STARTUP NATION:

Israels Surprising Economic Success

In The Face Of Adversity
(And What It Means For SC)

The State of Israel is a Startup

November 29, 1947 UN General Assembly votes to adopt
the UN Partition Plan
The first known Kingdom of Israel in this location was
in the 11th century BCE),
The majority of the world continues to question Israels
right to exist
Israel has a PR problem!

The State of Israel is a Startup

Entrepreneurship is the backbone of the country
No known natural resources
Necessity is the mother of INNOVATION
Agricultural innovation
Military innovation
Infrastructural innovation

What time is it?

Its time for your daily
dose of Israeli
technology.

** Slide as produced by Jonathan Medved

Personal Computers

** Slide as produced by Jonathan Medved

Consumer Electronics

** Slide as produced by Jonathan Medved

Medical / Life Sciences

** Slide as produced by Jonathan Medved

Telephony

Software/Internet

** Slide as produced by Jonathan Medved

The Secret Sauce

Compulsory Military Service
Global Orientation
Progressive Immigration Policies
Pro-active Government Policy
Persistence
Diaspora Community
Mash-Ups

Highly trained and educated workforce

What is important about military service?
18 year olds spend at least 2-3 years serving
Development of critical leadership skills
Responsibility and accountability for the well being of others
Taught to question authority for improved outcomes
Willingness to take risks in the face of adversity
Persistence and desire to learn from mistakes
Development of military technology often converted to civilian uses

Highly trained and educated workforce

Very high-quality education infrastructure
Highest ratio of university degrees to population in the world
Bill Gates:
The quality of education is one of the key factors that has made Israel so
unique in the great companies and partners we've had...

Warren Buffet:
If you go to the Middle-East looking for oil, you do not need to stop in
Israel. But, if you are looking for brains, for energy and for integrity, the
only stop you need is in Israel.

A country of immigrants
Progressive policy encourages immigration
Israel is built on successful integration of cultures
Mass immigration from former Soviet Union
Absorbed 5+% population increase in one year
58% were scientists, academic scholars, associate
professionals and technicians ( >2x the percentage of workers
in these fields)

Pro-active government policy

Yozma (initiative) 1993 VC policy

Offered attractive tax incentives for foreign venture capital investments

Promise of government to DOUBLE any investment with government funds

VC investment rose nearly 60-fold, from $58 million to $3.3 billion (90-00)

VC-launched businesses went from 100 to 800

Establishment of incubator system to leverage approximately

750,000 scientists, engineers, and physicians arriving from former
Soviet Union (24 incubators today)

Pro-active government policy

Government privatized the incubators
Policy of supporting R&D
Office of the Chief Scientist tasked with encouraging high value-added
R&D and collaboration nationally and internationally
This years budget for R&D support:

NIS 1.42 billion -- approximately $375 Million

Israel as a hub of innovation

Hi-tech center and culture of entrepreneurship
Hundreds of multi-national companies in Israel
Microsoft, Intel, Motorola, IBM, Google, Yahoo, etc.

Leading VC firms operate in Israel

Sequoia, Lightspeed, Bessemer, NVP, Battery, etc.

Overall VC investment over $2 billion per year

Number 1 over all of continental Europe
Number 1 in the world on a per capita basis
In absolute terms, 2nd overall only to Silicon Valley

Israel as a hub of innovation

Relative to the population, largest number of startup
companies in the world
In absolute terms, largest number second only to US
Outside the US, largest number of NASDAQ-listed
companies

Innovation we can emulate

Israel: Highest R&D spending as % GDP and per capita

So how do we compare?
South Carolina vs. Israel
South Carolina

Israel

Compared

32,020 sq. mi.

8,019 sq. mi.

400%

Population

4.7 million

7.8 million

60%

GDP

$166 Billion

$245 Billion

67%

VC Investments

$73 Million

$2,139 Million

3%

Geographic Size

SC is experiencing record growth

Back-to-back record years:
2010: $4.1 billion in Capital Investment and creation of over
20,000 new jobs
2011: $5.1 billion in Capital Investment and creation of over
20,000 new jobs

Since 2006: Over $22 billion in Capital Investment

and creation of over 107,000 new jobs
Foreign Direct Investment
Over 72% of capital investment and 46% of jobs in 2011

Our strengths
International leader in attracting Foreign Direct Investment
Strategic location
Good infrastructure: Roadways, Rail, and Port

Need ongoing spending to maintain and compete

Higher Education and Research Environment

SmartState ~ 120 endowed chairs (critical need)

Over $550 Million in research funding at our 3 major research universities

Technical College System

ReadySC workforce training program

Apprenticeship Carolina

Incentives
Department of Commerce Incentives (deal dependent)
Based on capital investment, number of jobs and wage scale
etc.
Counties can play major role in incentive package
SCRA / SC Launch
Project Development Funding Grants, Start-Up Assistance
Grants, SBIR Grants, and Loan and Equity-based Investments of
up to $200,000
Support for landing parties and demonstration projects

SC InvestorsVC, Angels, Corporate Investors

Collaborative research grant support

We need to align around innovation!

Identify new incentives to attract innovation capital
Tax breaks for R&D and Venture Capital investment in our state
Enact legislation like the proposed South Carolina Angel
Investment Act of 2011
Increase direct government grant support, if possible
Create, stimulate and support collaboration
Example: SC-Israel Collaboration
Stimulate business and research partnerships between
companies and universities in South Carolina and Israel as a
way to generate economic development, jobs, and
investments to the benefit of all.
www.SC-Israel.org

We need to align around innovation!

Champion educational excellence
Nurture innovators
Groom exceptional leaders
Encourage entrepreneurs of tomorrow
Attract and/or retain highly skilled and highly educated
workforce

Role of our students and workforce

Get educated! Get networked! Stay in SC!
Young students must identify an opportunity and gain
relevant education and experience
Seek work-based opportunities to grow experience and
network in the chosen field
* Consider study abroad and internship programs particularly in Israel!

Network, network, network!

Ask your state leaders to support legislation encouraging
venture capital investment and/or facilitating governmentsponsored startup funding (key drivers of innovation)
At the end of the day:

Stay in South Carolina

our state needs you!

Education Pays

Thank You