A scarcity of resources and good land – as well as military imperatives – are challenges that Israel has met with startling success in innovation. IAN CAMPBELLreports from Tel Aviv
THE STORY goes that it was a 1999 visit to Israel by the then minister for enterprise Mary Harney that helped put the finishing touches to a planned national research organisation.
She saw the world-renowned Weizmann Institute and met the Israel Science Foundation. A year later, Science Foundation Ireland was born.
Similarities between the high-tech credentials of the countries have been made ever since. Both play host to large US multinationals and have indigenous software companies that export to the world. They each have six universities and aspirations to turn research into commercial opportunity.
Closer inspection, however, reveals some stark differences. The Intel and Microsoft presence in Israel is more RD focused and the country as a whole has a thriving ecosystem of innovation that puts Ireland, and most other European states, to shame.
Israel has the highest density of start-ups in the world and more of its companies are Nasdaq-listed than all of Europe combined. According to the OECD, it’s the world’s most educated society, with 45 per cent of Israelis having been to university.
But even these statistics struggle to tell the whole story of a country with unique social and political circumstances that have a way of fostering innovation.
The most distinct feature of Israel’s research community is its focus on solving local problems. Vested interests encourage research into areas that other countries ignore.
Necessity really is the mother of invention for a country that suffers from a scarcity of water and a lack of natural energy resources.
Research and development into these two areas is supported by NewTech, a government programme that brings public and private sectors together along with academia. The aim is to promote innovative solutions for national problems. The government is willing to invest in long-term research, often without any clear application, on the off-chance of disruptive innovation.
This is very much in evidence at Kinrot Ventures, an incubator programme that is home to 12 start-ups working on water technologies. “Ten years ago we couldn’t get any interest from venture capitalists,” said Assaf Barnea, chief executive at Kinrot, “then the sector began to take off.
“General Electric and Siemens bought into it and IBM entered the market. In 2006 the Israeli government looked to prioritise the sector and began by investing in start-ups that could bring technologies to a global market.”
A measure of the state’s commitment is that is provides 85 per cent of Kinrot’s funding, the rest coming from venture capitalists and private companies. Each start-up is given an office and $600,000 (€420,000) investment for the first two years in what Barnea admits is a notoriously slow road to market.
“I wish it was more like the software sector which typically takes around eight months to get something off the ground. Water technologies RD can take five or six years and a lot of the companies will not succeed,” he said.
The Israeli attitude is that they have to try and they have to take risks. In a water industry that is ageing and inherently conservative, no one else is going to do it, said Barnea.
Some of the same approach can be found at the Weizmann Institute of Science in Rehovot, 20km south of Tel Aviv.
Groundbreaking discoveries have made their way into the world from its green pastures, including the amniocentesis pre-natal diagnostic test, precision systems for diamond cutting, and new antibiotic drugs that recently won resident professor Ada Yonath a Nobel Prize in chemistry.
The institute has 1,200 students, all postgraduates, and 250 research groups engaged on hard science projects. Prof Brian Berkowitz, in the department of environmental sciences and energy research, said the institute’s strength is its blue sky approach. “It’s all about curiosity-driven research, basic science where accidents often lead to the real breakthroughs,” he said. “It is rare that a company would come to us with a problem to solve.”
This seemingly haphazard strategy has not hampered commercial success. The institute contributes $8 billion a year to the Israeli national economy through a long list of licences and patents, not a bad return for what Berkovitz describes as “playing about in labs”.
Venture capital-funded incubators and research institutes are well-trodden routes to innovation in many countries. What sets Israel apart are cultural circumstances that are entirely unique.
Involved in intermittent military operations since its independence in 1948, the country built up some of the world’s most technologically sophisticated armed forces from nothing. But locally developed weapons systems are not the only fruits of an indigenous industry. The pervasive presence of the military touches everything, not least because every 18-year-old is conscripted for three years into the Israeli defence forces.
Military units often act as incubators for tech start-ups. The founders of Fraud Sciences, for example, had begun to develop their technology in an army unit focused on fighting terrorists. PayPal would eventually buy the anti-fraud technology for $170 million in 2008.
The co-founder of PrimeSense worked in research and development for military intelligence. His company’s 3D camera caption technology would subsequently be sold to Microsoft and used as the basis for the Xbox Kinect motion controller.
An even more intriguing piece in Israel’s innovation jigsaw is the kibbutz, the community collectives that initially sprang up to accommodate Jewish refugees. Over the years they have spawned many industry success stories, particularly in the agriculture sector.
Netafim, a world leader in drip irrigation, still has its main manufacturing facility at Hatzerim, a small farming community in the Negev desert. It manages to combine a unique mix of socialist idealism and capitalist acumen, with senior management still taking their turn at doing the washing up in the community canteen.
