How London can compete with Tel Aviv
Nir Zohar, Wix.com President and chairman of the Israeli Growth Forum, explains how London can compete with the likes of Tel Aviv.
Last month, London elected its new mayor, Sadiq Khan.
While it marks a new dawn for the city, it must be remembered that his predecessor, Boris Johnson also left his mark on London – and not just by putting more bicycles on the road.
Either by accident or design, he left office having helped mould London into one of the world’s most powerful startup cities.
For all his public tomfoolery, Boris knew that to cement London on the map as a startup city, he had to learn from other hubs in terms of best practice and collaboration.
Nowhere was this more evident that on his trade visit to Tel Aviv at the end of 2015.
Sadiq Khan has now the opportunity to continue to this good work and build on the fantastic infrastructure already in place to ensure relations between the two cities remain strong and mutually beneficial.
According to EY’s annual Attractiveness Survey, London is now only behind San Francisco in a global ranking of top tech cities.
Currently there are 4000 startups and over 250,000 digital jobs, a number which is expected to increase by 46,000 in the next ten years.
Yet, according to the 2015 edition of the Startup Genome Project, Tel Aviv rates higher.
With as many as 5,000 startups, it should be no surprise that Tel Aviv has established itself as one of the most innovative and entrepreneurial cities in the world.
Regardless of which report you read, both Tel Aviv and London support a culture of creativity and innovation that allows new businesses to flourish, creating opportunities for individuals to grow and develop into game-changers and industry leaders.
With a fast-paced culture that combines social time with learning and networking opportunities, both have a lot to offer potential startups and their employees.
But likewise, both cities now face a similar challenge of not wanting to become talent exporters.
In 10 years Israel has had 933 exits that are worth $54bn. It has 262 R&D centers – the highest in the world per capita.
Despite this, only 5% of companies remain independent and don’t sell – in the US that stat is over 20%.
Similarly, only 63% of patents invented in Israel stay Israeli (20% less in 10 years). There have been similar signs in the UK too.
Perhaps the most high profile example being DeepMind, the startup focused on artificial intelligence, which was acquired by Google in 2014 for $500 million.
It is vital both cities foster a culture of ‘staying put’ to keep local companies growing in their original markets. One of our most notable examples is Check Point.
Founded in 1993, it went public in 1996 with 50 employees and $30M sales. Today it has over 3400 employees and $1.49B sales.
There are many more out there too; Wix.com, Fiverr, Gigya, Outbrain, MyHeritage, IronSource, the list goes on.
However, one of the reasons we don’t have more Check Point’s is the heavy regulations that make it very hard to grow a company.
That is why we set-up the Israeli Growth forum. Our goal is simple – 10 years, 10 companies, $10 bn.
We want to keep leading companies that can have a huge impact, both globally & locally.
We focus on three things designed to do just that.
Firstly, we look to deliver ‘easy funding’ to make it easier for these scale -ups to grow.
Secondly, we have ensured that we open the Israeli market to the world to attract the best employees & expertise. Finally, we focus on business rather than unnecessary bureaucracy & regulation.
In one year the Israeli Growth Forum has accomplished a huge success in reducing government regulation for public companies, reduced double regulation, passing the legislation through the Knesset and opening the way for further regulatory facilitation.
This has included building a roadmap for a tax reform to adjust the Israeli tax structure for growing Israeli companies.
We have also made it easier to recruit experts internationally – an issue that is still being debated in the UK with regards to working visas.
We have also focussed on cultivating our own talent pool.
This has increased the number of engineers in the short and long term as well as creating job opportunities for sectors that are not in the industry today.
To ensure talent stays, regulators must be the builders, rather than the preventers of the business ecosystem.
They must work hand in hand to allow startups to turn into growth companies instead of dealing with heavy regulation.
There is much to learn from these two amazing startup stories.
We are looking forward to continuing to work hand in hand with London to turn our relationship, and the startup businesses we are creating, from good, to great.