Enroute as part of the Start-up nation Israel

1st of September, guest post by Lydia

My name is Lydia and I am a student from Germany currently absolving my three-month internship at Enroute, an Israeli start-up developing a personalized shopping platform, which is integrated into and interacts with ride-hailing and mass transit applications. Enroute is one of Israels 6000 Start-ups and is thus part of second largest concentration of technology-related start-ups in the world – right after Silicon valley. This is why Israel is also called the “Silicon Wadi”. So even though the country is only slightly bigger than Fiji, with only 2,5% of the population of the US and under the constant threat of terrorism, it is home to some of the most successful and innovative tech companies and entrepreneurs in the world!

Let me shortly give you some insights about the smart-mobility sector Enroute is operating in and what causes Israel to create such a high number of technology start-ups in this unique entrepreneurial ecosystem.

In recent times the number of Israeli start-ups contributing to the fields of connected driving, shared mobility and autonomous driving has increased massively and reached a sum of 550 in 2018. This development is caused by disruptive trends in the automotive industry and vigorous changes in the technological ecosystem which are driven by key determinants such as connectivity & smart devices, digitalization of retail, sharing economy and data intelligence. 36% of these start-ups focus on smart mobility – which is the youngest and fastest-developing sector- including sharing economy, connectivity and Big Data, 24% are dealing with vehicle technology like manufacturing, efficiency and security and around 18% of these start-ups are advancing autonomous mobility with emphasis on automated and urban vehicle and sensors. The remaining percentage work on fields like e-mobility, batteries, infrastructure and alternative fuels. Israels high technology and innovation industry attracts investors and many of the world’s leading companies of a variety of sectors: Intel, for example, acquired the Jerusalem-based Mobileye, a manufacturer of automotive chips and car sensor systems. Continental also invested in a smart car technology start-up called Argus Cyber security, while Samsung, Delphi Automotive and Magna International altogether pushed around $80 million into Innoviz Technologies developing laser-based distance measuring. Top global companies are not just investing in start-ups they are also setting up centers and labs like VW, Skoda, Seat and other leading automobile manufacturers did.

Thus, in the past few years Silicon Wadi has become one of the most important high-tech locations in the world and a mutually beneficial stronghold for entrenched companies on the one hand and young entrepreneurs on the other hand. The small nation is the world leader regarding start-ups per capita and gets the most venture capital in relation to its size than any other country in the world.

So what makes Israels entrepreneurial environment so successful? First of all, it’s about the people and the culture. As Israel hardly has any substantial natural resources, the only significant resource it can take advantage of is its people and their education. Due to its high investments in education the people are highly educated and the unemployment rate is low. Another thing that have roughly all CEOs of a start-up in common is their time in the military. Here they learn responsibility, team spirit and problem-solving skills and are trained to become out-of-the-box thinker with a risk-taking and entrepreneurial mindset. Beside the widespread entrepreneurial mentality, the general Israeli economy and the policy driving it also plays an important role. Around 40% of Israel’s manufactured exports are high-tech products and 60% of its exported services are Information and Communication Technology services. The government invests huge amounts of money into R&D support programs and networking institutions and also grants tax benefits. The R&D investments as a share of GDP are the highest worldwide. Over the last 5 years it spent over USD 55 million for the development of smart transportation, e.g. for the establishment of test centers for autonomous vehicles and high-definition road maps of Israel. As these investments also entails uncertainty, a program has been set up for risk-sharing and investments incentives.
In order to receive funding from the Israel Innovation Authority (IIA), a start-up needs to apply to one of the various programs. The company is then screened for its innovation level and its business potential. Investments must only be paid back if sales are generated. Besides these R&D Incentive Programs, there are also many institutions like the Israel Export Institute supporting the start-ups with marketing and networking measures. It aids them to get in contact with international partners and provides them with valuable market insights.

There are also a lot of Israeli venture capital flowing into high-tech start-ups. The mobility sector alone received USD 17.2 billion over the last four years. The local VC just accounts for 16% of the total investments. Capital from abroad has increased massively in the last few years, so the remaining 84% of the VC is capital from foreign investors. Israel has become one of the biggest markets for start-up acquisitions. As early as 2015 about 104 start-ups have been acquired by foreign corporations which then turned them into their R&D and innovation labs.

But there are not just foreign companies investing in Israeli Start-ups, the Israeli tech companies are also going global rapidly and are establishing subsidiaries in California, New York, Berlin and many other places to push into the US and the European market.

Israel seems to have figured out how to establish a high-tech and entrepreneurial Innovation-Start-up ecosystem. Just within the last 70 years it became the world’s leader in raising the highest number of high-tech start-ups and venture capitalists in relation to its size and is currently ranked third best start-up ecosystem in the world – behind the US and the UK. Given its rapid and tremendous rise of start-ups within the last years and the enormous private and governmental investments the foundation is laid for future growth and pushes for further Israeli technological success.

For Enroute it is an exciting journey of being part of the world’s highest-performing innovation ecosystems and to have jumped into a world full of new challenges and possibilities. Especially for me as an intern it is a wonderful way to gain new experience and continue learning in a very dynamic, energetic and pioneering work environment! Instead of just following the long-established routines of a larger enterprise, joining a start-up entails so much more flexibility and job satisfaction as you are more involved into the growth and evolution of the company. You can have a measureable impact of the companys performance and thus get the chance to directly contribute to its success.
In my thinking the beauty of a start-up is also about the flat hierarchy. In joining Enroute I became part of a small dynamic team in a familiar environment. Team spirit, work culture, agile decision-making and individualism are enjoying high value. So for me as a student and having worked for just well-established bigger corporates it is a completely new experience of adapting an out-of-the-box mindset and becoming part of a diverse, ambitious and entrepreneurial start-up community that I will never want to miss!