Israel, a desert country, and yet a success with innovation? Can’t be! Who’s buying into that line? Well,…..

• I am currently in touch with four overseas associates, asking for me to introduce them to Israeli innovation.
• A top London accountant told me last night that their city is near awash with seminars outlying the issue.
• I have just visited the proposed site of a new Jerusalem cyber incubator for ultra orthodox adults, which has already garnered some initial interest from established market players.

Bottom line? Israel has found a technique to turn innovation from a buzz word and convert it into a platform that can drive an economy, even in times of global slowdown.

There are loads of stats to back up the point.

• The Holy Land continues to attract more VCs per capita than most places.
• Israel spends around 4% of its GNP per annum on r&d, amongst the highest in the OECD.
• The country has already attracted over 300 multinationals to open r&d centres.
• There are now around 18 incubators and over 50 accelerators amongst a population of just over 8 million people

And so the list goes on. Many of the these facts were summarized this week in a talk by Inbal Arieli, a recent recruit to the NGO “Start UP Central”. She emphasized that capital raised in 2015 for Israel rose by around 30% to nearly US$4.5 billion. Exists were valued at twice that amount, US$ 9.02 billion.

Arieli gave some stunning examples at where Israel has lead the world. One that I recall is the ‘credit card’ that all citizens carry around and which are produced when visiting a doctor. This compact and comprehensive form of medical information, also available for hospitals, is simply not to be found in any other country (as far as Arieli knows).

However, the story that encapsulated why so many delegations are coming to Israel to learn about innovation is one that featured Dov Moran, the inventor of the USB memory stick. By the year 2006, his company M-Systems, was sold for over US$1.6 billion dollars to Sun Disk Corp.

Moran took his money and set up Modu. He brought in over US$100 million of other investments. 40 patents later, the company was sold off to Google. However, it was a flop. Arieli should know, as she worked there. BUT…….

While Modu did not succeed, members of its workforce went on to create at least 32 start ups. One noted case study is Onavo, which was eventually purchased by Facebook for US$120 million. In other words, the seeming failure of Modu illustrates just how Israel has turned innovation into a methodology which drives commercial success.