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5 commandments from the Israeli mobility ecosystem
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From Waze to Mobileye, the Israëli start-up success stories are famous for disrupting technologies and mind-blowing valuations. The BCG x Mobility Nation team met some of the leading players in mobility, and below are the key takeaways we bring back home.
1 - Think global from the start and be agnostic
With 8m inhabitants, the Israëli market is too small for ambitious startups. From scratch, ventures are made to scale, products aim for global use, and investments pour from all over the world. As Rafi Gidron, serial entrepreneur and business angel, said: “Silicon Valley is just around the corner”.
This is why the tech companies cultivate agnostics. Mobileye works with 25+ OEMs. Autofleet is engaging with all the biggest fleet owners. This strategy de-risks the businesses and, of course, provides a multiplier to the addressable markets.
2 - Build on your local strengths and open up for the rest
Israël is a deeptech hub, fueled by engineering universities and army research. Startups play in specialty topics: software and hardware/software interactions. Many tech entrepreneurs have strong deeptech experience – as a consequence you’ll also find they are a bit older than elsewhere!
For growth, local seed investment is strong with business angels or Israëli funds such as Next Gear Ventures or Maniv Mobility. But for succeeding rounds, investors are mostly outside of the country. By the way, to anyone who may see this as a traumatic brain drain, this doesn’t mean losing talents: Mobileye for example has kept its HQs and R&D teams in Jerusalem, its home city, even after being acquired by Intel.
3 - Build sharp business models that are profitable from the start along with a transformative vision
Accelerators such as Drive are a great example of how strong business models are developed. Tal Cohen, its founding partner and an avid chess player, consistently seeks to mix tactical innovation (putting a stake in the ground with fast-proven business models), and strategic innovation (which are essential to building a transformative vision). Drive relies on a set of industrial partners which engage on developing projects with the ventures they chose. These commercialization projects make the success of the accelerator, as proven by its many successful alumni start-ups such as Fleetonomy or Hailo Technologies. Eran Wagner (I3 Equity Partners) also builds on the operational link between industrial players and start-ups, combining it with vertical technology focus on IoT, to foster innovative models in the startups he accelerates and invests in.
4 - Don’t overshoot for B2C vs B2B and shape a strong B2G agenda
Mobility start-ups in Israël are focused on B2B models: large fleets, substantial revenue opportunities, and big industrial problems to solve. Take Autofleet bound to be a leading player in the future of mobility: this Vehicle-as-a-Service platform allows fleets to provide vehicles as an on-demand service to any source of supply. What struck us was the pure simplicity at which it responded to a true industrial problem, which costs several margin points to fleet managers worldwide. Similarly, Mobileye teams are focused on equipping large fleets so is by nature B2B, and are engaging in B2G discussions throughout the globe to scale their model.
5 - Aim for regulation as value capture and…measure!
Let’s take autonomous driving: Israël was the first country in the world were safety support systems had to be embedded in newly sold cars. This incremental cost, subsidized by the government, is valued at a return ratio of 1:3; i.e. when the government invests $1, it saves $3 in accident-related costs (healthcare, insurance, productivity loss etc.). This push provides tremendous platforms on which local innovators such as Mobileye can grow. More widely, the measure of the value of new business models is culturally embedded, and measure of impact on safety will be a key objective of their testing of 100 autonomous cars in Jerusalem in the coming weeks.
- Science & Technology
- Tech Startups
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