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The New Blossoming of Innovation in Jerusalem

by Shai Josopov & Sigal Kleynerman, April 7/17

 

 

 

(The writers are the CFHU Community Ambassadors to Winnipeg)

A few weeks ago we heard about another Israeli Hi-Tech record-breaking acquisition - Intel announced that it will commence a tender offer to acquire all of the issued and outstanding ordinary shares of 'Mobileye' for about $15 billion. The company was founded in 1999, with a mission to help cut the number of injuries and fatalities caused by vehicles. Its recent acquisition is to date the biggest exit deal in the history of Israeli industry.

Many news agencies worldwide covered this magnificent story, mostly ignoring one important detail about the acquisition - the fact that unlike most exit companies, 'Mobileye' is a "Born and raised" Jerusalem company, which makes it as 'Jerusalemite' as the Wailing Wall and Mahane Yehuda Market. This detail would have been insignificant, if not for Jerusalem's start-up and innovation history.

As one of the world's most ancient cities, Jerusalem has become a world player in the field of innovation. As such, it strives to keep up with the fast-paced Israeli high-tech and start-up race, usually just behind the 'giants' of the field situated in Herzliya and Tel-Aviv. Yet that wasn't always the case. Many veteran Jerusalemite high-tech entrepreneurs talk about a time where Jerusalem was the capital of Israeli innovation.  One such entrepreneur is Eli Wartman, a veteran entrepreneur, investor and a native of the city. Wartman has founded not one, but three of the largest start-up companies in Jerusalem, The biggest of which, ‘Delta 3’, traded at its peak at a value of nearly $2 billion, employing  250 workers. In a recent Interview for the Israeli magazine 'The Marker', Wartman described the different start-up realities in the Jerusalem of the late 1990's. "Back in the day, there were more resources in Jerusalem than anywhere else in the Israel: Academia, a quality population, more funds and multinational companies like ‘Teva’ and ‘Intel’. This was a fertile ground for the high-tech industry and start-ups, way before Tel Aviv was one of the hottest cities in the world." Later in the interview, Wartman described the years of decline in the Jerusalem high-tech scene. "The years of the second intifada were difficult, and Jerusalem, which suffered more than any other place, became a ghost town. In addition, when the "dot-com bubble" burst, the money also disappeared.  In the early 2000s, the transition of creative energy from Jerusalem to Tel Aviv began. It felt like a nuclear winter had begun." 

Today however, this image is changing. A report published in March 2017 by the research company 'Start-up Genome' placed Jerusalem on the thresh-hold of the world's top 20 high-tech scenes. The report, which was done before the 'Mobileye' exit, also placed Jerusalem in the top 3 locations for global deployment (the number of customers outside the area of ??activity of the start-up), surpassing L.A’s famous 'Silicon Valley'. The data attests to a clear trend that has been taking shape in recent years in Israel: start-ups are growing in other places in Israel other than Tel-Aviv and its environs, with Jerusalem being the best example of this blossoming.

Since 2012, more and more entrepreneurs have discovered that a start-up can also be set up in Jerusalem, without compromising conditions that allow for development and prosperity. In the eyes of the young entrepreneurs, this is the growth of something new in virgin soil and, no less, a bright spot in the future of the city. For veterans such as Wartman, who remembers well the flourishing of the city in the 1990s and the drought that followed, it is no less than a Renaissance. In this story, 'Mobileye' is hopefully one of many high points in Jerusalem's future.

So what is the underlying cause for this awakening? What helped Jerusalem shift from its long 'Nuclear Winter' to a 'spring of start-up Renaissance'? In addition to today’s more relaxed security reality, Jerusalem's start-up scene is enjoying another advantage – its cooperation with the local Academia.                                                                                                                              

Recently, it has become more common for entrepreneurs who come from academia, either students or professors, to take the lead in Jerusalem's start-up scene. Many of these entrepreneurs choose to make Jerusalem their first home, lending their part in this growth. One such entrepreneur is Prof. Amnon Shashua, from the Rachel and Selim Benin School of Computer Science and Engineering at the Hebrew University of Jerusalem, or, as he is better known today, - Mobileye's chairman and CTO.

Shashua co-founded the firm with CEO Ziv Aviram, based on the former's Hebrew University’s research. Mobileye’s technology was developed in Hebrew University labs and was commercialized by 'Yissum', the Technology Transfer Company of the Hebrew University. 'Mobileye' is not the only 'exit' to originate from the Hebrew University. Another one is that of 'Ex Libris', developer of a ground-breaking library management software, which changed hands this year for the third time and was acquired at a value of $500 million.

Although responsible for one of Israel's record-breaking exits, Prof. Shashua still teaches at the Hebrew University's School of Computer Science & Engineering,  still training and educating the future minds who'll be responsible for Israel’s next record breaking innovations. This reality embodies the spirit of the Hebrew University of Jerusalem and of the Israeli mind.  Innovation is a journey with many destinations that pushes us to always look forward to the next big breakthrough. As proven in the case of 'Mobileye', academia and entrepreneurship can join forces to achieve outstanding results and it’s this cooperation that has aided Jerusalem in becoming Israel's new developing capital of high-tech start-ups.

 
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