Israeli Ecosystem– How has the Start-Up Nation been Transformed –「イスラエル・エコシステムの今昔物語」

Nobuhiko Hibara
Waseda Business School
hibara@waseda.jp

樋原の紹介研究室のweb site
http://hibara-wbs.com/
Email: hibara@waseda.jp
樋原伸彦（ひばら・のぶひこ）
略歴：東京⼤学教養学部教養学科（国際関係論）卒業、東京銀⾏（現・三菱東京UFJ銀⾏）⼊⾏。世界銀⾏コンサルタント、通商産業省通商産業研究所（現・経済産業省経済産業研究所）客員研究員、⽶コロンビア⼤学ビジネススクール⽇本経済経営研究所助⼿、カナダ・サスカチュワン⼤学ビジネススクール助教授、⽴命館⼤学経営学部准教授を経て、2011年から現職。⽶コロンビア⼤学⼤学院でPh.D.(経済学)を取得。 早稲⽥⼤学イノベーション・ファイナンス国際研究所所⻑。専⾨はイノベーションのためのファイナンス。
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樋原の最近やってること、関⼼事⼤きく申し上げると、Innovation ｘ Financeより個別的には、以下• 創薬, Medical Devices, Other Life Science Businesses• AI, Data Analysis• FinTech(ブロックチェーン技術、Bitcoinなどの仮想通貨）• 注⽬している場所は、イスラエル、シリコンバレー、San Diego、ベルリン（独）等々• CVC(Corporate Venture Capital)• ハイブリッド・ファンドの政治経済学• 社内政治2020/4/23

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Transformation Process
1. Existing conditions in Israel before 1980s
2. Emergence of Entrepreneurship in Israel
3. Financial Initiatives during the 1990s
4. Right Now: “Bio-Convergence” Ecosystem Emerged

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Existing conditions in Israel before 1980s• Socialist Environment• Strong Labor Union• Only just more than half population paid tax• Existing Big Company Group（”20 Tycoons”) dominated thetraditional business sector such as commercial banking,mass media, and infrastructure ones.
• Liquidity in labor markets was quite low.

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Israeli Generations in Transition• 1st generation who had settled just after the WWII.
• 2nd generation (around the age of 80s)
Worked hard in the existing sectors.
• 3rd generation (around the age of 50s)
Changes started.
• 4th generation (under the age of 40s)
They started to enjoy the good part of the Western
Economies’ features. Everybody have “Backpackers!”
experience before they got into college.
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Emergence of Entrepreneurship in Israel

Personality Aspects• Mandatory military service (before college)
à networking and creativity• Backpacking around the world and then entering
undergraduate school around the middle 20s.
• Joining big corporations would NOT look so sexy to theyoung people.

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Emergence of Entrepreneurship in Israel

Environmental Pillars• Geopolitical situation• Constant perception of safety risks – ID no., gas masks,shelters, etc…
à the value of spending a day may be more worth than inother countries.
• Diversity and Mixture in population (particularly in the 3rdand 4th generation)

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Emergence of Entrepreneurship in Israel

Financial conditions• Very favorable in the 1990s.

-- Note that “Start-up Nation” by Dan Senor and Saul Singer(2009) emphasized the two things:1) Mandatory military service2) Immigration from the former Soviet Union countires.
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9Financial Initiatives during the 1990s

Yozma funds
Yigal Erlich, a founder ofYozma funds:“I just did right things atright time.”

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VC Fund Basic Structure

ENVC

INV

EN: Entrepreneur
VC: Venture Capital Fund
INV: Investors

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Waseda CFI Israel Seminar11Hybrid FundPrivateINV(Institutional orIndividual)
ENVC

GOV

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Yozma• In 1993 Israeli government established fund-of-funds Yozma(Hebrew for “Initiative”).
• Each drop-down fund got money from both foreign investors andlocal institutions.
• Each fund had to raise a minimum of $12M from private
investors. Government investment are not allowed to invest
more than $8M per fund.
• Each fund must provide private investors with a 5 year option tobuy the government shares.

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Yozma - Israeli Experience
ForeignPrivate
INVEN

Drop-DownFund ($20M)

LocalPrivate
INVUp to$8MYozma

GOV
$100M

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Reasons for the Success• “We did NOT have any thing. ―> Foreign LPs did play themost important role.
• Right timing! (Established in the early 1990s.)• Succeeded in convincing Government sector to activateright and flexible innovation policies.

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New Fund Initiatives in the Bio-Pharma sectors• Background: VC investment in these sectors was not sogood…..
• Government Backed Israeli Bio-Technology Fund-- The Government prepared U$220 million for its fundinvestment as LP.
-- Downside protection to private LPs was designed.

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Right Now: “Bio-Convergence” Ecosystem Emerged

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ICT to Bio-Convergence• AI• Data Science• Digital Health• Medtech• Dynamism

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Hybrid fund (supported byGovernment policies)
to Private fund (supported byCorporates)• Serial Entrepreneurs• Accumulated human resources• Ample supply of money• Government initiatives to private initiatives

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Capabilities of the Israeli
Ecosystem• Network capabilities

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Start-Up Nation Central

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Hebrew University of Jerusalem:
New Tech Park Initiatives

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Capabilities of the Israeli
Ecosystem• Network capabilities• Data accumulation and data analysis capabilities

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HMO: Big Data Usage
MaccabiTech, a subsidiary of Maccabi Health Services (HMO)

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Capabilities of the Israeli
Ecosystem• Network capabilities• Data accumulation and data analysis capabilities• Relatively longer-term perspectives on economic
value creation

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Complementarities between
Israel and Japan• Zero to One• One to 10 to 100• Why vs. How

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