Educating and Getting an Education in Israeli Health Tech
Last week, I wrote about my trip to Israel to scout out promising Israeli health technology investment opportunities and promote Los Angeles as a U.S. base for Israeli digital healthcare entrepreneurs. As I headed home to Los Angeles this week with my head spinning from a whirlwind week of over 25 meeting and presentations, I wanted to share some takeaways.
If you haven’t been following the Israeli tech boom described in Dan Senor and Saul Singer’s book, Start-up Nation, it’s worth checking out on your next trip to Israel. It’s not just Tel Aviv and Herzliya that are alive with tech entrepreneurs (of whom roughly a third are working on healthcare-related projects), Beer Sheva now has a massive complex for digital technology ventures. Even Jerusalem, which most people associate with spiritual growth, is booming with new tech ventures. The whole country is a laboratory of innovation.
Over the past several years, I’ve watched American drug and medical device giants like Amgen and Medtronic set up relationships in Israel, looking to capitalize on the incredible cluster of scientific and technology-related entrepreneurialism that is wholly disproportionate to the country’s small population. One of the lessons of the past week was how much the rest of the world is also doing the same thing. Big Chinese and European investors and healthcare organizations are setting up strategic partnerships here, searching for game-changing technologies to take back home. The U.S. is still the primary market for Israeli companies, but that’s changing as relationship blossom elsewhere in the world. It was striking that, at a point when the U.S. is looking increasingly inward, Israelis are well along in building collaborative relationships all over the rest of the world.
The reasons why the whole world is interested in Israeli technology are too many to list here, but the most striking thing to me was a development process that is smarter and leaner. You see it not only in the labs at Technion and Tel Aviv University, but in the unique government-backed incubators, where the Israeli government gives out 2-year $600,000 grants to start-ups that only convert to repayable debt (not equity) if the ventures succeed. The level of government support for entrepreneurship, in partnership with private investors and industry, is just breathtaking. The amounts of funding are small (not only at the incubators but in all other funding sources), meaning entrepreneurs need to move faster.
I saw one example after another – breakthroughs in cardiovascular health, pregnancy monitoring, neurocognitive decline, and more. Israeli entrepreneurs figure out quickly how to miniaturize and make lower cost all kinds of diagnostic and monitoring technologies, replacing cumbersome and expensive hospital-based equipment with cheap solutions – many smart-phone driven and involving wearable adhesives – without a loss in quality. One entrepreneur shared with me that, after he heard a large American company share its vision of what medical devices would look like in a decade, he returned to Israel and stayed in the lab until he produced what they described – less than a year after the conversation. Israelis innovate relentlessly.
Another lesson of the trip was that Los Angeles, despite being the largest metropolitan area in the country, has been asleep at the wheel, is not only behind the Bay Area, but also communities like Boston. Boston became famous for Mass Challenge, a four-month tech accelerator now in its __ year that has received credit for creating the ecosystem needed for a tech hub. Mass Challenge not only brings Israeli tech ventures to Boston each year, but actually brought its program to Israel. I’ve been part of discussions about a vision for L.A. over the past year, and, let’s just say, things are moving more slowly and the thinking is a little less ambitious here.
While we Californians pat our backs about how sunny and warm Southern California is, the founder of the biggest life sciences fund in Israel shined a light on the practical disadvantage we have when it comes to working with Israeli companies: “Whenever we’re on the phone with people in L.A.,” he told me, “somebody on one end of the line is angry [about the lateness of the hour].” The difference between a 7-hour and 10-hour time gap is that people in Boston and New York can call in the morning while it’s mid-afternoon in Israel. Between L.A. and Israel, morning in one place is evening in the other.
Time challenges for telephone calls notwithstanding, the trip highlighted for me the enormous opportunities for cross-collaboration and reciprocal learning. Israel is full of amazing scientific and technology development, but often produces ventures that are rough around the edges and weaker on execution. I came away energized and with a sense that we in L.A. have the ability to add significant value. The refrain I heard over and over is that Israeli entrepreneurs are uniquely good at developing technology, but weak on the next phases of execution. It’s almost a business corollary of the personal style of many Israelis: blunt, fast, and to-the-point, incisive but short on social nicety.
While I’m pursuing investment opportunities and places where I and my colleagues can be helpful in using our domain expertise to clarifying healthcare regulatory and reimbursement issues, I’m sharing the broad takeaways to encourage my fellow Angelenos to consider the opportunities as well. We often hear about Israel as a place that needs our philanthropic giving, but don’t often think or talk about how we can develop business relationships, exercise business leadership, and ultimately build a sense of community with Israelis and Israeli ventures. I was glad to see a local group getting ready to initiating an acceleration program for Israeli start-ups.
While we’re just getting started, the big takeaway is that there are plenty of opportunities to add value, to learn from each other, and to do well by doing good.