Tel Aviv: A Silicon Valley on the Mediterranean?

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While young Israelis ponder whether to settle in Tel Aviv or move abroad for a potentially easier life, Tel Aviv is dispatching ambassadors around the world to market the city as the heart of the startup nation, a Silicon Valley astride the Mediterranean Sea.

The municipality's Ir Olam (World City) task force is seeking to position Tel Aviv as an international business center and turn it into a hub of the global high-tech entrepreneurial community vying with London, Berlin, New York and, of course, that famous stretch of California south of San Francisco. The city's efforts will climax next week with its five-day DLD festival.

"Tel Aviv is categorically the startup city," declares Hila Oren, head of the task force. She says the city's plan has several thrusts. One is the nurturing of an innovative and digital environment by creating infrastructure and space for development and innovation. A workspace provided by the municipality for entrepreneurs - dubbed " Hasifriya (The Library") – was established within this framework, with another soon to open in the city's Kiryat Atidim high-tech business park. The municipality has laid out a wireless grid that covers the entire city to make the Internet more easily accessible.

If startups are already operating in the city, why does a municipal body need to encourage them to come?

"The business sector works wonderfully, but a municipal or public body is needed to provide things the business sector can't, such as reductions on local taxes or startup assistance, support gatherings and compounds like Hasifriya and Atidim," says Oren. "These are services that have nobody to provide them in the business sector."

Another focus is drawing an international crowd by removing entry barriers and making the city more accessible to a global population. In this framework Tel Aviv will don its finest next week for its innovation festivities as it fills up with thousands of overseas guests arriving for all the events taking place simultaneously.

The main event will be the DLD Digital Conference, an international conclave to be held this year in the Hatachana compound. A delegation sponsored by the Foreign Ministry of 15 startup entrepreneurs, including some from the Far East, will also be attending.

In addition, the municipality has initiated Open Startup, an event aimed at bringing Tel Aviv residents and startups together. Companies based in the city will open their doors to the general public to give a glimpse of what a startup looks like from the inside and what types of technologies are being developed. Last year 40 companies participated in the event; this year the number has risen to 100.

"Branding is just one tool"

Ir Olam campaign suits the liberal and secular spirit that distinguishes Tel Aviv from the rest of Israel. On the surface, the task force seems to mainly focus on branding and marketing Tel Aviv around the world, and less on helping to make the lives of entrepreneurs easier or improving the infrastructure serving them.
"Our unit doesn't deal with branding: That's just one of the tools," says Oren. "We deal with global development, and that is a broad strategic process. Our message is the innovation, the startup – that Tel Aviv will be the world's beta site. Innovation exists in our country, and we need to tell the world and bring people from abroad to Israel. My goal is to bring investors from around the world, students from around the world to study here, prime human capital, people who will work at startups."

At this point the idea of turning Tel Aviv into a cosmopolitan city drawing developers from throughout the world is still a distant vision due to bureaucratic constraints and the change in government earlier this year, but the goal is to bring it about as soon as possible. Ir Olam is working with the interior, economy and finance ministries, and anyone else in the government that can help it to develop the idea of establishing a special category of work visa for foreigners employed at Israeli startups for limited periods or coming to Tel Aviv to recruit local teams for companies they establish. The municipality's goal is to open Israel up to entrepreneurs throughout the world in order to generate economic growth and attract venture capital from abroad.

The most prominent example of a foreign startup setting up shop in Tel Aviv so far is Buffer. The company's three founders, who waited in the United States until their work visas came through, drifted between countries including a three-month stay in Israel during which they worked out of the Elevator incubator on Ahad Ha'am Street in Tel Aviv.

"For high-tech entrepreneurs considering a place to work and set up operations, if they can't move to New York or San Francisco, I would recommend Tel Aviv," co-founder Joel Gascoigne told TheMarker in an interview during his stay in Israel. "Certainly not London, where the weather is awful. In London, and Britain overall, the outlook is often strongly focused on the local market. In Israel, since the local market is small, the outlook is global and this is very healthy. The ecosystem here, like the one in San Francisco, is very good. We found in Tel Aviv something that we also found in San Francisco – the ability to discover things aimlessly, for example while walking in the street or while sitting at a café. You're always meeting with other entrepreneurs and you can pitch them your startup idea and get feedback. Tel Aviv has this."
Atmosphere rather than subsidies

So how can entrepreneurs and investors be convinced to come to Tel Aviv?

As opposed to London, where entrepreneurs receive subsidies and funds have been set up to attract companies to the city, Tel Aviv doesn't offer any significant incentives for luring companies. The main means of drawing attention is through the intensive marketing and branding work at key locations around the world. "Tel Aviv has atmosphere, a lot is happening and there is support for startups," says Oren. "The feeling is that young people are very welcome in the city."

What are the relative advantages of Tel Aviv as a startup city? How is it sold around the world?

"We tell them about the huge number of startups concentrated in one place, about the lack of hierarchy, about the legitimate Israeli chutzpah, about everyone mixing together -– major investors and small startups. We tell them about the mutual assistance and support existing between startups, and that our culture grants legitimacy to failure. We also talk about trivial things like the weather and the city's beaches – basic facts that sit well with the young. Tel Aviv is also safer than most cities of the world. All these things are understood as giving Tel Aviv a relative advantage over other cities."

Oren recognizes that around the world Tel Aviv is synonymous with Israel but less identified with security problems, regional tensions and a perpetual war-footing. "When I say 'Tel Aviv' I'm not talking about the city of Tel Aviv-Jaffa but about metropolitan Tel Aviv," says Oren. "Holon, Bat Yam, Ramat Gan and Herzliya are Tel Aviv. Even Haifa and Jerusalem are Tel Aviv in a certain sense: There is one airport at an hour or two's distance from each of them. In international terms you arrive at one center of innovation. From our standpoint there is no competition with Jerusalem or Haifa: It's all one product. If I get someone to come work at a startup in Haifa it will affect the overall ecosystem." 

Last year’s DLD conference: “Innovation exists in this country, and we need to tell the world.” Credit: Ofer Vaknin

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