mentality of the people/businesses whom we meet from the country. Many more of the beneficiaries of the future trends which excite us look set to emerge from Israel in the coming years. Watch this space.

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The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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