Why Tel Aviv is the Perfect Place to Build Your Startup

This is a guest post by Hanan Lavy, Director of the Microsoft Ventures Accelerator in Tel Aviv. Prior to joining Microsoft, Hanan founded several startups and was the Director of Software R&D at Mercury (acquired by HP for $4.7B). Hanan is going to be speaking at a meetup in Barcelona on Friday at 2pm in Torres Diagonal Litoral, Carrer de Josep Pla, 2, Edificio B3, Planta 6 and would be happy to meet with you while he is in town.

Beautiful beaches, great cafes, fantastic nightlife and sunshine most of the year does not sound like the typical recipe for creating one of the world’s most successful and renowned hi-tech ecosystems, yet despite the alluring distractions, that is what Tel Aviv has become today.

The story of Israel’s hi-tech prowess is well known throughout the world thanks to both its track record of very successful exits as well as the book “Start-Up Nation,” which examines the numerous factors that have contributed to the country’s run-away tech success.

I would like to drill down a bit more in this article and examine one city – Tel Aviv – that has been at the hub of this success and try to understand what makes it uniquely qualified to serve as one of the world’s most successful tech ecosystems.

Below, I will outline a number of factors which I believe have contributed to the city’s success and why it makes for the perfect location to build a start-up company.

Concentration of entrepreneurs – both first and old timers

While Tel Aviv is one of the world’s largest and most seasoned hi-tech ecosystems, with hundreds of startups and thousands of entrepreneurs working out of the city, it also functions as a small village, with everyone eager to help make connections, dispense advice and offer guidance, providing first time entrepreneurs with very valuable information and networking opportunities. Add in an abundance of hip co-working spaces and startup hubs and you get a powerful melding of hi-tech experience that is passionate about not only building their own companies, but with helping others build the next big thing as well.

Access to early stage capital

In its latest report on Venture Capital in Israel, Israel’s Ministry of Economy noted that approximately 80% of all Venture Capital money goes to seed, early or mid-stage investments, with only 20% of VC money earmarked for late stage investments. Many of the country’s VC firms are located in and around Tel Aviv, making it very easy for a start-up with a great idea to get an introduction to an influential angel or seed investor. Walk into any café on any given day in Tel Aviv, and you are more likely than not to see an entrepreneur pitching his or her company to potential investors.

Municipal Support

The municipality of Tel Aviv offers entrepreneurs and their startups very beneficial goods and services – from free public Wi-Fi to steeply discounted city taxes for start-ups, making it much more attractive for entrepreneurs to stay in the city, even after a successful exit. The city has also established programs to develop web and mobile applications for interaction with city life, transport and the local government.

Education

In and around the Tel Aviv municipality there are approximately 20 programs at numerous academic institutions specifically for foreign students in business, technology and design. Not only do these programs help teach the skills needed to create a successful startup, but they also provide wonderful networking opportunities for students. Hundreds of foreign students and foreign entrepreneurs participate in these programs every year, with many going on to add co-founders or build new companies with the students they meet in the programs.

Access to Mentors and Accelerator programs

Around Tel Aviv and its immediate surroundings, you can find an abundance of accelerator programs that have been created with the sole intent of helping entrepreneurs build their startups into something great.

At the Microsoft Ventures Accelerator in Tel Aviv, which I run, we offer startups a unique, intensive four month long program that provides entrepreneurs everything they need to successfully launch their companies. We have graduated close to 50 companies from our program, with each company receiving an average of $1.2 million in funding from investors. More importantly, the partners and mentors that we work with –over 120 of the most experienced, trusted and successful hi-tech entrepreneurs – provide the startups with invaluable guidance and instant access to a powerful network of contacts.

Our next incoming class of startups is going to be focused on cyber security and software-based medical/health focused startups. We are putting together an incredible program with our partners – including VC firm Jerusalem Venture Partners, who will work with us on the cyber security portion of the program, and Becton Dickinson (BD) and Healthbox, who we are partnering with on the healthcare piece of the program – that will provide companies in these areas with a fantastic opportunity to work with the best and brightest minds in each of the respective fields.

If you would like to hear more about the program, drop me a line – mva-il@microsoft.com and I would be happy to answer any questions you may have. Looking forward to seeing you in Tel Aviv!

About the Author

Hanan Lavy is the Director of the Microsoft Ventures Accelerator program in Tel Aviv. Prior to joining Microsoft, Hanan founded several startups and was the Director of Software R&D at Mercury (acquired by HP for $4.7B). Hanan is going to be speaking at a meetup in Barcelona on Friday at 2pm in Torres Diagonal Litoral, Carrer de Josep Pla, 2, Edificio B3, Planta 6 and would be happy to meet with you while he is in town.