An inside look at Israel’s incubator ecosystem
Whereas accelerators aim to speed up the process of a company’s growth, incubators are there from their birth
Accelerate, accelerate, accelerate. At least, that’s what entrepreneurs are told once they get their billion-dollar idea for a startup. While accelerator programs exist to speed up the growth stage of a company, Israel and its government take a unique approach to incubators - hubs that exist for companies to gain that initial boost to help them eventually get funding.“If you talk about incubators in the states or in Europe, both will be incubators that would not inject capital,” explained Assaf Barnea, CEO at Sanara Ventures. “They would not become shareholders or board members like we are in Israel… They will be like WeWork offices. So there's a bit of confusion on what exactly incubators, globally, means. In Israel, it’s known as a prestigious program globally for being a hybrid model or for adding services like office space, business support, financial support, legal support, HR, to those early-stage companies.”
“Nothing is going to stop them from going to the United States or to Europe and I hope they will when their companies grow,” he told CTech. “But to begin with, at the very early stage, they have here the advantage of having design partners from the industry and immediate and quick access to most of the facilities they require. It’s not an accident that Silicon Valley started in Silicon Valley - it’s because the silicon industry was there.”i4Valley was founded in July 2020 and its focus is on companies that can help in the fourth industrial revolution, widely expected to impact industrial industries. Its portfolio includes companies like Engini, KIINNS, and Aqualitas - typically companies that help with food and water safety, enterprise planning, or agriculture. “A lot of times, such people will find it difficult to raise seed or pre-seed to start a company,” Yechieli said. “The incubator system enables them, in our case in the field of industry 4.0 but in other fields, to jump into the water and start swimming - and a lot of them swim. That’s an amazing investment from the country in early-stage entrepreneurs and eventually... even if they fail on the first try they will succeed if they persist.”
“Many talented entrepreneurs have great ideas,” says its CFO Haim Brosh. “As an investment company that owns and operates incubators, Trendlines offers more than a cash investment. The incubator model offers entrepreneurs the capabilities and deep support required to turn their brilliant ideas into commercially viable companies – technological, business, financial, and marketing knowledge – are all part of the professional experience we provide to ensure the best chance of success in transforming an idea into a startup.”Community connection Trendlines is also located near the Galilee in a town called Misgav although it also has an office space in Ramat Gan if it ever needs a space for meetings and delegations. Bank Hapoalim, one of the country’s leading banks, ensures that it maintains a sense of connection and community for companies and incubators based out of Israel’s periphery locations.
“I’m working at the Yokneam branch, this is really not the center of the country. You’ll have a different kind of customer here,” said Roi Tal from Bank Hapoalim. “The difference is in all geographical areas, it’s a different approach from the bankers who work with the local businesses or high-tech community… we need to take ourselves and build communities and hope and work on it.”Tal has been at Bank Hapoalim for 15 years and based at its Yokneam branch since 2015. There, he works to connect banks, VCs, entrepreneurs, and startups together in ways that fans of the high-tech world might be used to in Tel Aviv’s Sarona Market or Rothschild Boulevard. “We need to build the community that people will hear about and meet all the time with hubs, accelerators… and then when we work with the people, we do introductions both sides to high tech startups and they need leads, we need leads, so it’s a win/win for both sides.”
Despite this challenge, Barnea credits the IIA and the “truly amazing” job it’s doing in helping prevent companies leaving periphery areas once they finish and search for more investment. “I think the IIA is doing a great job and I think also the adjustment we are trying to make now in the industry is how to bridge some of those financial gaps. The post-incubation, the value of that. This is something that needs to be addressed - the value of a post-incubation investment,” he added.Incubators into hubs Regardless of where these incubators are based, it’s clear they all have one clear goal: to foster the innovation that is born from entrepreneurs and spread it around the country. So far, it is working. The IIA’s Avital told CTech that incubators have an important role outside of acting as seed investors, and should focus on creating environments and industries that eventually turn into hubs of their own. The Kitchen Hub, he said, was the country’s first foodtech incubator. Based in Ashdod, it brought companies to the region and eventually created the foodtech industry in the country. “The incubators' main goal is to become a hub, a focal point to connect all the dots,” Avital concluded. “Our hope is that the startups will want to stay there because of the hub, the connections to the dots, because it will be good for them to be there, and all the connections they can have for being there.”