StartupEast is a newly launched accelerator which helps Israeli startups penetrate Asian markets. Only startups with a strategic focus on expansion in Asia are welcome to apply.
Most of the news in the mainstream media about Israel inevitably centers on violence, war, and conflict. What many people don’t know is that there’s a thriving startup ecosystem in the country, rated consistently as one of the most innovative in the world. In 2013, there were 61 Israeli companies listed on NASDAQ, more than Japan, Europe, Korea, and China combined. And between 2010 and 2013, approximately 381 Israeli startups raised some form of investment, with 88 successful exits at a total of $8.76 billion. Google’s high-profile acquisition of location mapping startup Waze is one such example.
These figures are even more impressive when we consider that Israeli startups are at a natural disadvantage given their extremely small local market. The total population of the country is only 8 million. Companies are forced, from a very early stage, to look at scaling regionally if they wish to be successful. This doesn’t seem to have affected the entrepreneurial spirit though. Currently, there are approximately 5000 startups operating in Israel, giving it one of the highest rate of startups per capita in the world.
However, while it is still possible to expand operations into American and European markets, it is rapidly becoming difficult to do so due to saturation and a crowding-out effect, explained Amos Avner, a founding partner of StartupEast, a new accelerator trying to introduce Israeli startups and innovation to Asia.
StartupEast has an interesting model. Its acceleration program requires incubated startups to divide their time between Israel and Asia. It also requires startups to have an almost exclusive focus on Asia, and to have a local presence in the region once they graduate.
“It’s important to keep finding new markets and new opportunities,” said Avner.
Avner is not alone in running the program. Other founders include Amir Ofek and Omri Shamir. All three have diverse backgrounds and experience; ranging from new media, entrepreneurship, and corporate strategy. Avner believes this brings varied knowledge and skill set to the table, ultimately helping the startups picked for acceleration.
The idea for StartupEast initially started as a small side project within the Tel Aviv University incubator program where Avner worked previously. However, once there was increasing interest for the initiative, both from within Israel as well as other countries, the founders felt it would be best served as an independent entity. StartupEast was incorporated approximately eighteen months ago, focusing solely on taking early-stage companies to the next level.
Healthy ecosystems, global appeal
The accelerator is trying to entrench itself in Asia, because of what Avner calls “booming startup activity.” Southeast Asia, China, Japan, and India are all building healthy tech ecosystems, with a wave of funding and acquisition activity, and enough talent to hire the best and brightest in their fields. “We believe it is an ideal opportunity for Israeli startups to take advantage of the existing climate,” he said.
StartupEast has chosen to open an office in Singapore, which, according to Avner, was an easy decision. Its status as a gateway to the rest of Asia, widespread government support for tech startups, and multinational population were factors his team considered closely. “The environment and attitude resembles Israel in many ways. We thought our startups would have no problem adjusting,” he added.
Funding for the accelerator has come from private capital, as well as a substantial amount put in by Samurai Incubate, a Japanese VC firm. StartupEast has also partnered with the National University of Singapore’s Enterprise incubator, solidifying its presence in the country.
The first cohort of startups graduated from the accelerator only a few weeks ago. They were subjected to a unique, four-month-long stint which included spending two months in Israel and the remaining time headquartered in Singapore, but traveling extensively across Asia. “We visited Japan, Philippines, and Korea,” stated Avner. “The purpose was for the startups to meet with potential investors, partners, and clients thereby getting a feel of the different markets in the region.”
Startups which graduated from the first batch are:
- introMi: A location-based proximity and discovery protocol SDK for mobile devices that can be used in dating, commerce, and productivity applications.
- Winkapp: An image recognition solution that can link images with relevant mobile content, and is relevant in the adtech space.
- Leadspotting: Cloud-based business intelligence and lead generation software, with features such as map-based visualizations and personalized alerts.
- WatchMe88: A location-based dating and interaction app for wearable devices.
Three startups from the batch are on the verge of closing their seed funding rounds. However, Avner declined to give more information, citing non-disclosure agreements.
Those accepted into the accelerator are given a stipend of around $20,000 to help with travel and other costs. There’s also training for strategies on how to run and scale companies, including support with operations, marketing, and business development.
Avner feels the accelerators’ strongest suite is the vast network of investors and clients it can tap. “We make sure they [the startups] meet with a number of investors and clients spread across Asia. Networking is a very significant thing we provide,”he said. In exchange, StartupEast takes eight percent equity from each startup it accelerates.
What’s the future?
Avner’s vision for the accelerator is clear. Only those startups with a strategic focus on expansion in Asia are welcome to apply. This includes startups could either be country-specific or have a more regional perspective. The accelerator will not, however, enroll companies only looking to tap markets outside the continent.
StartupEast is aiming to accelerate at least forty ventures over the course of the next two years. Avner said they’re looking for companies with ‘truly innovative’ technology, and who at least have a minimum viable product ready. He believes one of the key competitive advantages for Israeli startups coming into Asia is their superior technological prowess. “There are hundreds of impressive startups in Singapore, with great products and exceptional founders. If Israeli entrepreneurs wish to differentiate, they can do so on the basis of technology,” he added.
However, innovation isn’t the only thing the accelerator considers. The team, and its entrepreneurial appetite is very important, as well as the likelihood of the idea turning into a commercial success. “We’re looking for patience, flexibility, and adaptability,” said Avner, “It’s crucial for founders to be able to adapt to different markets, cultures, and new ways of doing business.”
Part of the program is introducing founders to the diverse cultures present in Asia, as well as training on etiquette, and cultural code. Avner identifies the Philippines and Korea as markets of interest due to their growing, tech-savvy populace, and opportunity to scale. “Success also boils down to having the right local partner,” he explained.
Despite the program’s unique appeal, Avner remains aware of the challenges which lie ahead. Investors may be reluctant to fund startups that do not have local founders or significant amounts of traction. They need to be convinced that their risks will pay off in the long run. “It is easier to invest in a company that already has a significant, loyal user base,” he said. “In our case we have to prove ourselves by building innovative products and hope institutional investors realize the true worth of the team.”
This post was originally published on Tech in Asia.
Featured Image Credit: PR Screenshot/ StartupEast