Concerns over boycotts of Israel by countries in Europe and elsewhere are overblown, Avi Hasson, Israel’s Economy Ministry’s chief scientist, said at a press conference Tuesday. “We are building ties with countries in Asia, Latin America and elsewhere. Our trade with Europe is robust, and trade with Turkey has grown in recent years, despite the crisis in relations between our countries. Israeli tech is an international phenomenon, and will not be stopped by politics,” Hasson said.
The Chief Scientist’s Office’s job is to promote Israeli companies abroad and assist start-ups in Israel to develop their technology and grow. Hasson, who has a $450 million annual budget for technology development, presented foreign journalists with a rundown of his office’s activities during a discussion at the MIXiii 2014 high-tech conference Tuesday. Hundreds of start-ups and veteran companies presented their technology at MIXiii, which was meant to showcase Israeli advances in networking technology, biotechnology, environmental tech and more.
Although a big believer in the private market, with over two decades of experience in tech companies and venture capital firms, Hasson said that there are times when government needs to bear the investment burden. “Government is much more capable of handling risk than the private sector is. Sometimes an investor will sink a lot of money into a company that has great technology that can’t make it in the market.
“Instead, the intellectual property will be distributed to other companies that could emerge from the ashes of the original investment. The investor will consider that venture a failure, but we in the Chief Scientist’s Office would consider that to be a success — from the failure of one company, four other successful ones were born, providing jobs and enhancing development,” said Hasson. “It may not be reasonable to expect a venture capital firm to look at things in that way, but that is what the government is there for.”
Not that there’s anything wrong with failing, Hasson said, adding that failure is one of the secrets of Israel’s success. “In some countries they execute you for failing, while in others you are socially shunned.” Not so in Israel, where failure is expected in the entrepreneurial community. The intellectual property developed by a start-up that can’t get their product or service off the ground will almost always find its way into a more successful offering, said Hasson. “A real mark of success for an entrepreneur is to be able raise millions of dollars a third time, even after their first two enterprises went bust.”
Israel has research and development agreements with over 50 countries, several of which, including one with China, are to be announced this week, said Hasson.. The Chief Scientist’s Office is involved in developing such agreements with as many countries as it can. “Israel’s tech story is an international one,” said Hasson. “Israel has no domestic market and no natural resources. All we have is human capital, and the only people we can sell to are abroad.”
If tech companies want to succeed, they have no choice but to ignore politics, said Hasson. “The Israeli tech economy has proven to be very resilient. Israel lives in a ‘bad neighborhood,’ surrounded by enemies, but our exporters — and, at this point, tech accounts for about half of Israel’s exports — have to roll with the punches.”
Israel as a whole has done a very good job in that respect, said Hasson, noting that the politics raging around the tech industry, both international and domestic, have had little effect on the fortunes of Israeli companies. “We have over 300 multinational companies with Israeli R&D labs here, from Cisco to IBM to Intel to Deutsche Telekom, and many others,” said Hasson. Politics has not affected those companies’ decisions to locate in Israel, nor has it affected their ability to do business here.
“Israeli tech dipped when the 2008 financial crisis hit and, like the economy in the rest of the world, our tech companies have recovered. There’s no question that our prosperity is closely aligned with the rest of the world’s. What’s happening in Nablus is much less important than what is happening on the NASDAQ and other stock exchanges. Israel may be a small country, but it’s much more international than many other places.”