Impact Tech Nation: Why Israel is a “Blue Ocean” (Part I)

Before you read..

This article is divided into two parts, so keep your eyes peeled for Part 2! Enjoy and share your thoughts with us below.

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Imagine this: In a country of 8.7 million talented people and 137 lush beaches, there are 6300 startups (or 1 startup per 1400 people), of which 35% have the potential to be aligned with the global Sustainable Development Goals. These startup companies, if successfully migrated into the impact sphere by adopting and diligently tracking impact KPIs alongside profit, can have massive global impact.

Although less than 10% of the $500B global impact capital is deployed in impact tech, the country’s competitive advantage in high-tech innovation is already enabling local companies to leapfrog into scalable solutions for today’s most pressing social and environmental challenges.

This country is Israel, the future impact tech (startup) nation.

Israel is essentially an untapped teeming “Blue Ocean” with the potential of opening up new, uncontested market spaces and creating unique international consumer demand.

Lay of the Land

Israel is at the forefront of technological innovation, with many of the world’s premier startups born from Israeli minds and nurtured with the Israeli values of hard work, creativity, and fast-paced progress. Highly successful Israeli companies such as Wix, MobileEye, and Waze have created global brand recognition and enabled the country to become a global tech hub. Over 350 multinational companies have their R&D centers in Israel, and for many of these companies, Israel was the first choice in expanding beyond their home base.

Now, the types of startups we believe have the most potential to make a difference are those that are created to make the world a better place. These companies are born out of a desire to better the world by tackling specific global challenges using impact-intentional business practices. They generate more than just revenue; they cultivate measurable social impact in areas such as HealthTech, AgTech, WaterTech, or EdTech. Our Founder and Managing Partner, Cecile Blilious, defines these startups as impact natives, or companies that are created under the premise of tackling a well-defined social/environmental problem.

However, what is less intuitive and thus, often overlooked, is the fact that impact can occur in all facets and across multiple domains — even those that are traditionally thought of as solely high-tech industries such as cybersecurity and blockchain! All that is required for a startup to transform into an impact startup is: (1) awareness about the UN’s SDGs and the impact investing ecosystem that can be translated into intentionality, and (2) help and advice from an expert or thought leader in the impact space to guide them in determining how their product/service can be purposeful, defining their impact metrics, and framing their impact mission.

We call these companies impact migrants, referring to those businesses that, although were not created under the premise of addressing a specific social or environmental issue, have a desire to transition into impact by defining their impact mission and tracking new impact targets. For these companies, the opportunities are vast: discovering new market segments, attracting higher capital and a more diverse talent pool, and aligning their values to the business by better engaging with stakeholders. Doesn’t get any better than that.

Cecile strongly stands by her belief that “impact on society is a mindset.” In other words, when high-tech startup founders have a global vision for their company while wholeheartedly embracing an “impact mindset,” they transform their entire business culture and simultaneously boost the company’s impact, revenue, and growth. Triple aim!

Considering the multitude of factors accelerating Israel’s revolutionary impact tech landscape, we believe that Israel is poised to become the Impact Tech Nation. Let’s dive in.

Our North Star is our Mission, Passion, and Purpose

IFI seeks founders with powerful stories and/or meaningful intent coupled with strong business skills, as we believe they have the perfect recipe to create social and financial value. Cecile and the rest of the IFI team seek out both, companies that are impact natives, as well as those that have the potential and willingness to migrate into the impact space.

Let’s take a look at two such portfolio companies.

In conversation with one of our impact native portfolio companies, EyeControl, which creates wearable communication devices for locked-in patients and ICU patients who are unable to communicate, we learned that the passion behind the technology comes from the founders’ personal dilemmas.

Or Retzkin, one of the co-founders, connected with Shay Rishoni and Itai Kornberg after a hackathon. Shay suffered from ALS, which hindered his ability to effectively communicate with caregivers and loved ones. Or bonded immediately with him due to his grandmother Julie, who lost her ability to communicate shortly after being diagnosed with ALS. Since they all understood the magnitude of the physical and mental health challenges hindered communication creates for over 10 million patients worldwide, they set out to create EyeControl.

Stemmed out of the founders’ personal stories, EyeControl is fueled in all business dimensions by its “north star” of facilitating an enhanced quality of life for patients and are constantly inspired by their loving memory of Shay. We’re so proud of you EyeControl!

On the other hand, we fiercely believe that impact-oriented startups can stem from intelligent entrepreneurs who recognize an opportunity for a hi-tech solution to solve a specific problem, set out to close this gap, are guided into impact intentionality along the way, and migrate towards becoming an impact-oriented startup.

One of our portfolio companies, MedOrion, offers one such impact migrant story. Its founders, Asaf Kleinbort, Eviatar Khen, and Shai Levi, recognized a lack of effective personalized and all-encompassing population health marketing tools and saw a real business opportunity in building an AI-powered platform to deal with the mass preventive medicine market gap.

The founders were connected with Cecile through one of IFI’s investors who understood that this company has real impact potential, and she then provided guidance in terms of helping the company articulate their Theory of Change and impact strategy accordingly. In this way, MedOrion did not change their business model per se or sprout from a founders’ personal experience — they were simply made aware of what impact tech is and quickly realized that their ultimate mission of reducing diseases and human deaths through preventive medicine was aligned with the UN’s SDGs.

Just think of how much good can come in the world if the 35% of Israeli startups who have the potential to become impact-oriented actually understand their impact KPIs, blend those into their business cases, and start tracking impact outcomes.

Impact really is a mindset game.

In Part 2 of the article, we will be discussing the evolvement of investors’ mindsets in regards to impact investing, as well as why Israeli founders have a personal, professional, and impact advantage when it comes to starting high-tech businesses. Stay tuned!

About the Author

Rashel Bajaj is a summer intern and analyst for the Impact Management and Measurement Project at Impact First Investments. Rashel is an undergraduate student studying finance, business information systems, and economics at the University of Pittsburgh. She is an avid student leader on campus, taking on leadership roles in various globally-minded organizations such as Global Brigades, and hopes to start her own social entrepreneurship venture.