Uri Adoni from Jerusalem Venture Partners about Culture of Entrepreneurship
While other countries are trying to duplicate and create their own Silicon Valley, Israel has managed to establish a unique ecosystem and become the second-largest hub of innovative projects in the world.
Here is what venture capitalist Uri Adoni, the partner at Jerusalem Venture Partners, says about how the startup industry has been organized in Israel and why it is important to support a culture of entrepreneurship.
A few words about the fund
JVP was founded in 1993 by Erel Margalit and helped in shaping the ecosystem of not only Jerusalem but all of Israel. The fund has over $ 1.1 billion under management and focuses on areas such as mobile development, enterprise software, data storage, IoT (Internet of Things), computer vision, cyber security, big data.
JVP works differently than other venture capital funds, as it consists of two startup incubators, located in Jerusalem and Beersheba, which are both licensed and a part of the state program. There are a couple of dozens such places in Israel, which primarily aim to find and evaluate promising new projects. After passing the qualifying stages, a startup receives financial aid from the state and, according to law, a comparable figure from the incubator. Statistics also shows that, on average, every $1 of public funds is matched by $5 in private funds. The program lasts 18 months and, upon completion, each project has an opportunity to receive funding for further development. The incubators serve as a filter, allowing JVP to select only the best projects. It takes roughly 18 months to monitor the startup’s work, evaluate its capabilities, get acquainted with the team, and analyze the potential market. But, at the same time, a startup may need less time to start. The portfolio of JVP, for instance, includes a project that attracted $10 million in seed investment after just six months of incubation.
What is entrepreneurship culture?
Ask yourself: Can the product that you and your team are working on change reality? Is your solution innovative? Will it solve existing problems more efficiently?
You should be prepared to spend all your free time at work on the product. If you think you can work for a few hours a day and create a revolution, you should just quit now.
You must have a competitive spirit, the desire to change the world, and a desire to be a part of these amendments.
You have to deal with the problems that you face along the way. The entire responsibility lies on your shoulders. You received financing today, but tomorrow, it can be cut in half.
“It’s like a roller coaster.”
Readiness for all of this is the very essence of the culture of entrepreneurship.
Developing your project is much more interesting and inspiring than working at the big technology companies.
Portrait of a good startup
Management of each new project should keep in mind that the key to success is an idea that successfully finds the solution to future problems. Only after that, the technical base, that a good team includes not only experienced engineers but also a robust management, that the successful manager of a 10-member startup would not always be a good leader for a large company. It is important to be able to “hear” the market and react to its changes, and that, no matter how smart and market-savvy your team is, the market is always one step ahead.
It is equally important to prepare for other changes in technology or with your team. Today, b2b, but tomorrow, b2c.
You need to have a vision of how the project will look like in a few years, but do not forget about plans for the near future: 3, 6, 12 months.
Common mistakes startups make at the idea stage are:
Developing a product that solves yesterday’s problem, copying existing solutions, and product-development for the oversupplied market.
Local or global market?
The absolute majority of funds are interested in projects aimed at global expansion and venture capitalists in Israel are no exception. Product-testing at the city or state level is a good base, but if the project is to attract investments, it is necessary to focus on the big markets: the US, Europe, and Asia.
One should not forget about a considerable number of projects successfully working at the local level, but if a startup is targeting a small market, it needs to look for more accurate means of financing.
Israel VS. Silicon Valley
The main difference between the two largest areas of innovation is that US startups are in a vast and active local market right away while Israeli projects have to enter the large markets from outside.