5 Things African Tech Startup Ecosystems can learn from the Israeli Startup Ecosystem 1 lesson it should not learn.
pic from Africa Isreal conference
Israel is a country with 8 million people and a land mass of 20,770 km² , a small country by all standards but Tel Aviv one its top cities is a strong contender for Silicon Valley’s Spot for premier technology ecosystem in the world.
As at the time of writing this, Israel has the largest investment of GDP into research and development, whilst Tel Aviv beats everyone to become the city with the largest number of startups per capita in the world
There are many many lessons there for the African technology ecosystems in how it’s built up its ecosystem and supporting industries.
If you have read my writing on technology ecosystems in Africa you know I am genuinely bristling while I write this line: the Tel Aviv startup ecosystem calls itself Silicon Wadi, according to literature “Silicon Wadi is a pun based on the Californian region of Silicon Valley.”Wadi” is the Arabic word for a valley or dry river bed, also commonly used in colloquial Hebrew”.
“Silicon Wadi is an area with a high concentration of high-technology companies on the coastal plain of Israel and is the reason Israel is nicknamed the Start-Up Nation. The area covers much of the country, although especially high concentrations of high-tech industry can be found in the area around Tel Aviv, including small clusters around many other cities.”
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The story is told that In the 1980’s during the collapse of the USSR a large numbers of Soviet Jews( mostly engineers and scientist) moved to Israel increasing the population by ¼ . This lead to unavailability of high paying jobs and drove these engineers and scientist to work for themselves creating a startup culture.
There is lesson there for African tech ecosystems and governments to become strategic is addressing brain drain and luring back highly skilled individuals back to the African continent. I believe encouraging others outside the continent to build for the continent in higher numbers is probably the best way to attract them back to the continent.
Lack of resource is an advantage
When a small nation is in the middle of the desert without water and friendly neighbors, it quickly learns how to heavily innovate in water management, defense and agriculture and create a culture of solving problems and can do attitude. To farm in the desert, one must think outside the box!
Lesson: Africa has a lot of challenges and instead of seeing them as a disadvantage, it must be viewed and reframed as an opportunity to do things differently, innovation in Africa because of resource constraint must be imbibe: Frugality because most innovation in emerging markets lacks a large pool of financial resources, hence these solutions are optimized cheaply and focus on consumer need versus a nice to have.
Flexibility, because these solutions are cheaply built and focusses on customer needs, it enables faster turnaround and testing and allows for quick adaptation
Inclusiveness – because of a large pool of low income consumers, a good number of solutions are targeted and low income groups
Talent and skill set growth
The compulsory military services for all over 18 years in Israel has helped develop computer science graduate with elite research and cyber security skills. It also teaches team work and leadership which is important for entrepreneurial ventures.
Lesson: Programs need to be created to develop high quality talent and skill, after has the distinct advantage of being youngest continent with 60% of its population under the age of 25, the average age of 19.4 years, and the world’s 15 youngest countries are all in Africa. Africa is literally the future of the world
According to the World Economic Forum by “2030 One in five people will be Africa and Africa will account for more than half (54%) of the 2.4 billion global population growth in coming decades and so we definitely Africa has an upcoming large pool of talent, larger than the United States and China.
The Afdb Youth for coding program seems an interesting intervention to help develop Africa’s high tech talent .
Creating a Niche
Due to Israel’s resource scarcity and security issues it has built a strong skills in building high tech and cyber security skills and has leveraged on it to build a startup ecosystem that has developed a strong global brand in these areas evidence by major technology brands like Apple, IBM, Google, Facebook, Cisco, Microsoft and Intel opening R&D Offices in the country as well as big tickets exits like Intel buying Mobiey a leading provider of solutions for autonomous cars for 15.3 billion and 1.1 billion acquisition of Waze a community-based traffic and navigation app by Google . In 2017 a whopping 23billion USD worth of exits happened in the Isreal startup ecosystem.
Lesson: There are niches that Africa has built up skills set in developing solutions for e.g. Underserved spaces like Agri tech, Fintech and Micro-insurance, doubling down on these spaces is a must
Creation of a Venture Capital Ecosystem
According to Wikipedia and Forbes
“Israel’s venture capital industry was born in 1985,when the first Israeli venture capital fund, Athena Venture Partners, was founded by Major-General Dan Tolkowsky, the past Chief of Staff of the Israel Air Force; Dr. Gideon Tolkowsky; and Frederick R. Adler, a pillar of the US venture capital industry who had conceived the notion of taking Israeli High-tech companies public on NASDAQ. Subsequently, in 1990, Gideon Tolkowsky and Yadin Kaufmann founded Israel’s second VC firm, “Veritas Venture Capital Management”, whose main investors were Anglo American Corporation of South Africa and De Beers.
The success of the Venture Capital industry in Israel continued with Yozma (Hebrew for “initiative”), a government initiative in 1993 offering attractive tax incentives to foreign venture-capital investments in Israel and promising to double any investment with funds from the government. As a result of their efforts, Israel’s annual venture-capital outlays rose nearly 60-fold, from $58 million to $3.3 billion, between 1991 and 2000. The number of companies launched using Israeli venture funds rose from 100 to 800. Israel’s information-technology revenues rose from $1.6 billion to $12.5 billion. By 1999, Israel ranked second only to the United States in invested private-equity capital as a share of GDP. It also led the world in the share of its growth attributable to high-tech ventures: 70 percent”
Lesson: Government intervention in spaces that enable technology ecosystems to thrive is needed to develop home grown venture capital industries and angel investors
What we must not learn
A small population mean a large population of Israel startups focus on global markets from the very start, which I is where I believe Africa should diverge. The numbers of youth and population and growth in Africa, favor building for Africa. There are many problem spaces to be solved for on the African continent and its best to concentrate on building for African in Africa.
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