Investments in Israeli startups that are trying to bring innovation to age-old industries — making them digital and smarter — have jumped in five years, to $650 million at the end of 2019 from $112 million in 2014, according to data released by the nonprofit Start-Up Nation Central.
The 2019 financial figure accounts for 6% of global VC-backed financing into the Industry 4.0 sector, also known as the I4 industry, according to the organization’s database Start-Up Nation Finder and data firm Pitchbook.
But while funding injected into these firms is growing, these startups are struggling for revenues, paying customers, and growth because the sector is still in its early stages and Israeli industry, being small and often noncompetitive globally, offers limited growth opportunities, said Yuval Engelstein of Start-Up Nation in a blog posted on the nonprofit’s website.
About half of all Israeli manufacturers have not yet started to plan for the Fourth Industrial Revolution (Industry 4.0) and many factories across the country do not meet international standards of competitiveness due to their poor technological state, Engelstein wrote in the blog.
“They are accustomed to traditional manufacturing processes that lead, among other things, to low productivity and the inability to cope with competition and changes at the global level,” he wrote. “In addition, Israeli industry is highly regulated, which makes manufacturing here more expensive compared to other countries.”
“One of the main business and tech challenges for startups is to find their first customer and successfully demonstrate their solution with them,” said Engelstein in the blog.
Partnerships with manufacturers worldwide are thus crucial for these startups. At the same time, global manufacturing giants in China, Taiwan, Germany, Japan, and elsewhere are all looking to innovate and stay ahead of tech trends that could disrupt the industries they work in.
“Businesses with comprehensive Industry 4.0 strategies are far more successful across the board,” a report by consultant company Deloitte said. “They’re innovating and growing faster, successfully integrating Industry 4.0 technologies, and doing a better job of attracting and training the people they’ll need in the future.”
Thus, delegations of senior executives from Dow Chemical Company, Honda Engineering, Schneider Electric, Rockwell Automation, Siemens, AB InBev, and ABB will be visiting Israel to take part in an industrial innovation technologies conference later this month in Tel Aviv, where startups will showcase innovations and participants will discuss topics including connected factories, industrial cybersecurity, and 3D printing.
The conference, touted by Start-Up Nation Central as one of the largest in the world, “is an indication that the Startup Nation has become a global center for smart manufacturing innovation,” according to a statement released by the nonprofit.
Taking place February 24-27, 2020, at the Expo Tel Aviv, Israel Industry 4.0 (II4) Week will see executives from multinational industrial giants attending a week-long series of events with over 30 of the country’s most prominent startups in the Industry 4.0 field, the statement said.
The conference will showcase the emerging Industry 4.0 sector, which has seen the number of startups surge by 70% to 260 at the end of 2019, from 146 in 2014.
Thirty Israeli I4 startups will exhibit their innovations in predictive maintenance, industrial cybersecurity, safe and reliable autonomous mobility, “factory of the future,” laser sensors, remote monitoring, and tech to boost production efficiency. There will also be maritime innovation and construction technologies showcased at the event, the statement said.
During the week, participants will take part in networking opportunities, corporate workshops, pitching events, and hackathons, and multinationals will also announce new activities in Israel during the week, the statement said.
“Israel has the world’s highest concentration of technological innovations for Industry 4.0.,” said Emmanuel Lagarrigue, chief innovation officer at Schneider Electric, a French industrial giant active in the digital transformation of energy management and industrial automation, in the statement. “Schneider Electric is looking to create partnerships here for long-term growth.”
Start-Up Nation Central is an independent nonprofit that seeks to connect Israeli startups to business, government and nonprofit leaders around the world.