What lays on the horizon for Israel’s promising startup scene – Interview with Ran Bar-Sella, CEO of Incubit Technology Ventures

In cities across the world, startup ecosystems are blossoming. One of the most promising ecosystems to date, outside of Silicon Valley, is Israel’s, which has picked up a vast amount of attention in recent years as a hub to watch. From Forbes to WeWork, Israel has been quietly building a reputation as one of the world’s most promising forces in the startup scene, with what appears to be a prodigious amount of rising startups.

To get a better understanding of Israel’s promising future and the current startup climate, we spoke with Ran Bar-Sella, CEO at Incubit Technology Ventures, which focuses on early-stage deep tech startups.

What are the requirements for a startup to become a part of Incubit Ventures, and what do you personally look for?

Incubit Ventures is a wholly owned subsidiary of Elbit Systems – Israel’s leading defense electronics company. Incubit is part of Elbit Systems’ Open Innovation (OPIN) strategy. We focus on Deep Tech startups developing a product/technology for the commercial markets where their technology can be of interest for Elbit System’s markets as well. Incubit creates value for Elbit by creating access to technology developed by startups outside of Elbit’s business domain, and creates value for its portfolio startups by being an early stage deep tech investor, which knows a lot about developing technology and has a lot of different resources that can help you out – from experts to labs and other infrastructure.

Our interest, and selection criteria, is focused on Deep Technology (DeepTech) startups – developing the kind of disruptive technology that really has a potential to change something fundamental in a big market.

Personally, I look for a coachable team. As Eric Rise (Lean Startup) said – “on its first day – a startup is a faith-based business. You only believe you know your market/product/customer”. Investing in a new company is all about learning, together, about the technology, the application, the customer and the competitors. It’s important to invest in teams that know that and are willing to learn together.

I understand that Incubit Technology currently has 9 portfolio companies, are there plans to increase this number, and if so what number would Incubit like to reach?

Of course. We see a healthy deal flow of about 80-100 new ventures a year and plan on adding at least four each year. We already added two this year, so we now have 11.

Tel Aviv has been recognized by Forbes as a startup space to watch for 2018. Around the world, Israel has gained a lot of attention as a rising startup hub. What is the country’s secret to success for promoting technology and innovation?

Well, that’s the $1M question, and a lot of people are trying to figure it out and duplicate it around the world. I’m not sure anyone has the correct full formula but I think I can point out a couple elements of the answer:

• Mandatory service in the IDF creates a learning experience for people with entrepreneurship potential at an early age, enabling to gain skills and experience in an environment that is both demanding but open to improvisation.
• Stanley Milgram’a famous ‘six-degrees of separation’ rule states that every person on the globe is connected to any other through no more than 6 friends-of-friends.
  In Israel the number if four (4) – and the networking level is much much higher. This is a true advantage for entrepreneurship as in the early stages of a venture you constantly look for resources/advice and people to learn from.
• Isreal’s defense industry is a growing ground for many entrepreneurs who have the opportunity to deal with cutting-edge technologies at a younger age, in many cases having to invent technologies that cannot be obtained abroad.
• Last, but not least, is a general cultural attitude towards failure. In our culture, it’s not fun to fail but it is also not the end of the world. We have a term that translates to “learning fees” and failing and trying again is considers as ‘I have paid my learning fees and now know better’. In Yiddish is sounds better.

Dealing with ‘real’ deep tech startups, is there an area of technology that you are really looking forward to seeing develop over the next 5 years that will have a huge impact on society?

As we are looking for Open Innovation opportunities across the entire technology horizon of Elbit systems, we actually cover a wide range of technologies – as you can see from our portfolio. To mention but a few:

• Materials in general and specifically nano-materials and Meta-materials with Energy as one of the leading applications.
• AI, including the AI training and validation phases
• 3D printing in various materials – including certification and NDT
• Technologies related to un-manned platforms.

What advice would you have for early-stage startups that want to become a part of an organization such as Incubit?

That’s easy – just drop us a line on our website and we will steer it together from there

To be a bit more specific:

• Know your technology, what pain it is solving and to whom, what are the current alternative and why your solution is better.
• Be willing and prepared to explain it to someone who does not know about all this as much as you do
• Know what differentiates you from the rest of the companies out there – as this is the base for your ‘go-to-market’ phase
• Be willing and passionate about working together with us to build your new deep tech startup.

Disclosure: This article includes a client of an Espacio portfolio company