As a small country, Israel has a stereotype of religions and frequent conflicts and resource shortages. However, the strong ability of innovation and entrepreneurship developed by Israel has attracted investors from all over the world. The number of new start-ups in Israel is the highest in the world, with an average of every 1,800 entrepreneurs. The per capita venture capital investment ranks first in the world, 2.5 times that of the United States, 30 times of Europe, 80 times of China and 350 times of India. Non-U.S. companies listed on the NASDAQ stock exchange surpass the total in Europe. How did a barre small country create a world-renowned innovation miracle in the 70 years since the founding of the People’s Republic? The “Startup Nation” is not created in one day. In this analysis, we will see how Israel utilizes integration and incentives of technology, capital, culture and system to create an excellent entrepreneurial ecosystem, to turn its population and geopolitical disadvantages into the power for success.
First, the “source” of innovation comes from People: attaching importance to education and the tradition of respecting knowledge, and a strong mode of training the elite in defense to attract Jewish hi-tech talent immigrants to “return to the motherland” and accumulate human resources
(A) Knowing the importance to education and advocating the tradition of knowledge
Jews attach great importance to education and education has also become the primary task of Israel in its founding. Israel’s first prime minister, Ben Gurion, said: “Without education, there is no future.” The third president, Zalman Shazar, believes that “education is the hope of creating a new Israeli nation.” The range of compulsory education in Israel ranges from 3-18 years. For decades, the share of education spending in GDP in the country has remained at around 8% and in 2011 even exceeded 10%.
However, Israel’s basic education focuses on cultivating an open mind. Israelis think it is more important for students to ask questions than their ability to solve problems. Students are encouraged to explore questions and challenge authority in order to cultivate innovative and thought-provoking talented people. After such basic education, we can break the stereotype of thinking and challenge the principle of conventionality, and also become the habit of thinking of young people in Israel.
Israel’s higher education, with particular emphasis on training innovation and entrepreneurship. Israel supports each institution of higher education to set up an incubator and commercialization center for research achievements, and emphasizes combining scientific and technological innovation with disciplines such as economics, management and lawmaking to form an integrated comprehensive advantage.
Israelis also view learning as a lifelong mission. Israel loved reading books, loved to buy books, and loved to write books. A UNESCO survey in 1988 found that Israel has the largest number of libraries and publishers in the world. Among Israel’s 25-60 year-olds, 45% have college education or above (about 25% in France and Japan), 140 scientists and engineers per 10,000 employed people (85 in the United States and 65 in Japan) .
(B) A strong national defense emphasizing on elite training
IDF has become the cradle of successful entrepreneurs. Due to the strong survival in the geopolitical conflicts in the Middle East, the most advanced technologies are often first applied to national defense. Therefore, the great source of science and technology comes from the IDF. In response to special defense needs, Israel has implemented compulsory military service and reserve system. The Defense Forces has also shouldered the mission of training the best scientists and technicians. For Israeli young people, the military career can enhance individual willpower and determination, but also enhance the ability of individual innovative thinking and ability to become a necessary qualities for entrepreneurs afterwards. Take the IDF Super Elite Training Program “Talpiot Project” as an example. Candidates should not only quickly obtain a degree in mathematics or physics, but also receive academic training far beyond the scope of study for general undergraduates, as well as to provide interdisciplinary solutions to specific military problems. Elite trainees are well versed in a variety of fields, with organizational leadership and many becoming founders of successful Israeli businesses.
Taking the army as a melting pot has given birth to the military-civilian integration and cross-border undertaking. After entering the job market, the elite troops of the Chinese Defense Forces have accelerated the civilianization of military science and technology and cross-border integration with different disciplines, stimulating the rare cross-sector innovation in other countries and spawning many “destructive and innovative” high-tech enterprises.
(C) Attracting Jewish Talents to Immigrate
Israel is a typical immigrant country. Unlike other immigrant countries such as the United States, Israel mainly brings together Jewish people around the world. The first chapter of the Reunification Law passed in 1950 stipulated that “all Jews have the right to move to Israel as immigrants.” According to this law, Israel is the homeland of all Jews. The fact that Jews immigrated to Israel was not “immigration” but “return” made overseas Jews have a strong sense of identity with Israel. Many Jews returned to their homeland without giving up their superior living conditions. The overall quality of the Jewish people is rather high. Although the Jewish people make up only 0.2% of the global population, they contribute nearly 30% of the Nobel Prize winners. The immigration policy that liberalizes Jews altogether has attracted a large number of highly qualified personnel to Israel. After the dissolution of the Soviet Union in 1991, Israel accepted nearly one million Jewish immigrants from the Soviet Union. In 1989-1994 alone, nearly 10,000 scientists and 50,000 engineers emigrated to Israel, filling the demand for high-quality professionals in the development of high-tech industries in the 1990s . In 1995, Israel introduced a plan for foreign experts to hire 530 world-class foreign scientists to conduct scientific research in Israel for three years. In 1999 and 2009, Israel further implemented its plan to introduce more expatriate Jewish scientists.
Second, science and technology are innovative “engines”: First-class research universities and research institutes, a huge ecosystem of science and technology enterprises provide a powerful scientific and technological support for innovation and entrepreneurship
(A) First-class research universities and research institutions
Seven Israeli research universities have performed well in global research and have provided strong support for Israeli science and technology research and development. Among them, the Wechman Academy of Sciences and Hebrew University were selected by the United States “scientists” magazine in 2011 the world’s top ten suitable for academic work place. Similar to Stanford and MIT in the United States, Israel Institute of Technology is Israel’s “engine of innovation” and “backbone” of the high-tech industry. In Israeli companies listed on the NASDAQ, 70% of companies have an Israeli Technion graduate, ranking among the top three executive positions. There are numerous research institutes and R & D centers in Israel’s universities, as well as independent technology transfer companies that specialize in the commercial development of scientific research. Weizmann Academy ranks top in the global life sciences and biomedical research field. Its technology transfer company is responsible for the application development and technology transfer of the university’s scientific research achievements. It transfers an average of over 60 new patents each year and works closely with various science and technology parks , Complete the industrialization transfer of scientific research achievements. In addition, the Israeli government departments have direct scientific and technological institutions. Such as: the Ministry of Agriculture directly under the Agricultural Research Organization, the Ministry of Industry and Trade directly under the Industrial Research Organization, the Ministry of Science and Technology directly under the Space Program Development Agency, in their respective areas have fruitful scientific research.
(B) a huge science and technology business ecosystem
Large Israeli technology business ecosystem, with many high-quality innovative enterprises, accounting for 80% of the total number of R & D capabilities of enterprises; the number of high-tech enterprises in the world, second only to the United States. Whether it is military enterprises, telecommunications groups, chemical groups, have a solid scientific research strength.
At present, there are over 110 large-scale international foreign-funded enterprises that set up research and development bases in Israel to promote the employment market in high-tech industries. Among them, the United States, nearly 500 Israel’s R & D personnel in Israel, Intel company has more than 3,000 people, IBM company has 1,100 people, Germany’s Siemens company about 600 people.
Third, capital is the “blood” of innovation and entrepreneurship: the R & D investment of the government, the network of technology incubators covering the whole country, the well-developed venture capital funds and abundant financial support for innovation and entrepreneurship
(I) Continuous government R & D investment
At the very beginning of the founding of New China, the Israeli government has formulated a strategic plan for the development of science and technology. Over the years, it has also steadily increased its support for research and development and invested heavily in science and technology research and development. Israel’s research and development spending as a share of GDP remained at about 5%, well above the average OECD level, ranking first in the world for many years.
Government R & D investment is concentrated in applied research (such as biotechnology, nanotechnology, etc.), mainly from the Ministry of Education, Ministry of Science and Industry and Trade and Industry. The Ministry of Education mainly invests in basic, cutting-edge research and development projects with “public” attributes. The Ministry of Science and Technology mainly supports international exchanges and cooperation in scientific and technological research and development. Benefiting from a high degree of R & D investment, Israel has created world-class scientific and technological achievements in high-tech fields such as communications and life sciences, and exports of hi-tech products account for over 70% of the total export volume of the country.
(B) covering the country’s technology incubator network
The Israeli government implemented the technology incubator program since 1991 in order to solve the plight of high-tech small and medium-sized enterprises that are developing rapidly, being risky, having technology but lacking capital and operating experience. The non-profit incubator set up by the government to support start-ups provides all-round support such as financing, research and development, management and market development. The government bears 85% of all costs, but products that require the successful R & D of businesses must be produced in Israel and repay government grants based on a percentage of sales revenue. Before 2010, the Israeli government provided more than 35 million U.S. dollars in funding to incubators every year. Since then, the Israeli government has upgraded to a “shared risk but no revenue sharing” approach. At present, Israel has formed a network of 24 government supported technology incubators across the country. So far, a total of more than 1,000 projects have been hatched, of which 70% have received external funding and the success rate of hatching has exceeded 50%.
(C) developed venture capital fund
In response to the issue of the disjunction between the R & D results of scientific research institutes and the economic development of the country, the Israeli government encourages scientific research institutes and industry to form a cooperation body to jointly develop key common technologies and promote the effective combination of production, study and research. The extensive participation of venture capital funds has further promoted the industrialization of scientific and technological achievements and greatly stimulated the potential and creativity of Israeli technology companies.
From 1993 to 2000, the number of Israeli venture capital funds increased from 3 to 100, and investment in the “seed stage” accounted for 80% of the total investment (only 85% of venture capital in Europe and only mature companies), prompting Israel to create a large number of High-Tech Companies.
Fourth, culture is the “soil” for innovation and entrepreneurship: crisis awareness stemming from the needs of national security, challenge of authority and adventurous entrepreneurial spirit, creating a good cultural atmosphere for innovation
(A) from the national security needs of the crisis awareness
The Jewish nation has experienced endless suffering in the long years of dispersal and also strengthened its inherent sense of crisis and responsibility. Faced with a high degree of sensitivity to threats, the preemptive awareness of coping with crises constitutes the thinking model for Jews to surpass their rivals and maintain security through innovation.
“We have only one desert and a few good ideas,” a familiar phrase for almost every Israelite. These “congenitals” make Israel more inclined to try harder acquired acquired compensation and no “impossible” to change the status quo through the power of technology and innovation. In the face of the high development and restriction of the proportion of water and energy resources and the desert area, Israel has achieved the leading position in the world in drip irrigation, salt reduction in the soil, comprehensive solar energy utilization and desert agriculture and has successfully transformed the environmental disadvantage into an advantage. Israelis have been constantly educated about this crisis since childhood. The crisis consciousness has been integrated into the blood of Israelis and innovation has become a living instinct for Israelis.
(B) challenge the authority and risk-taking entrepreneurial spirit
The Israelis are questioning. The Jewish people have a suspicious and controversial cultural tradition. They are the cultural roots of the Israelis who are good at innovation and entrepreneurship. Israel emphasizes that the ability to ask questions is more important than the ability to solve problems and often sparks sparks of innovation in heated debates.
In the Israeli army, people of all cultural backgrounds and different ways of thinking must work closely together in order to successfully accomplish their tasks and strengthen the Israeli team spirit.
Interestingly, during the service of many reservists, many Israelis often appear as ordinary officers of the company who command the president of the company and taxi drivers command the millionaire. The social classes that may have been cured are constantly being subverted to make Israel the world’s class The country with the lowest ideology also formed a social atmosphere that is good at breaking the traditional and challenging the authority.
V. The Rule of Law is the System Guarantee of Innovation and Entrepreneurship: A Perfect Legal System and an Excellent Innovation and Entrepreneurial Environment
The Israeli government has always regarded innovation as the top priority of its national development strategy and has formulated a series of laws, regulations and related rules to encourage and support innovation and entrepreneurship. In 2015, the National Bureau of Innovation upgraded to replace the former Chief Scientist’s Office and was responsible for implementing the state’s policy of encouraging industrial technological innovation. The purpose is to encourage entrepreneurship and consolidate the entrepreneurial country status. At the same time, Israel has implemented a strict system of intellectual property protection and effectively protected the intellectual property of innovative entrepreneurs through laws such as the Property Law, the Copyright Law and the Trademark Ordinance.
