Israeli VC’s & The Search for the Internet Success

What have we learned from our mistakes? Will the local Israeli venture capitalist's get in the game? With these questions in mind the Israeli VC Gemini Israel Funds gathered a group of former and current influential from the Israeli Internet scene.

There where people from ICQ, Speedbit, Hotbar, Aladdin, Netsnippets, Spearcast, Maxthon (guess who..) and others I don't know. The event was opened up by Bob Rosenschein, CEO and President of Answers.com (formerly Guru.net) sharing some of his lessons learned over the years. Afterward Gemini Israel's Daniel Cohen, gave a presentation to open up a discussion on why it is so quite on the Israeli Internet scene. Where is the next ICQ, Hotbar or Answer.com ? What are Israeli VC's lacking that the US based VC are not? Why can't Israeli VC spot an Internet success in the making?

Well, one of the explanations David gave was the geographical distance that somehow does not seemed to be bridged by cutting edge communication like Skype etc. We are just not there in the coffe shops of Paolo Alto or hanging out in Silicon Valley. I agree on that one, but I believe some of the main hurdles of Israeli VC's are:

• Lack of balls - they are simply to afraid to follow their gut feelings (after having been burned by the previous bubble)
• An obsession with R&D based companies
• A fixation with patents and unique technology platforms

With this in their back heads, they are simply missing the lesson that successful Internet companies are not rooted in heavy R&D, patent and they often lack any particular cutting edge technology. Rather their DNA is made up by

• A cool brand that is community oriented and sharing based, or answers an immediate need (think Maslow'pyramid) and are often disruptive.

Anyway, I think it was a very good initiative to organise the get-to-gether - and who knows, perhaps the next Internet success in the making is really just around the corner or right under their noses....

 

Comments

[ouriel]

I totally agree. Web2.0 in israel is not catching up. Not only in terms of creations of new services but also in the implementations of existing players like portals or dating web site. Israel is missing the next revolution of consumer internet and turning out to be a geek-only country. I posted 2 weeks ago about it

[Netanel Jacobsson]

YOu are perfectly right Ouriel. BTW love you blog!

[Uri L.]

3 follow ups:

A.
Israel was never strong in core consumer web applications (respect for Gurunet and Answers.com).

Of course that here and there we saw some significant startups (shopping.com, hyperbanner, farechase) - but nothing to compare with the US.

no, I don't think RawSugar are a good example.

In internet related apps, mostly clients, we had some great achievements.

B.
Web 2.0 bread and butter are individual, young and skilled developers who like to play and share concepts and ideas.
Israelis were never strong at this front - and there are many reasons for that.

Net - you explained how China identified this point, and is going to hot hard on Web 2.0 over the next years.

C
Israelis aren't part of the global discussions around Web 2.0. Moguls like Vardi and indy bloggers are participating, but the Israeli voice is generally dead.
How many people from the companies you mentioned are writing a blog? do we have mobile mondays here? or SForum meetings?

We have one closed camp once a year, and occasional geek meetings.

How many web 2.0 oriented blogs from Israelis (in english) have you seen?

Optimistic corner:
Thumbs up to the lads at Concept and Exego for pushing the boundries consistently.

[Netanel Jacobsson]

Uri, Interesting comments. So you are actually saying that it has nothing to do with the VC's attitude, the problem is with the israeli companies? Interesting point. You are probably right on that one, however, I still think that the VC's attitude here has to change towards Internet companies and by that I don't mean just web 2.0 (what is that really?) companies but the rest as well.

[Yaniv Golan]

Uri, Netanel,

We already have 3 Web 2.0-oriented blogs, in English, in this conversation. I could list a few more if requested.

A significant number of the people driving the Web 2.0 revolution out there are Israelis, ex-Israelies, or on-the-line Israelies. In fact, visiting the valley, you might find yourself conducting pretty much an entire week worth of intensive meetings with various major Web 2.0 players - in Hebrew. I just did that a few weeks ago.

So, if we set up a local Tagit Yom Shlishi, would you two attend?

[Netanel Jacobsson]

Yaniv, sure why not? Good idea.

[Steve]

Best product are not always the best known.
See Quicknation.com.