Israel Technology & Innovation
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FT SPECIAL REPORT Israel Technology & Innovation Tuesday March 22 2016 www.ft.com/reports | @ftreports Inside Mapping apps plot Scaling up is the next challenge world domination Companies are challenging Google in Israel’s booming tech the transport sector sector is facing labour Page 2 shortages, report John Cyber security Reed and Murad Ahmed Military service produces talent for a roducts being pioneered in thriving business Israel’s high-tech sector Page 2 include a medical device that uses electromagnetic waves P to treat depression; a data Start-up funding platform that tracks ships at sea for Money flows in despite hedge funds and governments; and an eyeglass-mounted camera for the blind the global slowdown in thatcanreadtextsandrecognisefaces. venture capital investing Brainsway, Windward, and OrCam Page 3 are just three of thousands of new tech- nology companies in the country nick- named “Start Up Nation”, which has Medical technology since the 1980s has created one of the Hundreds world’s most vibrant technology com- of fledgling munitiesoutsideSiliconValley. Israeli tech firms raised a record healthcare $4.4bn of venture capital investment businesses last year, a 30 per cent rise on the previ- with ous record set in 2014. That total, calcu- ambitions lated by Israel’s IVC Research Centre, does not include the billions of dollars for global invested by Google, Facebook, Oracle Shipping now: marine data start-up Windward, founded by Matan Peled (left) and Ami Daniel (right) is finding global customers — Eyal Warshavsky growth and other foreign groups in their Israeli Page 3 R&D centres which account for half of Palestinian lands. Intel announced a computing divisions, particularly Unit prime minister. New companies in big morelikeIsrael,”saysJonMedved,chief thecountry’s280,000hightechjobs. $6bn investment in a new chip plant in 8200, release thousands of veterans data analysis, artificial intelligence and executive of OurCrowd, which helps The sector is growing without appar- Israel in September 2014, less than a every year equipped with world-class machinelearningarethrivingtoo. raisefundsfornewventures. Tech companies are ent regard for the cooling of investor monthaftertheendofIsrael’slastwarin hacking skills. These are feeding into a Agriculture companies — experts in Despite an international campaign to slow to hire Arabs sentiment toward tech companies else- theGazaStripagainsttheIslamistgroup cyber security industry that grabbed 20 squeezing maximum yields out of boycott Israeli goods, the tech sector is Minorities make up where, the political violence in Israel Hamas. per cent the world’s new investment in unpromising soil — now provide infor- attracting new customers from places just 3 per cent of the andtheWestBank,orthegrowinginter- Israeli tech owes much to the coun- the sector in 2015, according to the mation technology tools for crop man- with which Israel did not traditionally national boycott movement targeting try’s military establishment. The Israel National Cyber Bureau, a body that agement to help feed a hungry planet. do business, including China, India, industry’s workforce the Jewish state for its occupation of Defense Forces’ elite intelligence and reports to Benjamin Netanyahu, Israel’s “Unfortunately, the world is becoming Continuedonpage2 Page 4 2 ★ FINANCIALTIMES Tuesday 22 March 2016 Israel Technology & Innovation Gross domestic spending on R&D as % of GDP Difference with OECD average, Mapping apps plot world domination percentage points -2 -1 0 1 2 automotive sector as it moves towards a South Korea Transport After the futureofdriverlesscars. Israel $1.1bn sale of Wazeto “Mankind needs cars to be autono- Japan mous, it would save an enormous Germany Google in 2013, Israel’s amount of time for everyone,” he says. France start-ups have even “But there is a lack of cyber knowledge EU28 of this industry. Cyber was not an issue UK grander plans, [automakers] thought about when Italy writes Murad Ahmed designingcars.” Spain Some plans are even grander. In Tel Russia Aviv, a company called SkyTran is Mexico hen Israel’s tech start- building what could be the future of Chile ups tackle transporta- publictransportation. tion, they think less Itiscreatingamonorail-likesystemof about the local com- capsules, large enough to hold two peo- Science degree recipients W mute and more about ple, which run along magnetic levita- % from all degrees worlddomination. tion, known as maglev, rails which are 13 In 2013, Waze, an Israeli company elevatedhighabovetheground. that offers real-time traffic information Itisafuturisticconceptthatenvisages Israel 12 on its popular navigation app, was passengers travelling in bubbles over acquired by Google for $1.1bn. Being cities at speeds of 150 miles per hour. A snapped up by the Silicon Valley com- test track is being built at the campus of 11 pany was seen as a great result, as it was Israel Aerospace Industries and could then the country’s biggest high-tech becompletedbytheendofthisyear. 10 dealbyvalue. The system, which requires heavy Now, an even bigger Israeli transpor- investment in a technology that has yet OECD* 9 tation technology company has to be proven, has its sceptics. But Saul emerged. Mobileye, the world’s leading Singer, co-author of Start-Up Nation, an 8 supplier of driver-assisted technology is account of Israel’s high-tech sector, 2000 05 10 13 listed in New York and has a market believes SkyTran could be revolution- capitalisation of about $6.5bn. It wants aryincitiessuchasBeijing. * Core countries average. Excludes Estonia, Iceland, Slovenia, Greece, Czech Republic and Luxembourg to go one better than Waze — by aiming “The subway is full, they’re already Sources: OECD; Israel Ministry of Finance to beat Google in the race to building limiting cars on the road and building driverlesscars. High fliers: ThesuccessofWazeandMobileyehas country’s current cyber security exper- freewaysontopofeachother,”hesays. Over January and February, the Nas- SkyTran spurred on a spate of technology start tisestems. The focus on transport may have daq-listed company announced deals envisages upsinthecountryfocusedontransport. Mr Ben Noon says he and his col- come from local challenges in getting Scaling up is with carmakers Renault Nissan, passengers What stands out is their long-term and leagues wondered how to carve out a around,saysNirErez,chiefexecutiveof Volkswagen and General Motors to travelling in globalambition. niche in Israel’s crowded cyber security Moovit. His app culls data from tens of the next build the digital maps autonomous capsules above Take Argus, a Tel Aviv-based start-up sector and were inspired by stories of Mobileye, thousands of people to deliver public vehiclesneedtonavigate. cities foundedin2013,whichisbuildingcyber successinthetransportsector. transportinformationandroutesin850 The partnerships mean that Jerusa- security products for the automotive “Thefactthattherearesomanycyber the digital citiesaroundtheworld. challenge lem-based Mobileye is working with a industry.Thecompanybelievesthatthe companiesinIsraelallowedustoseethe mapping “It is really problematic in Israel, third of the international motor industry rise of connected cars — vehicles with entire landscape,”he said. “We saw our we are trying to fix it here,” says Mr atatimewhenGoogleisstrugglingtoper- internet connections and the ability to friends trying things, some succeeding company, Erez. “Israel is one of the few countries Continuedfrompage1 suadesuspiciousmanufacturerstouseits communicate with other devices — will and some not, so we had the chance to has a where ground transportation are very Latin America, and Africa. Mr Netan- technologytocreatedriverlesscars. also lead to hackers attempting to learnfromthem. limited. yahu has said repeatedly that the world “It’s one thing to come and say: remotelyhijackacar’sfunctions. “Not that many people in Israel were market “We’re surrounded by countries that is beating a path to Israel’s door, and ‘I developed a technology,’” says Amon Ofer Ben Noon, chief executive and into the automotive sector before, but value of don’t necessarily allow us to drive vehi- “they all want three things: Israeli tech- Shashua, Mobileye’s chairman and co-founder of Argus, started the com- Mobileyehasmadeitcleartous.” clesoutsidethecountry.Theonlywayto nology, Israeli technology, and Israeli co-founder. “It’s another thing to say, pany with three other founders in a Mr Ben Noon says that the company’s about get out is by aeroplane. We’re all dream- technology.” ‘Ihavealreadypartneredwithone-third garage after leaving Israel’s8200 intelli- ultimate goal is to become a leading $6.5bn ing of ways to make transportation High tech is a hedging policy of sorts, oftheglobalindustry’.” gence unit, from where much of the provider of cyber security to the smoother.” as Israel comes under growing criticism from its traditional trading partners in Europe for its role in the deadlocked Israeli-Palestinianconflict. Tech companies in this report LEBANON SYRIA Israelis say there is something special Turning Golan about their corporate culture, where Spy tactics can spot overheads are typically low and open- Herzliya Haifa Nazareth ness to risk is high. Israel’s close-knit military talent • SkyTran • Mindo Life • Galil Software culture and small size make it feel more • Neura • Google • Nazareth like a city-state than a country — with • 83 North Yokneam Illit Business consumer trends 8mpeopleitisthesizeofNewYorkCity. into civilian • Apple • UpNRide Incubator