26 Mar How to get started? Mittelstand and Israeli Start-ups
How should German medium-sized companies proceed if they are interested in entering the market or cooperating with Israeli start-ups?
As is well known, many roads lead to Rome, or rather to Israel – this statement also applies to medium-sized German companies that want to work with Israeli start-ups in the context of R&D projects and innovation processes or aim to enter the Israeli market with their products and services.
In the following, some possible approaches and steps are presented and explained that have proven themselves in the process of cooperation with Israeli start-ups.
1. Use opportunities to exchange information about existing contacts and experiences with Israeli companies in your environment and network.
Establishing contact with companies from your own network that are already doing business in Israel or have had initial experience working with young Israeli companies in particular is always a sensible first step. If you can already identify the first Israeli companies along your vertical value chain, do not hesitate to contact them directly. Israelis are very open and spontaneous in their communication – a direct request for an informal exchange provides you with the first important information, insights and new approaches. There are also a large number of organizations that can support you in your search for contacts, networks and access to Israeli companies. You can find a corresponding overview of relevant actors at the end of this article.
2. Get your own impression of Israel, its start-up scene and concrete opportunities for cooperation.
The interest in the exchange and cooperation with young Israeli tech companies is growing steadily – the country has long since established itself internationally as a nation of innovation drivers.
However, medium-sized companies are still reluctant to establish appropriate contacts in Israel for a variety of reasons and have wrong or only very vague ideas of what a possible technology cooperation and collaboration could look like. In order to get a first impression of the country and the culture, the local mindset and the technological know-how, participation in a delegation trip or “fact finding mission” is suitable. As part of such a trip, often lasting several days, the participants receive a comprehensive overview of the Israeli ecosystem, access to industry-specific networks and clusters in a tightly timed program and make their first concrete contacts with Israeli companies and start-ups in individually organized B2B meetings.
The foreign trade promotion of the state of North Rhine-Westphalia, for example, usually offers trips in this format several times a year – in times of travel restrictions due to Covid-19, the business trip to the “Silicon Wadi” is now also digital. The German-Israeli Chamber of Commerce and Industry (AHK Israel) has been a steady partner of the country for years and will also provide companies with advice and operational support after the trip when planning the next concrete steps.
Often it is the impressions, discussions and findings gained during a trip on site that prompt and convince companies to specifically pursue technology cooperations in Israel and to tackle the next phase of strategic planning and implementation of a cooperation agreement.
3. Use a tech scout in Israel
Especially with innovative products, as they are in demand worldwide in the important future markets, it is essential to gain access to the latest developments, trends and market opportunities, to be informed about them and to use them strategically for your own company. On the other hand, the subjects of Industry 4.0 and digitization pose great challenges for many medium-sized companies and there is an increasing need for opportunities for cooperation with young companies in order to maintain their own competitiveness.
The implementation of a tech scout offers the opportunity to develop permanent access to Israel’s high innovation potential and thus to identify new growth and cooperation opportunities at an early stage. It may therefore be advisable to hire an external specialist on site who prepares regular reports on relevant tech and industrial developments in Israel, creates appropriate contacts to networks, potential partners and institutions and identified start-ups from Israel with the appropriate decision-makers in the company in Germany. In an Israeli market that is strongly characterized by personal contacts, access is often created that could not have been established during a one-off visit.
As an offer from NRW Global.Business, for example, NRW companies have the opportunity to implement targeted scouting by the “Cooperation Scout NRW @ Israel” at the AHK Israel and thus achieve a high degree of flexibility and visibility in Israel at low cost. and gain use of resources.
What can a collaboration ultimately look like?
When talking about working with start-ups, the first step is to understand each other. That is, those affected need to understand each other’s circumstances. Since both types of company are so heterogeneous, this understanding is often a challenge for both sides.
In the second step, you begin to identify relevant start-ups that meet your own defined goal. With a clear goal, a clear proposal can be made that will produce better results. This suggestion can, for example, be the identification of attendees for an event, at which the employees of a company can connect with start-ups. Another option is to identify an R&D supplier / partner. The format can also be very different – options include start-up scouting or start-up pitching, an innovation competition or an event “Start-up meets established company”.
As soon as relevant start-ups have been found, forms of cooperation can be identified and evaluated taking into account the initial goals. In this phase, the start-ups are evaluated and decisions about specific actions are made. Those responsible exchange their goals and visions in order to come to a mutually beneficial cooperation. This cooperation can take the form of a first general exchange, a proof of concept or a supplier or customer relationship as a very simple introduction. If one has had good experiences with the cooperation, other forms such as R&D cooperation are also conceivable. In later phases, corporate investments, acquisitions, or mergers and acquisitions may even add to the collaboration opportunities.
After completing the form of cooperation, efforts will focus on carrying out the cooperation and creating the expected benefit for both sides. Expectation management and open communication about the goals of both sides play an important role. The intensity of the cooperation can vary greatly from loose cooperation to strategic cooperation. The definition of milestones and a code of conduct can be good methods of laying a strong foundation for long-term cooperation.
This Article was published first on: www.mittelstandsbund.de and translated into English by the GINSUM-Team
About the author
Philip Velmer
Philip Velmer leads NRW companies in the development of new taxes and cooperation opportunities in the area of international corporate cooperation. In November 2020, the NRW regional company NRW.Global Business was founded.