Israel is third in Nasdaq-listed companies (behind the United States and China and ahead of Canada), but that’s not all: last year, 550 Israeli companies got venture capital funding, compared to 2,500 U.S. startups. That’s about 20% of the relative investment, despite Israel having only 2% of the U.S. population. Talk about punching above your weight class.
That over-performance is being fuelled by the likes of Jonathan Medved, one of Israel’s many, many venture capitalists. Medved is one of the more successful VCs—over the past 20 years, he has helped bring 11 companies to valuations of more than $100 million, with some of his more notable investments including Shopping.com (acquired by eBay) and Answers.com (acquired by Summit). A few years ago, The New York Times named him one of the 60 most influential Americans who have made an impact on Israel.
Speaking with Medved was definitely a highlight, as he did a good job explaining why Israel has been so successful in cultivating a world-class technology sector. As an added bonus, he also shed some light on the similarities—and striking differences—between Israel and Canada when it comes to tech. Here’s a condensed version of our conversation:
What’s the secret of Israel’s success in technology?
It’s because of our attitude toward risk. This place is risk central. We live risk, we eat risk, we wake up and hear President Whackjob talk about wiping us off the face of his map. That’s real risk and I worry about that.
So the risk of starting a company and losing my job or losing somebody some money, that just doesn’t compute. I’m not cavalier about other people’s money or jobs, but here that doesn’t qualify as risk, which is weird because in many, many countries, quitting your job and starting a company and taking money from someone and losing it is a big, big no-no. You put the guy on suicide watch if it doesn’t work out. Here, it’s okay. Silicon Valley is very much that way too. It’s part of the game.
I wish we didn’t live in such a risky place. I wish I didn’t have memories of cafes that I loved going to being blown up. Today, it’s all calm and chill but 10 years ago it wasn’t. What’s weird is that it didn’t have an impact on people starting companies and, weirder still, is that it didn’t affect investors.
That’s not something I fully understand. You’d think that today people would be trying to figure out, ‘What’s my Iran risk for Israeli investment,’ but no one talks about it. Venture capital dollars between 2010 and 2011 were up by over 70%. It went from $1.3 billion to $2.2 billion. More foreign money is pouring into the country. Go figure.
There’s also the immigrant thing. They turn out to be killer entrepreneurs. Immigrants have essentially been there and done that, even if they haven’t formed a company. They actually have formed a company, it’s called ‘My Life Dot Com.’ They took the risk to come to a foreign country, where they essentially had to worry about legal stuff, banking, staffing up, marketing and many of the things you need to do to build a company from scratch. Some of them do it with laundries or restaurants or gardening or construction, but an increasing number do it now with tech.
In the U.S. as a whole, about 25% of new startups are founded one way or another by an immigrant. The estimate in Silicon Valley is that the number jumps higher to like 50%, so anyone who talks about shutting down immigration should have their head examined. These guys are great, great job creators.
A lot of people don’t get this country. They think it’s a white country, but it’s so totally not true. The majority of the Jews who live here come from Africa and Asia. Our diversity is one of our huge strengths. It also makes for great cuisine and beautiful women.
Continue reading Via Canada Business Week