The city was named one of the top 50 startup ecosystems in the world this year by Compass. What’s gilding the city of gold in silicon?
While Tel Aviv is indisputably the Israeli ecosystem’s capital, Jerusalem has caught up quickly. In the last five years, the city has leaped into Startup Compass’ Top 50 ecosystems and in April, Time Magazine called it one of the top five emerging ecosystems to watch around the world.
You shouldn’t make the mistake that the city is only getting the fringe benefits of being in Tel Aviv’s sphere of influence. Jerusalem also plays host to Hebrew University’s sprawling science campus close to the country’s parliament, called the Knesset, has a plethora of media and life science companies, and almost quadrupled its venture capital funding within three years.
Made in JLM, co-founded by CEO Roy Munin, VP Uriel Shuraki, and Chairman Hanan Brand, aims to put the city in the top 20 by 2020. Jerusalem is now seeing about 100 new companies a year according to the organization, a communal effort to express that success to the world and amplify it.
The organization creates sub-communities for different professions, plans meet-ups, and aggregates industry events throughout the city. The group is unique in that it is an organic development: It wasn’t launched by Jerusalem’s municipality, though co-founder Uriel Shuraki says there is definitely a symbiotic relationship now between the city and the organization.
“Companies were hard to find and we wanted to make connecting people easier. Jerusalem already had all the ingredients of a great ecosystem,” Shuraki tells Geektime. Made in JLM counts 3,000 to 4,000 members who have been able to network into sub-communities of several hundred for designers, developers, and other professions. “We’re kind of an umbrella. We work with all the entrepreneurs and work with all the communities to connect them together. It’s rare we organize events but we aggregate all the details of events” he notes.
Investment and growth
The city’s venture investments have ballooned over the last few years. At a measly $58.1 million for 26 startups in 2012, venture capital has exploded to $227 million for 57 startups in 2014, according to data from Made in JLM that Hanan Brand compiled. A number of VCs exist in the city, including the eponymous Jerusalem Venture Partners and OurCrowd, a crowdfunded VC firm focusing on Israeli startups.
There’s a heavy emphasis on media, adtech, and mobile, but that shouldn’t distract you from its life sciences prowess. Several biotech firms are also headquartered there, including international pharmaceutical conglomerate Teva, Cisco, Intel, and IBM, which all maintain R&D centers in the city. The JDA’s BioJerusalem initiative supports life sciences firms in the city, offering up to NIS 3 million for equipment and NIS 5 million for infrastructure and NIS 3,990,000 (NIS 50,000 – 96,000 per employee) for life sciences companies, and additional R&D funding is available through a national development program.
Massive financial incentives
The city has a tremendous list of incentives and proverbial gift baskets for local companies they consider startups.
The Encouragement of Capital Investments Law brings taxes for approved enterprises down to 9% in some cases. Because Jerusalem is considered a development priority for the country, the city and its residents are eligible for certain economic benefits in business. The Israeli Ministry of Economy will cover up to 20% of salaries for 15 or more employees receiving “high salaries,” i.e. 2.5x the average national wage, for as long as four years. That’s intense.
Companies also receive grants of up to NIS 400 per sqm for relocation to Jerusalem or expansion of existing premises in the city. R&D grants are also available from the Ministry of Economy and Office of the Chief Scientist.
The city’s Jerusalem Development Authority really lays it out though. They’ll also provide as much as NIS 500,000 for SMEs with 10 or fewer employees. For student jobs, the city will cover up to NIS 2,000 for startups and grant the employer a lump sum payment of NIS 10,000 should that student stay on longer than the approved 6-9 month period. This doesn’t even cover what you can get if you are in certain verticals.
Challenges and building
Shuraki just returned from a three-week trip to the U.S. organized by the U.S. State Department called IVLP — the International Visitor Leadership Program. Along with 21 other participants who oversee activities in other major startup cities, they toured hubs in Kansas, Boulder, Washington D.C., and San Francisco to network and piggyback off tactics used for organization there. The stark difference he found between his group and communities there is the bottom-up approach the community’s taken to organizing.
“There are a lot of startup communities out there, but most of the time municipalities organize them. Here, the community built it and then the municipality jumped on board,” Shuraki tells Geektime. “We know much better what’s happening on the ground while people in the municipality are a bit disconnected from that. They totally understand why it should be different. For example, they count on us to do social media better.”
Right now, Made in JLM is trying to focus on improving the job market in the city. There is some hope that new infrastructure — namely a high-speed Tel Aviv-Jerusalem rail — can start bringing more activity from the coast into the mountains. But we’ll have to wait and see.
“The train goes both ways — maybe it will make it easier.”
Made in JLM is currently a six-man operation that maintains an ongoing forum of 60 tech leaders in the city. They count all the community’s members as representatives of the city.