Tel Aviv: sea, tech & fun

"Tel Aviv is a great place to do business at the moment"says Daniel Rouach, President of the France-Israel Chamber of Commerce. Why such a dynamic? Because in just a few years the country has become a a veritable cluster of innovative start-ups. Ten years ago, a group of young entrepreneurs began to join forces, initially at the north of the Israeli economic capital and also around Haifa and Rechovot. But, of all of them, Tel Aviv has been able to stand out the most thanks to a very solid policy of creating incubators. "The high-tech ecosystem in Tel Aviv has developed like a copy-paste of California: we have excellent universities, venture capital, young people who want to look on the bright side of life and a whole range of technology linked to the army that has encouraged research. Add to that a friendly, festive and relaxed atmosphere, and you have a microclimate that's conducive to the birth of start-ups."says Daniel Rouach.

High-tech incubators

Today, Tel Aviv is a truly connected city. There's not a metre without WiFi, a café where you can plug in your computer or a coworking space. "Avenue Rothschild, once a major residential thoroughfare, has become a veritable high-tech lung."continues Daniel Rouach. More widely, R&D centres and incubators have sprung up all over the city, all backed by major banks and investment groups. Focusing mainly on FinTech, bitcoin and healthcare, these incubators form a kind of micro-clusters that give the city a unique and unique character. a unique and relaxed atmosphere, especially since the presence of the army has faded with the relocation of certain bases outside the city centre. "Twenty years ago, Tel Aviv was very provincial, but the start-up movement has radically transformed it. Today, people use electric bikes and scooters to get to work."smiles the President of the Chamber of Commerce.

Today, Tel Aviv is a truly connected city. There's not a metre without WiFi, a café where you can plug in your computer or a coworking space.

Tel Aviv has thus become the economic heart of a small country that joined the OECD in 2010. With steady growth since the 2000s, first around 5 %, then now between 3 % and 4 %, Israel has reached a GDP of 300 billion US dollars, the equivalent of Denmark's. "But the country still has good growth potentialIt's a great place to be," says Florent Della Valle, deputy head of the economic department at the French embassy in Tel Aviv. Because, while Israel has eight million inhabitants like Austria, it is still far from having achieved the wealth of the small Alpine nation. "At this rate, it will take ten to fifteen years for Israel to reach the level of wealth of the most prosperous European countries."says Florent Della Valle.

Four billion dollars are invested in Israeli start-ups every year. 60 % of this funding comes from the United States and 25 % from China.

For the time being, even though social security contributions are much lower than elsewhere, incomes remain highly disparate. While the average salary is around €2,000, it approaches €4,000 in fields linked to new technologies. "The line between tech and the traditional economy is extremely blurred"says the economist. This is all the more true given the high cost of living, a recurring theme in the political debate. The non-tech middle class is also struggling to find housing, while many foreign buyers are snapping up flats in Tel Aviv, a phenomenon that is driving up the exorbitant property prices. Added to this is the fact that Israel lacks manpower in the construction and public works sector and has to recruit from outside its borders to develop its supply.

The city of Tel Aviv is working hard to build new residential areas, such as Montefiore. At the same time, it is working to improve its public transport system with the construction of an underground metro and a tramway, the first line of which should be in service by 2022. A Tel Aviv-Jerusalem high-speed train line is also due to be inaugurated in 2019.

Serial entrepreneurs

These improvements in transport and real estate are a necessity, as the Israeli population continues to grow, partly due to births, but above all due to "aliyas", the return of the Jewish diaspora to the Promised Land. And it was precisely the Russian aliyah of the 1990s that gave rise to the "new Israel". the kick-off for high-tech in IsraelJews from the former USSR are highly skilled in R&D. "The Israeli government has set up the first incubators to enable new immigrants to develop innovation in the broad sense of the term.e, explains Delphine Adjiman, Tech & Services Export Advisor for Business France Israel. It was also in the 90s that the first nuggets were born in Israel, conceived by inventive R&D teams and charismatic 'serial entrepreneurs', such as Dov Moran's USB flash drive, Yossi Vardi's first ICQ instant messaging system, and even cyber security breakthroughs.."

There may be other reasons for this favourable climate for entrepreneurship. As Dan Senor and Saul Singer analyse in their famous book Israel, the Start-up Nation, the proximity of danger linked to potential armed conflict forges the character of young Israelis and gives them a certain habit of risk, a great capacity for adaptation that is paradoxically positive. "Today, there are between 5,000 and 7,000 start-ups in Israel, most of them around Tel Aviv. That's fewer than in France, where there are around 10,000, but the ratio per capita is enormous by comparison. And the ecosystem here is much more natural than elsewhere."says Florent Della Valle.

Compulsory military service for both boys and girls solidified the network effect. "What's more, the army trains young people even before they go to university. So they already have practical skills before they enter the world of work."concludes the economist. And while France spends 2 % of its GDP on R&D, Israel is devoting 4 % for over ten years. The country is the only one in the world, with Korea at the same level, to have invested so much for so many years.

Israel's openness to the outside world is another obvious asset. "Israelis are a people of immigrants, so they have a reflex to organise fund-raising events abroad."60 % of start-up funding comes from the United States and 25 % from China, which is increasingly present in Israel. All in all, four billion dollars are invested in Israeli start-ups every year, and around 10 billion in buy-outs. These investments come from major groups, but above all from venture capitalists such as Jerusalem Venture Partners, Pitango, Magma VC etc...".These companies are truly part of the ecosystemsays Business France's Export Tech advisor. Israelis are looking abroad, not because they don't see Israel as a potential market, but because they have this reflex to look far ahead."

Could this asset also be the limit of Israeli start-ups, which are made and unmade by foreign takeovers? "We're talking about 'serial start-uppers' here.says Delphine Adjiman, because people create their own companies, sell them on and start new ones, with no real sense of purpose." In 2015, Israeli start-ups were worth 25 billion. And takeovers by Internet giants One of the most impressive was Google's acquisition of Waze for $1 billion in 2013. Other examples of this appetite for local start-ups: Face.com was acquired by Facebook in 2012 for $100 million, while in 2016 Otto was snapped up by Uber for $680 million. As for Viber, it was bought in 2014 by Rakuten, Japan's Amazon, for $900 million. "Back then, we had 350 million users; today, we have 800 million across the world, particularly in the Balkans and South-East Asia."explains Nadav Avidan, Viber's spokesperson.

Mentoring and workspaces

These success stories are prompting groups around the world to turn their attention to Israel. Today, big names such as Microsoft and Coca Cola are offering mentoring and workspaces to start-ups that could provide them with interesting solutions. In all, Israel is said to have almost 200 accelerators, not counting the coworking spaceswhich also provide a real stimulus. Among these, Urban Place offers small businesses around fifty turnkey offices, but above all a personalised service and the best ways to network. Opened in 2015 at the very start of Avenue Rothschild, the venue boasts breathtaking views over the Mediterranean. What's more, you can often hear French being spoken here, because its founders are originally from France. And it's no secret that French Tech also thrives in Tel Aviv, a city open to entrepreneurs from Paris who want to join the vibrant ecosystem of the Start-up Nation.