Startups

JERUSALEM — Two Filipinas represented the country at the annual Innovation Festival in Tel Aviv, which ended yesterday.

May Montero, 34, and her husband Kenneth Morgan Nieto launched Tambio in May 2015, making it easier and fun for people to join commercial raffles and redeem prizes from booths, currently set up in eight shopping malls in Metro Manila. Tambio has processed over a billion worth of sales for one mall operator alone.

The other Pinay entrepreneur, Ginger Palma-Arboleda, 35, was operating an events company and found paying taxes a pain. So she egged her husband EJ, who is knowledgeable in information technology, to develop a system that will compute, file and pay taxes for small entrepreneurs and the self-employed.

Ginger, who worked for seven years in banking, said their service would “eliminate tax bill shock.” Clients, who will pay a monthly subscription fee, need not become tax experts. She hopes to launch their company, Taxumo, in November.

Getting startup funding through linkages in an innovation festival is unusual in the Philippines, but has become common in this country. Israel, a leader in scientific and technological innovation, is also a paradise for startups.

The Israeli government helps its people pursue their dreams, encouraging them to think differently and think global, by providing not just startup funding but also the innovation infrastructure. This includes the right tax structure, according to Chief Scientist Avi Hasson (yes, it’s a government position), research and development support, an efficient intellectual property regime, forging cooperation agreements with other countries so that Israeli startups can link up with businesses overseas.

An Innovation Authority shoulders up to 85 percent of startup funding for two years. Some 4.3 percent of Israeli GDP goes to R&D, with the sector employing 300,000 workers.

The result: about 80 startups open every year, and a “Brain Gain” program also headed by Hasson has enticed about 20,000 Jews overseas to return to Israel, with the government helping them to find housing and get settled. Office rentals for startups are also subsidized.

Women are encouraged to innovate and become entrepreneurs. There’s a baby-friendly startup school for women, called Campus for Moms, with over 350 graduates so far. Among the products is Infime, which has a pending patent for a system that allows women to try on lingerie in participating malls through virtual 3D. Body shape and measurements are fed into the system, which then allows the consumer to see how different sizes and designs fit.

This year’s Innovation Festival focused on women entrepreneurs – among the reasons May and Ginger were chosen. But the men of course are heavily into innovation. Watergen, for example, has developed a device that produces drinking water from air. The machine, which can produce from 20 to 2,000 liters daily, runs on electricity equivalent to the consumption of two light bulbs and can run on solar panels. The company will start commercial production next year and hopes to sell to developing countries.

Nexar has developed a 4G-connected smart dashcam that senses and “sees” the road like a human brain. Moojis personalizes emojis, allowing users to put their faces on moving emoticons. The selfie emojis can dance, wink, wear disguises and be photoshopped so users look like Kendall Jenner.

The enthusiasm for innovation is palpable in this country, where’s there’s much talk about an innovation “ecosystem” and where entrepreneurs, according to Hasson, are treated like rock stars.

And Israel has prospered from that ecosystem, with 50 percent of its exports high-tech products and services. The country’s prosperity has never been about cheap labor and low taxes, Hasson stressed.

“Overall, in the macroeconomic scheme of things, you can see that the system works,” Hasson told journalists at the festival.

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So what’s Israel’s secret formula for success?

“Mediterranean sun affects your psyche,” DLD chairman Yossi Vardi told journalists, and it didn’t seem entirely like a joke.

Vardi does have one advice to budding entrepreneurs: choose partners wisely. A third of startups fail, he said, because partners don’t get along. This risk is minimized in Israel, where compulsory military service allows innovators to filter potential partners.

 “All of us are paranoid,” Vardi said. “We’re kind of like sheep – we like to flock together, we like to do things together.”

Hasson points to a definition of Israel by a former French ambassador as the possible secret formula: a combination of tactlessness, chutzpah or insolent assertiveness, and “balagan” or chaos, although “creative chaos.”

There is also the willingness to fail, which is probably because the government takes the lion’s share of the risk.

“Innovation is very risky,” Hasson said, pointing out that for every successful startup, there are from 10 to 50 failures. But every failure, he said, generates about 40 startups aiming to do it right. As Vardi put it, “we are successful in whatever we do, even when we are failing… it’s a question of mindset.”

Israel does not give funding priority to any particular sector, giving its citizens free rein to find ways of doing things better. But the startup’s proposal has to be sound. “It has to fly,” Hasson stressed. “You can’t win the lottery if you don’t buy the ticket.”

“It’s working,” he said, noting that the economic returns are five to eight times greater than what the government invests in startups. “It’s a good business.”

And while Israeli politicians disagree on many things, support for high-tech programs has been unanimous, Hasson noted. From the creation of the Jewish state, he said, “there was a conscious decision to build this knowledge economy.”

But big players weren’t always keen to finance startups. “There was a list of about 50 excuses,” Vardi recalled. But he said this has since been replaced by “the fear of missing out.”

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Israelis are keenly aware of the unique circumstances that created their nation. While Israel is sharing its expertise and technology with the world, Hasson cautions that Israel’s experience may not be cut and pasted in other countries.

“Will you be exactly like Israel? No, you can be different from Israel,” Hasson told foreign journalists. “You can be better than Israel. Trying to be Israel is also not the right strategy.”

But Israel is serving as an enabler for innovators all over the planet. Vardi noted that foreign participation in the innovation festival has grown from 530 when it was launched in 2011, to 1,350 even when “missiles were flying all over Tel Aviv” in 2014 to the 4,500 in the latest.

Israel’s government, industries and civil society partner to create the special ecosystem. At age 68, modern Israel itself is a startup.

“We take tech innovation and transform it into economic prosperity,” Hasson said.