Munich Startup: With a relatively small market and lots of startup competition, Israel initially looks like it might be an unfavorable place for young Munich companies to expand internationally. So why could it indeed be worthwhile to put the country on your mind map?
Bavarian Office Israel: For Munich startups, the Israeli market is only interesting to a certain extent in terms of customer acquisition, even though there is some potential here. That being said, Israel is still exciting for the following reasons:
- There are more than 430 venture capital firms in Israel, and their interest in the European market is growing. Just last year, the Israeli VC fund Maniv Mobility invested in the Munich startup 2trade. The Munich startup ecosystem stands to position itself quickly here. We want to actively support that here at our office and are planning some activities in the area, for example together with BayStartUP.
- Talent and R&D: International companies like Apple, Google and Cisco are showing how it’s done – R&D centers have been opening all over the place in Israel recently, and we now have more than 100 just in the Tel Aviv area. And that’s due to the highly skilled professionals in Israel as well as excellent cooperation with universities. So if startups are looking for new employees, they should definitely have Israeli professionals on their radar.
- The third and most important reason: 300 days of sun every year. And of course hummus.
Munich Startup: How can startups get in touch with Israeli investors? Is an office in Tel Aviv a must?
Bavarian Office Israel: Israel is a small market and both startups and investors are active internationally. Israeli investors are used to working with legal entities that aren’t registered in Israel. Which means an office in Israel is not a must.
Establish and maintain networks
Everything happens through networks in Israel – cold calls or direct contact are quite rare. Which is why networks need to be established and maintained. It’s completely normal and recommended to ask established contacts to introduce you to others. There are also exciting events in Israel, such as Ecomotion on the field of mobility, or DLD Tel Aviv, which makes it easy to get to know the ecosystem. And our team here at the Bavarian Office in Israel is also part of the local network and offers support.
Munich Startup: What do Israeli investors look for?
Bavarian Office Israel: In Israel, the areas that are predominantly invested in are enterprise software, mobility, life sciences, agtech and foodtech, IoT startups and cyber security, which are exactly the fields that Munich also excels in.
Munich Startup: Who can help a Munich startup build a presence in Israel?
Bavarian Office Israel: There are numerous organizations that can help Munich startups: the German-Israeli Chamber of Industry & Commerce, the Israeli Trade Office in Munich and our Bavarian Office in Israel. For young entrepreneurs, the BIPA (Bavarian Israeli Partnership Accelerator) is certainly the best route for getting to know the Israeli market.
The purpose of our office is to support Bavarian and Israeli economic ties. If a Munich startup is interested in the Israeli market, they can contact us at any time. As a state organization, our services are free and also confidential.
Munich Startup: What legal conditions or obstacles should a person definitely know about?
Bavarian Office Israel: As with any international expansion, startups should contact a good lawyer and/or accountant early on. In this case, it’s a good idea to work with local legal advisers who specialize in international companies. This makes it possible to avoid mistakes from the very beginning, especially when it comes to international tax issues. If the posting of workers is planned, then you have to deal with Israeli visa legislation.
Munich startups lack global thinking
Munich Startup: What can Munich learn from the success of the Israeli startup landscape?
Bavarian Office Israel: Two things: confidence and thinking globally.
After Silicon Valley, Israel is the most important startup center in the world. That is something Israel is (rightly) proud of, and the country knows how to market its ecosystem. The Munich startup world might be smaller, but is in no way inferior to the Israeli ecosystem in terms of innovation, especially in the fields of deep tech, enterprise software and mobility. So many interesting startups come from Munich, and also in terms of funding, the Bavarian ecosystem is really catching up. That’s why the Munich startup scene should continue to market and expand on its international reputation. Special emphasis should be placed on Munich’s strengths: the exceptionally well-educated talent pool, tremendous customer potential in B2B and the growing number of exciting and extremely innovative startups.
The second is thinking globally. The Israeli market is small, which is why even very early-stage Israeli startups already plan international scalability into their business models. Startups from the DACH region have a larger market where they can “grow up” first, but they should still aim to expand globally.
“Israeli communication is extremely direct”
Munich Startup: What differences are there in corporate culture between Germany and Israel, and are there any important customs in the business world that Munich startups absolutely need to know about?
Bavarian Office Israel: Israeli communication is extremely direct. This can be irritating in the beginning and sometimes also understood as impolite, but on closer inspection, it holds a lot of potential for effective collaboration. In contrast to Germany, the Israeli business world is spontaneous above all else. Meetings tend to happen on short notice and are not planned weeks in advance. Decisions are made much faster and things happen quickly. And that’s also what Israelis expect from their partners and customers. That’s something you need to be prepared for, but should be no problem for startups.
Munich Startup: What no-go should absolutely be avoided?
Bavarian Office Israel: Showing up to a meeting in a suit and tie and not getting right to the point. The latter can quickly be considered a negative characteristic in the Israeli business world.
Munich Startup: Do you have a special tip for Munich startups?
Bavarian Office Israel: In the Israeli startup world, everyone knows everyone else, and you should never forget that – but that’s nothing new to Munich residents…
Contacting the Bavarian Office in Israel
The Office for Economy, Science, Technology, Education and Youth Exchange of Bavaria in Israel opened in December 2017 and is located in Tel Aviv. Johanna and Jonathan are responsible for Bavarian-Israeli business relations.