The incubator model for creating growth in young companies is simple and can be very effective.

Build a hub of similar companies. Take a large chunk of equity. Provide them with logistical and financial support. Then sell them off a.s.a.p. for as much as possible.  Get a few deals wrong along the way, but when it goes right, you hit the jackpot. Simple!

Israel has over 20 incubators, one of the first country’s to pioneer the idea. Many were initially set up via a government initiative, although they have since been privatised. One of the more successful one is JVP, Jerusalem Venture Partners, which occupies premises that formally belonged to the mint of the central bank. (Ironic?)

JVP was originally set up by Dr Erel Margalit around 20 years ago. He had previously worked for the legendary mayor of Jerusalem, Teddy Kollek, driving high tech and conferences into a city whose main export up to that point in time had been religion .

Margalit tells a fascinating story, beginning with an initial daunting overdraft. Banks practically laughed when he asked for support for his “new children” that would create software codes or other intagibles not in known established curriculae.

Today, JVP’s website relates of companies like Chromatis, Precise, Cogent and others, whose positions have been valued at over US$1 billion. JVP considers itself a media center, where there is a heavy emphasis on young companies, usually providing content. A simple example are their start-ups in the field of animation, who are currently in discussions with Hollywood studios.

What makes JVC different from other incubators is its vision and its value system. As Margalit stated this week: “The new master is the individual…..To meet the individual, you need creativity”. And Margalit does that on two separate yet connected levels.

First, JVP looks for a long-term relationship with its clients. While many entrepreneurs are often looking for a quick exit to get some money back for their efforts, Margalit’s team keeps to a broader picture. Experience dictates that the big profits are located that bit further down the commercial road – to be attained and realised with patience and continuous evolvement.

Second, and in parallel, Maragalit looks at the community. For example, JVP invests in schools – religious and secular, Jewish and non-Jewish – specifically targeting early teenagers on the edge. JVP has sunk resources into the performing arts. And just for variety, the incubator is involved in programmes for community leadership. The link? Again, it is all about promoting individual development and initiative.

The point being that a successful incubator cannot exist in a social vacuum. When will others learn?

POSTSCRIPT: This week, the Bank of Israel published figures that for the first decade of this century, the income of the average Israeli household rose by 10%. GDP person rose by 12%. However, the income of the poorest households only climbed 4%. Now what would Dr Margalit have to say about that?