As 2015 comes to a close, I look back and realize that it has been quite an amazing year. I moved to Israel from United States just over a year ago, and since then I have met some amazing people, had some amazing experiences, and have seen, first hand, the Israeli startup ecosystem and the opportunities that it offers.
Israeli startups are poised to raise well over $4 billion dollars this year, there have been some great exits and IPOs, and many new funds have been opening up here in the Startup Nation. However, despite all this success, I feel like there are many opportunities that are being overlooked by startups and investors in Israel. Most Israeli startups and venture capital funds focus on expanding to international markets, usually the US and Europe, while many local issues that can be solve through entrepreneurship are being overlooked.
Israeli entrepreneurs often come up with ideas that would solve specific problems that the Israeli market faces, however they are not very scalable outside of Israel. Thus, many Israeli funds do not see the financial upside and do not invest in such companies, and they never take off. While a key part of venture capital is making money, I think that it is also very important to solve the major problems that face our society, and in order to do that you need to sometimes look to your own backyard first. While Israel is a tiny country, I feel like there are many problems, from the outdated banking and postal services to the lack of any real eCommerce services, that could be solved by startups and VCs that have a local focus and understanding.
A example of this is Gett, the Israeli taxi company that disrupted the local taxi industry. While I assume that they did have international plans for expansion from day one, they started off by fixing a broken industry in Israel. Only once they had completely changes the face of the taxi business in Israel did they look to expand elsewhere.
I am not saying that I think Israeli VCs should only invest in startups that want to solve problems that are specific to Israel, as that is not sustainable and many of those investments would fail. However, I do feel that Israeli investors should look closer to home for opportunities that can not only make them some money, but also improve the country they call home.
Happy new year!