STARTUP NATION:

Israels Surprising Economic Success In The Face Of Adversity

(And What It Means For SC)

The State of Israel is a Startup

November 29, 1947 UN General Assembly votes to adopt the UN Partition Plan The first known Kingdom of Israel in this location was in the 11th century BCE), The majority of the world continues to question Israels right to exist Israel has a PR problem!

The State of Israel is a Startup

Entrepreneurship is the backbone of the country No known natural resources Necessity is the mother of INNOVATION Agricultural innovation Military innovation Infrastructural innovation

What time is it?

Its time for your daily dose of Israeli technology.

** Slide as produced by Jonathan Medved

Personal Computers

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Consumer Electronics

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Medical / Life Sciences

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Telephony

Software/Internet

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The Secret Sauce

Compulsory Military Service Global Orientation Progressive Immigration Policies Pro-active Government Policy Persistence Diaspora Community Mash-Ups

Highly trained and educated workforce

What is important about military service?
18 year olds spend at least 2-3 years serving Development of critical leadership skills Responsibility and accountability for the well being of others Taught to question authority for improved outcomes Willingness to take risks in the face of adversity Persistence and desire to learn from mistakes Development of military technology often converted to civilian uses

Highly trained and educated workforce

Very high-quality education infrastructure Highest ratio of university degrees to population in the world Bill Gates:
The quality of education is one of the key factors that has made Israel so unique in the great companies and partners we've had...

Warren Buffet:
If you go to the Middle-East looking for oil, you do not need to stop in Israel. But, if you are looking for brains, for energy and for integrity, the only stop you need is in Israel.

A country of immigrants
Progressive policy encourages immigration Israel is built on successful integration of cultures Mass immigration from former Soviet Union Absorbed 5+% population increase in one year 58% were scientists, academic scholars, associate professionals and technicians ( >2x the percentage of workers in these fields)

Pro-active government policy

Yozma (initiative) 1993 VC policy
Offered attractive tax incentives for foreign venture capital investments Promise of government to DOUBLE any investment with government funds VC investment rose nearly 60-fold, from $58 million to $3.3 billion (90-00) VC-launched businesses went from 100 to 800

Establishment of incubator system to leverage approximately 750,000 scientists, engineers, and physicians arriving from former Soviet Union (24 incubators today)

Pro-active government policy

Government privatized the incubators Policy of supporting R&D
Office of the Chief Scientist tasked with encouraging high value-added R&D and collaboration nationally and internationally This years budget for R&D support:

NIS 1.42 billion -- approximately $375 Million

Israel as a hub of innovation

Hi-tech center and culture of entrepreneurship Hundreds of multi-national companies in Israel
Microsoft, Intel, Motorola, IBM, Google, Yahoo, etc.

Leading VC firms operate in Israel

Sequoia, Lightspeed, Bessemer, NVP, Battery, etc.

Overall VC investment over $2 billion per year

Number 1 over all of continental Europe Number 1 in the world on a per capita basis In absolute terms, 2nd overall only to Silicon Valley

Israel as a hub of innovation

Relative to the population, largest number of startup companies in the world In absolute terms, largest number second only to US Outside the US, largest number of NASDAQ-listed companies

Innovation we can emulate

Israel: Highest R&D spending as % GDP and per capita

So how do we compare?
South Carolina vs. Israel
South Carolina Geographic Size Population GDP VC Investments 32,020 sq. mi. 4.7 million $166 Billion $73 Million Israel 8,019 sq. mi. 7.8 million $245 Billion $2,139 Million Compared 400% 60% 67% 3%

SC is experiencing record growth

Back-to-back record years:
2010: $4.1 billion in Capital Investment and creation of over 20,000 new jobs 2011: $5.1 billion in Capital Investment and creation of over 20,000 new jobs

Since 2006: Over $22 billion in Capital Investment and creation of over 107,000 new jobs Foreign Direct Investment
Over 72% of capital investment and 46% of jobs in 2011

Our strengths
International leader in attracting Foreign Direct Investment Strategic location Good infrastructure: Roadways, Rail, and Port
Need ongoing spending to maintain and compete

Higher Education and Research Environment

SmartState ~ 120 endowed chairs (critical need) Over $550 Million in research funding at our 3 major research universities

Technical College System

ReadySC workforce training program Apprenticeship Carolina

Incentives
Department of Commerce Incentives (deal dependent)
Based on capital investment, number of jobs and wage scale etc. Counties can play major role in incentive package SCRA / SC Launch Project Development Funding Grants, Start-Up Assistance Grants, SBIR Grants, and Loan and Equity-based Investments of up to $200,000 Support for landing parties and demonstration projects

SC InvestorsVC, Angels, Corporate Investors Collaborative research grant support

We need to align around innovation!

Identify new incentives to attract innovation capital Tax breaks for R&D and Venture Capital investment in our state Enact legislation like the proposed South Carolina Angel Investment Act of 2011 Increase direct government grant support, if possible Create, stimulate and support collaboration Example: SC-Israel Collaboration Stimulate business and research partnerships between companies and universities in South Carolina and Israel as a way to generate economic development, jobs, and investments to the benefit of all. www.SC-Israel.org

We need to align around innovation!

Champion educational excellence Nurture innovators Groom exceptional leaders Encourage entrepreneurs of tomorrow Attract and/or retain highly skilled and highly educated workforce

Role of our students and workforce

Get educated! Get networked! Stay in SC! Young students must identify an opportunity and gain relevant education and experience Seek work-based opportunities to grow experience and network in the chosen field
* Consider study abroad and internship programs particularly in Israel!

Network, network, network! Ask your state leaders to support legislation encouraging venture capital investment and/or facilitating governmentsponsored startup funding (key drivers of innovation) At the end of the day:

Stay in South Carolina our state needs you!

Education Pays

Thank You