This week brought together a few different parts of my personal and professional life. On Monday, Kevin Baxpehler and I hosted the UK Israel Business investor delegation to Tel Aviv, and today I spent the morning with the 8200 EISP startup delegation to London where I was joined by Kirsten Connell (Cylon Lab, Managing Director) Simon Menashy (MMC Ventures, General Partner). Having these two events in one week made me realise – there are huge opportunities to build stronger bridges between the two tech communities.
The two events were packed with great questions and takeaways. Here they are in no particular order.
- Should Israeli startups even look at the UK at an early stage given the US market is much bigger/strategic? There’s no doubt the US is THE key market, but it’s not the only one. Reasons to consider London as a launchpad:
- It’s close and cheaper to get to than the US
- Most companies /funds are concentrated in 11 square miles in London. You can get a lot done in a short trip ;-)
- Sometimes trying to take on the vast US market too early can result in “bringing a knife to a gun fight”
- You’ll find less competition and easier to stand out than in the valley.
- For certain industries (fintech, retail, health) it makes sense for Israeli startups to tap into the UK market early.
- To take on the US market, will likely mean the CEO needs to relocate to the US and build a team there.
- Is there too much money? Israel is on track to reach $10 billion in venture capital invested in startups in 2019. While there’s a huge growth in the capital volume, it is concentrated in mega rounds for growth companies. The number of seed deals is actually flat or a bit down from last year. Takeaway – while Israel is the highest in the world for VC per capita, there’s still a gap in funding at the early stage.
- Who to raise from? Given the competition between funds, some have started investing early than they normally do, so series A funds dip into seed and several claim they need no investment committee to write checks under a certain amount. That’s great, but founders should understand what’s the follow on ratio for those seed investments. Having a top tier investor not follow on can create serious singling risk for the startup. Nothing new here, but good reminder!
- Soft skills – Israeli Entrepreneurs are brilliant innovators and have strong technical expertise. Where they can use some help is in the soft skills and storytelling. Don’t lose the Chutzpah, but learn the please/thank you/small talk/follow up email to get things done in the UK.
- The value of boards – Don’t underestimate the value a good board of directors can bring. In UK registered companies, every member of the board can be found in the Companies House website, and having the “right” people on the board can open doors and accelerate relationships, especially for a startup coming from abroad. In the UK, the Chairman (or Chairwoman) for example, work closely with the companies and can be mentors, introducers and companions to the founder. The board should support the startup and leveraged to make key decisions. Israeli startup can learn from the UK in this regard.
- Diversity is key. No more “Pale, Male and Stale”. London is probably the most international city in the world and has a lot to offer in terms of diverse talent. In terms of female founders, there’s still plenty of work to be done, but we all agreed there’s never been a better time to be a female entrepreneur!
- Tax incentives – The UK gives tax incentives for investors (EIS and SEIS) as well as tax incentives for employee options (EMI). Especially at the early stage, investors will care about accessing those benefits. To qualify, the startup must have at least one full time person based in the UK.
- Two ears, one mouth – Israeli founders are wonderfully opinionated, but investors want to know they are being heard. This point is slightly due to cultural differences, but Israeli founders should keep in mind that UK investors see this as a potential concern. Be ready to take feedback on board.
- The UK is very easy and relatively frictionless to do business with. There are companies like London and Partners, that help startups from abroad establish a UK presence and get connected.
- Finally, there’s a growing social network for Israelis in the UK:
- The Israeli tech parliament, is a regular meetup for Israelis in tech offering “Firgun time” and the ability tap into the community with what you’re looking for. Monthly events (via meetup group) and active FB community.
- The UK Israel Tech Hub (affiliated to the UK government) connects UK corporates to Israeli startups, now about to open a physical space for Israeli startups looking to expand in the UK
- Sosa is setting up shop in London
- Labs/WeWork/Mindspace operate in both countries
- There’s a growing community of Israeli VCs and founders in the UK.
If you’re an Israeli startup looking at London as a potential market, there are plenty of doors open for you. Please get in touch if I can be helpful!
Co Founder and Managing Partner at Remagine Ventures
Eze is managing partner of Remagine Ventures, a seed fund investing in ambitious founders at the intersection of tech, entertainment, gaming and commerce with a spotlight on Israel.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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