Need to fight for survival makes Israel the hotbed for innovation

IT was a gloriously beautiful spring morning in Israel, and a tech crowd had gathered on the lawn of Hagan b'Shefayim, a garden venue just 15 minutes from Tel Aviv.

The Trendlines Group - an Israel-based, Singapore-listed startup incubator - was holding its seventh annual company showcase in the adjacent ballroom. In attendance were some of the world's most ambitious entrepreneurs and investors in medical and agricultural technology.

This scenario is quintessentially Israel, a country that has come to be known as the Startup Nation. On that very spring day in March, another innovation event, Startup Festival, was happening in Rishon Lezion, the fourth largest city in Israel, 8km south of Tel Aviv. More a pitching competition, the festival connects early-stage startups to investors.

Without a doubt, the Israeli entrepreneurial scene is spirited and robust and, according to angel investor Eri Steimatzky, "bubbling with ideas". Israeli startups have also been described by author Marcella Rosen in her book Tiny Dynamo as quietly changing the world.

It all comes down to the need to fight and to innovate for survival; this has made Israel - a country similar to Singapore in many ways - the hotbed for innovation today, as The Business Times found out in a trip there.

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Mr Steimatzky, whose father founded Israel's oldest and largest bookstore chain Steimatzky, tells BT: "Jews and Israelis have been brought up for many generations to challenge, doubt and question their teachers, think on their own, and not to take anything for granted. The troubles and hardships faced by the Jews throughout history have taught them to improvise, invent and think out of the box."

Boris Hofmann, a business development director at German medical devices company B Braun, says Israeli ingenuity is born from necessity, the mother of all invention. "It's a small community. Neighbouring countries don't like you that much. Large companies cannot disrupt themselves, and so they invest in startups as a form of external innovation."

Dr Hofmann, who heads B Braun's Aesculap division (which focuses on products and services for core processes in surgery) in Germany, notes that Israel has been uniquely successful in translating innovation from universities to the industry, and that the incubator model has served the country's startup ecosystem well, by providing "funding and structure".

He adds: "Israel wants to be the highest risk-taker in every project. There is hence a lot of government support for startups." The Tuttlingen-based executive, who travels to Tel Aviv regularly for work, is a board director of Trendlines Medical Singapore, the Singapore-based medtech (medical technology) incubator of The Trendlines Group.

Medtech aside, Israel is also a hotbed for innovation in agriculture - it invented drip irrigation and pioneered water desalination - and of course in defence.

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A 2016 report by Adam Reuter and Noga Kainan noted that the Israeli army provides a "huge experimental field of innovation technologies" to the US military, and that counter-terrorism intelligence that Israel provides to the United States saves the latter "billions of dollars" every year.

Since the beginning of the 21st century, Israel has produced the highest number of Nobel Prize winners (eight) relative to its population size of 8.7 million, going by the report. It is also a country that invests more in research and development than any other country, and is one of only eight countries to have launched satellites into space.

According to Dr Reuter, chief executive officer of Israeli financial risk management firm Financial Immunities, and Ms Kainan, founder and chair of Chief Financial Officers Forum, Israel is an "island of success" and a country that has "succeeded against all odds", having created a "revolution in agriculture" and "winning the desert".

Like Singapore, Israel is land and water-challenged with almost no natural resources. Israel (22,000 sq km) is about 30 times the size of Singapore (720 sq km), and has a population of 8.7 million people, versus Singapore's 5.4 million. Both countries enjoy a cordial economic and security relationship, marked by a high level of military trade.

Today, Israel and Singapore are linked more than ever by the desire to innovate and start up, particularly in the medtech space. The Trendlines Group, which in 2015 listed on Singapore Exchange's Catalist board, received in January up to S$2.2 million in grants from Spring Singapore (the Republic's enterprise development agency) to support medtech startups here.

Johnny Teo, director for manufacturing and engineering at Spring, said at the February office opening of Trendlines Medical Singapore that Spring's collaboration with The Trendlines Group will boost Singapore's medtech startup ecosystem, while leveraging its "rich biomedical research initiatives".

Steve Rhodes, co-chairman and CEO of The Trendlines Group, said the company's incubator model "has been proven", and now is the right time to export it. Notably, Trendlines Medical Singapore is the group's first incubator outside of Israel.

Affirming the strong synergies between Israel and Singapore, Mr Rhodes said: "The Singapore market suits us very well because it is dynamic, growing and innovation-focused, much like the Israeli market."

This article was first published on Apr 17, 2017.
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