11 Mar What can Israeli start-ups offer German mid-sized companies?
With over 8,000 active start-ups and an economy shaped by industrial high technology and entrepreneurship, Israel has undoubtedly earned its nickname “The Start-up Nation”. Disruptive innovation in various industries is rapidly changing the global corporate landscape and creating new challenges and opportunities for companies. Traditional business models run the risk of becoming obsolete if they do not develop at the same pace. Israel’s unique ecosystem has been very successful in meeting the needs created by these constant changes.
Israel is seen as an entrepreneurial powerhouse and hotbed of new technology, profitable business opportunities and high returns on investment. For these reasons, it comes as no surprise that the world’s leading multinationals have chosen Israel: Microsoft, Google, Apple, Intel or IBM are just a few of the names in a long list of over 370 multinationals who have recognized Israel as ideal Offers investment and cooperation opportunities. So how does Israel manage to stay at the forefront of technology in different areas? And what makes it so unique that so many international players come here looking for the next innovation?
Israel’s unique society and culture, strong economy, government support and a “global first” market approach are just some of the factors that make the Israeli innovation ecosystem one of the most successful in the world. In 2019 alone, Israeli Startups received a record $ 8.2 billion from investors. As a global innovation leader, Israel has already attracted a number of large German companies. Well-known companies such as Deutsche Telekom, Bosch and SAP have set up centers in Israel – especially in technology-oriented industries such as the automotive industry, intelligent mobility and cyber security. On the other hand, however, there are many German medium-sized companies that have not yet dealt with the fact that Israel is big when it comes to innovation and research and development (R&D) Can offer potential.
In which areas are Israeli start-ups leading?
Whether in the fields of automotive, aerospace, high-tech and semiconductors, agricultural engineering, cyber security, water technology, clean tech or financial technology – Israel’s ecosystem is at the forefront of technological development in many sectors.
The focus is particularly on the following sectors:
Health and Life Sciences
There were more than 200 life science companies in Israel in the late 1990s. With steady growth over the past decade, with around 80 new companies annually, Israel has introduced creativity and innovation to the field; today there are over 1,500 active companies. The largest sector is medical devices and digital health with over 70 percent of companies. Israeli scientists and engineers have developed world-class innovations such as digital imaging, medical devices, telemedicine, early diagnosis, intelligent surgical devices and much more.
Israel has recently become active in the automotive and smart mobility industries. Technology companies like Mobileye or mobility service providers like Waze and Gett have their roots in Israel and are driving growth in this sector in the region. Historically, Israeli companies supplied conventional mechanical parts to the automotive world. But recently, the digitization of mobility has required new skills – such as object recognition and tracking for advanced driver assistance systems and the projection of mobility behavior for shared driving services.
As an innovative ecosystem, Israel has become a strong player in Industry 4.0. The Israeli Industry 4.0 landscape can be divided into nine categories: operational optimization, cyber security, sensor and image processing, inspection and testing, IoT platforms and connectivity, additive (3D printing) manufacturing, supply chain, robotics and maintenance. Areas such as product manufacture, design and marketing are largely shaped by Israeli start-ups, which question the previous approach in order to develop and implement new innovations.
Israel has been a leader in IT security technology development for more than 25 years. Due to a variety of factors, such as the high concentration of skilled workers and the support from the government, Israel is regarded as a pioneer in the global development of solutions for cyber security. Start-ups deal primarily with topics such as firewalls, fraud detection, prevention and security management as well as endpoint security for companies.
How can German SMEs benefit?
External innovation and disruption
There are several advantages for German medium-sized enterprises and their companies in working with Israeli start-ups. First of all, the often small but at the same time customer-oriented start-up provides a possible innovative impetus from outside. This is often necessary in order to adapt the internal culture of the already established medium-sized company to the digital age.
In particular, new technologies and trends as well as changing markets should prompt medium-sized companies to look for cooperation with start-ups in order not to fall behind national and multinational companies in the long term. Because these are often already very active on the Israeli market and other innovation centers. Such a cooperation can open up new opportunities for medium-sized companies to use state-of-the-art technologies, for example in the area of cyber security. Since internal innovation is often slowed down, working with a start-up can also facilitate the necessary disruption of your own business model, which is often difficult to achieve from within.
When working with established technology providers, medium-sized companies run the risk of missing out on potential new sources of income: Buying from an innovative start-up can give a company a competitive advantage. Startups can outperform existing corporate solution providers because they have lower overhead costs and are more focused on innovation.
Startups tend to align their innovations closer to customer needs because they are not as process-driven as established companies. They can more easily customize solutions so that the company can better serve its customers.
More agile corporate culture
Working with Israeli start-ups can generally bring more openness to innovation and intrapreneurship. In a rapidly changing business environment, it is important to actively promote a culture of openness that allows innovation as well as failures on the way to new solutions.
Remain the market leader
Working with innovators enables a company to better track changes in the market that can lead to disruption.
Key questions that medium-sized companies should ask themselves in order to identify the most promising innovative start-ups for cooperation:
- What are the advantages and the long-term competitive advantage of this cooperation?
- Why is the start-up interested in working with the company?
- Which model of cooperation is used?
- Who are the internal stakeholders driving the process?
This Article was published first on:www.mittelstandsbund.de
About the author
Christoph Sommer heads the Israel business unit at NRW.Global Business, the foreign trade promotion agency of North Rhine-Westphalia, and supports Israeli start-ups on their way to the German market.