Israel is the new Israel (Alternatively, if TechCrunch is the go-to online tech publication, will TreeHugger be the new TechCrunch?)
Sarah Lacy over at TechCrunch posted today that Israeli entrepreneurs post-bubble have lost their mojo and VC funding has reflected that. There has been a lot of reaction to her post in the comments section and off the site, but it is really much more complex and wide-ranging than a post on TechCrunch or even here on Israel Innovation 2.0 can handle. I think that Sarah is both right and, of course, wrong.
She is right that the crop of Israeli IT and Web startups are disappointing when compared to Check Point and ICQ from the 1990s. There have been many theories, denials and other responses of the lack of companies of this caliber in the past few years and I have to say, when researching these different companies, there definitely is a difference.
The theories for this that I believe and have often mentioned (sorry to anyone familiar with those posts) are the ones Daniel Cohen of Gemini Israel Funds wrote about in an article on Venture Beat back in the fall of 2007: “Entrepreneurs want to retire with $3-$4M, Impatience of investors, ‘Think small’ mentality and The lack of $1bn experience.” Add to these reasons the brain drain of top engineers and entrepreneurs and relocating the company outside of Israel and Lacy has a very good point.
Fortunately though, Lacy’s post on TechCrunch was only fulfilling a certain agenda and only relevant for the IT and Web 2.0 sectors which TechCrunch covers. No matter what happens with Israeli IT companies in the future (and I believe Israeli SaaS and security companies, such as Clarizen, Imperva and Trusteer all have a lot of potential), Israel is almost guaranteed to be the main player beyond this in the next tech revolution, clean technology.
A lot of VC funding has gone into cleantech companies in wastewater management, solar energy and wind energy that won’t mature and really show its worth for another few years. In addition, there is a noticeable trend over the past year of people from Israel’s IT sector considering and heading into cleantech.
So, where does China fit into cleantech? I haven’t researched it to say, but on the Israel end I know that China, along with several other Asian countries, countries in Africa and Australia have all expressed interest in Israel’s innovations especially to deal with water conservation management and solar energy. If in relation to Lacy’s article, China is getting more investments in IT (the greatest tech sector in the past) in comparison to Israel but not in relation to cleantech (the likely greatest tech sector in the future), the answer to Lacy’s question about “If China is the new Israel..” would really be that Israel is the new Israel.
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Lisa,
Although Sarah Lacy did mention Checkpoint as a reference it does seem to be very Internet oriented. Nevertheless I do think that it is right to expect to see more from Israeli startups in that field as I do not believe that the 90’s were simply ‘lucky years’. I do think that entrepreneurs should have broader strategies and that investors should be more professionaly involved in order to help create startups that endure and creatively overcome today’s market challenges.
Thanks for this interesting post and for bringing the cleantech and security hitech industries into the discussion.
Good post Lisa. I think that Sarah Lacy just enjoys being provocative… I’m working on a rebuttal.
Eze – Yeah, she definitely enjoys being provocative. I think it’s a good thing she wrote that article though. It’s fueled a discussion that hasn’t happened for a while. Looking forward to reading your response.
Sarah, provacative????
What will be much more interesting is what she says at the conclusion of this trip.
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