Reported by Isao Tokuhashi
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Today we introduce you to the meetup which Japanese people who are attracted by “Startups in Israel” got together. Its panelists were those who’ve been getting engaged the business in Israel or with Israeli companies and they discussed “The reason we do business with Israel”.
Also there were many big fans of Israeli innovative techniques or Israeli startup scene even though the venue is thousands of kilometers away from the country. My Eyes Tokyo has interviewed a man from Israel before (*Click here to read his story!), but we don’t know very much about the country. We learned about Israel from the aspect of the business.
Firstly, Steve Kato, president of ISRATECH/organizer of the event, explained about his business and Israeli startup scene.
Since he visited Israel for the first time in 2006, Kato has introduced Israeli venture companies in Japan. Then he got many inquiries and launched his own media. That’s ISRATECH.
In 2012, he held the event called “Samurai Venture Summit in Israel” in Tel Aviv with Samurai Incubate, one of the Japanese major incubators. Then he founded “Japan Innovation Center” which connects the Israeli hi-tech ventures to Japanese enterprises.
There are some joint ventures between Israeli startups and Japanese companies. For example, the manufacturer of collision warning systems called “Mobileye” had a deal with “Denso“, the Japanese auto components supplier. Also according to the “Startup Ecosystem Report 2012“, Tel Aviv is the leading alternative to Silicon Valley. Innovative people in the world usually check what’s happening on the West Coast, East Coast and Israel – Kato said.
And there were some people who labeled Israel the nation at risk. Kato said that many startup companies have been launched in that surroundings there.
After a short break, the panel discussion started. There were 5 panelists and all of them are the elite players who work on the first wave of the business in Israel.
Board member of iLand6 Capital and Development
In 2002, he met with Todd Walzer, the expert of Japan-Israel corporate alliance and entered iLand6. Prior to that, Ezoe had worked for NTT (Nippon Telegraph and Telephone Corporation) since 1996.
Country Manager of Discretix
He’s been a Country Manager for Japanese market since Jan 2012. Prior to that, Haruta took up the post of the Sales Manager for Japan at Discretix after working as an engineer for several Japanese companies.
Managing Partner of Fin Tech Global Capital LLC
Became a board member of two Israeli companies after working as a freelance fund manager which invests in venture companies both home and abroad. Prior to that. Hondo invested in European/Israeli ventures at Daiwa Corporate Investment. He started his career as an IT/Management Consultant at Accenture.
Associate Professor at Waseda Business School
Expert of Israeli innovation system and investment industry. Hibara has been a Associate Professor since Sep 2011. Prior to that, He’d worked at Bank of Tokyo (Currently Bank of Tokyo-Mitsubishi UFJ), The Center on Japanese Economy and Business at Columbia Business School, Consultant at the World Bank, The Research Institute of Economy, Trade and Industry (Japan), Edwards School of Business/University of Saskatchewan (Canada), Ritsumeikan University (Japan).
1.Things you need to consider when you plan to collaborate with Israeli companies
Nobody has an experience to introduce the latest technology which is developed by an Israeli company in the Japanese market. So there would be a lot of unexpected problems. Sometimes the technologies which have never existed before make huge profits and sometimes those might be harder to notice because they would have had no place in the market.
Israeli companies are excellent negotiators. They tend to tout their technologies or products to attract JP companies.
They often do that so JP companies must set their own evaluation standards. But don’t be suspicious about them very much because a great deal of skepticism would become grit in the gears of the business with them. So it’ll be better for you to attach a high value to their own future vision instead of getting caught up in quality of their technologies or products.
2. Uniqueness of Israeli startup scene
There are more young startup people compared to other countries. They are very mature for their ages because, I guess, they enter universities after the military service. Also there are many people who start their businesses by tapping into the networks that they’ve built during their enlistment. Israeli domestic demand is weak so they have no choice but thinking globally.
When I entered Discretix, everybody seemed to be working on the new development without any roadmaps. That was the difference from American companies. But they make the development faster once they set the strategic directions and create wonderful products.
3. Why do you invest in Israeli companies?
Because there are a lot of excellent startups, especially in the high-tech field. As Hibara-san said, they acquire technology and build networks while they bear arms and moreover they organize good teams. Technology, network and the lineup of team members – we attach importance to those things when we make an investment decision.
4. Things you need to consider when you bring Israeli new high-technologies/products to Japanese market
There are a lot of Japanese who are attracted to Israeli high-tech. So You should introduce your products to them first. Then market-research, hold regular sales and put in 1 or 2 years on developing a better version of products. Especially you need to spend such a long time for the social application of military technologies. In other words, the best thing is to bring hi-tech products which can be transferred to be civil ones 1 or 2 years later.
5. Arab Boycott
Every time I see chief scientists of Israeli companies or government officials, they ask me to introduce them to Japanese METI (Ministry of Economy, Trade and Industry). But Japanese politicians/bureaucracy/people in the big companies don’t go to Israel, so they ask me to be a bridge between them and Japan. It’s difficult for Japanese key people to go to the country and they don’t go to even the Israel-related symposium as panelists. That kind of situation has not changed since a long time ago. And people in other countries do that as well.
This can be a great opportunity for Japanese startups to contact with Israeli startups, because they can go to the place where Japanese big companies cannot go easily.
How many companies in resourceless countries like Japan do advance into Israeli market? For example, Samsung, a S. Korean giant company, send vast numbers of people to Israel and invest a great deal in there, but I’ve never heard that Arab oil embargo has been imposed on S. Korea before. In my opinion, Japan is overly sensitive to the Arab Boycott. Not only S.Korea but also other countries focus on Israel and invest in there, but Japan seems to be left in the dust of them in my impression. Staffs in Japanese big companies, especially executives, tend to eliminate the unknown. So their mindsets are needed to be changed in order to enhance opportunities for investment in Israel.
There are some Japanese big companies who refused to do business with us because we are an Israeli company. But there’s a loophole – that’s to seal deals with America-based affiliates of Israeli companies.
The word “Arab Boycott” misinforms us, but it’s not to say that All Arabs hate Israel. There are many kinds of Arabs.
Japanese companies are now learning about how to use “detour” when they makes deals with Israeli companies, but some Japanese companies that are not familiar with “detour” often ask us about it. There must be some LEGAL loopholes, so I don’t think Japanese companies cannot do business with Israeli companies due to Arab Boycott.
6. What are the advantages of Israel?
Israel is dominant over other countries in ICT and security technology fields. It’s not only because they have conscription systems but also because they’ve acquired and maintained the technology for “prolonging the death of soldiers”. Because Israel has a small population. I think defense technology is much easier to be shifted to civilian use than the technology for attack. It’s been contributing to the growing field of ICT and security technology, I guess.
Their area of specialty is ICT. For example in the UK, there are many world-class people at Cambridge or Oxford, but British venture companies couldn’t receive investment because the investment arm in the UK has not been developed very much. Other European countries as well.
On the other hand, Israeli investment arm is well developed – there’s a sovereign wealth fund called “Yozma” there.
There are many companies which excel at communication systems or image systems. Their advantage is “mathematics”. They want to develop the high-performing products, but they don’t want to raise the cost. In order to solve those opposite things, they apply advanced mathematics. That’s why they can develop the technology which is never be “soft touch”.
Israel’s specialties are the physical field, such as wireless technology, security technology, material engineering and medical device, not web service or cloud.
After the panel discussion, a Q&A session was held and a participant asked a question like following;
Q. What is Jewish (or Israeli) like?
I had been thinking that they would be difficult to get along with before I met them. But I feel they are not so different from us as I work with them. I even feel both of us are almost the same at the core. So I am comfortable with one another. Also they are hard work and mail us back quickly. They respect us Japanese and work hard on requests from Japanese companies.
On the other hand, I feel that their business skills are not as good as I expected. Sometimes I often give advice to them even though I’m Japanese LOL
They really love to discuss something with each other. They discuss with anybody even their business partners or associates, If you take a passive role when they are going to discuss with you, they may think you are disagreeable. So you should tell your opinions on your own terms without considering our way of thinking when they ask you a question.
They love to talk. I often see people calling while walking. I also think that they love to discuss. The most exciting board meeting that I’ve experienced ever is the one held in Israel. 6 people were talking about 3 topics at the same time! If you think like “I’ll make a meaningful mention”, you’d be left out of the discussion.
In my impression, they are easier to get along with compared to people in other countries. They love to discuss and hear any opinions. So it’s really easy to do business with them.
…The active Q&A session continued.
Israel – the “Startup Nation” where Japan gives the eye. ISRATECH and Samurai Incubate will set foot on the Startup Nation again in this coming December after their first session in Tel Aviv last year.
“Samurai Venture Summit in Tel Aviv Vol.2” will be held at Google Israel in Tel Aviv on Dec 10 (Tue) 2013!