Israel’s reputation as the Startup Nation conjures up thoughts of billion-dollar exits, hundreds of employees becoming millionaires overnight, and an enviable lifestyle full of perks. While that has all happened before, the path it takes to make it to an exit, or become a name brand in the ecosystem is far less glamorous. Some of the most promising technologies never make it out of the lab or the prototype phase. The technologies fail, not because of an inherent issue, but because they simply don’t have the know-how and support. Focusing on these early-stage technologies and companies might be less alluring, but doing so is crucial for Israel’s continuing innovation and requires both governments and VCs to step up.
Israel’s Ministry of Science claims that 90% of patents for technologies die in the “Valley of Death; this is the point where ideas are no longer afforded funding and, therefore, opportunity to grow. Promising potential breakthroughs and startups end up in the dreaded valley when they have passed the research phase and typical academic grant funding. The research is no longer considered basic science and has transitioned into applied science with its potential for commercialization, so long as it can prove itself true to the market. At this stage, if a researcher can present to a VC, they are often met with push back asking for more studies and results, due diligence on the mechanism, and a prototype before a company is willing to invest. It’s the equivalent of entry-level jobs demanding five years of experience, and it’s killing promising innovation.
The Israeli tech ecosystem may be in the spotlight with dozens of new unicorns in just a few years, combined with a flurry of SPACs, yet the uncomfortable fact is that 2021 yielded a record low number of new startups. Early-stage startups that could become tomorrow’s batch of unicorns have been declining since 2015, and the future looks bleak if we continue the status quo. Our best resource in revitalizing it is not by trying to remedy some shortage of ideas, but rather by fostering the incredibly promising technology about to fall off the cliff and into the ”Valley of Death.”
Read full article: Israel’s tech ecosystem needs to address the start-up “Valley of Death” | Ctech
