Last week, the Fung Global Retail & Technology team went on a four-day technology innovation tour of Israel. Members of our team met with Israeli startups, presented at the LeAD Sports Technology Accelerator launch and attended the OurCrowd Global Investor Summit, where Deborah Weinswig discussed corporate innovation.
The summit is the biggest equity crowdfunding event in the world and it featured keynote speakers who discussed innovation, technology and globalization. Held in Jerusalem, the summit was attended by more than 4,000 industry leaders, more than double the number of attendees the previous year. The major theme of the day was “The Future,” and there was also much discussion of collaboration. The event included presentations, panel sessions and one-on-one “speed dating” networking sessions. One participant affectionately referred to the summit as “networking on steroids.”
At the summit, we heard from an array of executives and leaders, including:
The summit opened with a welcome address from OurCrowd Founder and CEO Jon Medved, who highlighted the global nature of the event. Medved said an estimated 82 countries were represented at the summit, along with 300 startup companies, 250 venture capitalists, 200 multinationals, 170 visiting journalists and 6,000 registered attendees (an estimated 4,000 actually attended).
OurCrowd was founded in February 2013, and Medved noted that it has raised more than $400 million for more than 110 portfolio companies since its inception.
Medved then introduced Jerusalem Mayor Nir Barkat, who spoke about his life as an entrepreneur and about Jerusalem. He described Jerusalem as a city where everyone is welcome. “There are no guests and no hosts. It is not just the past, it is the future,” he said. According to Barkat, tourism and health/life sciences are two industries that are growing in Jerusalem. He said that four years ago, there were 250 technology companies in Jerusalem, but today there are 600. He also said that there are great opportunities in Jerusalem for young companies that want to locate and grow their operations in the city.
Medved echoed the mayor’s comments about Jerusalem being ripe for investment, and presented two contrasting slides of the venture capital picture that illustrated how Israel has thrived in a declining market. “Worldwide venture capital activity declined 24% and venture-backed exits declined 26% year over year,” Medved said. He then contrasted that global trend with the trend in Israel, where high-tech capital grew by 120% from 2013 to 2016.
Why is Israel receiving so much investment? Medved suggested it is partially because the country’s entrepreneurs focus on difficult, high-tech areas such as machine-learning algorithms and drone technology. He added that 60% of military drones come from Israel, and said the country leads the world in autonomous vehicle technology. Sports technology and agricultural technology are also core strengths.
Elan Zivotofsky, OurCrowd General Partner and Laly David, OurCrowd Business Development Partner, then discussed the top 10 tech trends that OurCrowd has identified:
Later in the day, Deborah Weinswig participated in a panel discussion titled “Wag the Elephant: Innovating at Big Companies,” which focused on partnerships, corporate culture, communication, branding and working with startups. Laly David, Business Development Lead at OurCrowd, moderated the panel, which included Ruthy Kaidar, Chief Startups and Developer Relations Lead, Microsoft Israel; Inken Braunschmidt, Chief Innovation Officer, Innogy; Nick Sugimoto, Senior Program Director, Honda Silicon Valley Lab; and Meir Morgenstern, Site Lead, Dropbox. Highlights of the panel discussion follow:
External partnerships: Ruthy Kaider from Microsoft Israel said that her company’s CEO took the company in a new direction a few years ago. The focus became selling services instead of selling products. This shift has had a positive impact on Microsoft’s partnership model. Today, Microsoft’s presence in a country enables customers to leverage its solutions.
Microsoft understands that startups are the next form of partnerships, and that it is the power of the ecosystem and the partnerships that allow startups to succeed. Kaidar said that Microsoft built collaborations to help startups reach customers because almost every customer that startups want to reach is already a Microsoft customer.
Innovative thinking: When faced with severe challenges, German energy company Innogy explored many options, including augmented reality (AR) and artificial intelligence (AI), with the understanding that, in the future, the company’s ultimate customer may not be a person.
Dropbox still believes that companies can give people the opportunity to disrupt and provide ideas. About 30% of the ideas for new Dropbox products come from the company’s annual Hack Weeks, and company culture demands that employees think like entrepreneurs.
Management solutions: Dropbox Site Lead Meir Morgenstern described how many individuals spend nearly 60% of the week (or three days each week) managing time. The company is looking for innovative technology solutions to fix this very real problem.
Prioritizing initiatives: Microsoft decides the strategy and pillars that it will focus on at the beginning of the year. The pillars will never compete, and are horizontal.
Rebranding: If a project does not have support from leadership, it will always be a pet project. Innogy’s Inken Braunschmidt advised that it is not wise to try to convince everyone of an idea’s value at the same time, and said individuals should look for good partners who can help the team solve problems rather than trying to solve everything on their own.
Bridging cross-cultural differences: Li & Fung has a 250,000-square-foot space in Shanghai called The Explorium, where partners can share the space, learn and experiment. The company invites senior leaders to Singularity University to experience AR/VR and introduce them to new technologies and trends. The company also connects large companies to startups; the goal is to find the right startup that fits the company’s needs, across borders.
Working with Israeli startups: Every April, Fung Academy holds a startup park event. Last year, three out of the 12 participating startups were Israeli, and this year, six are expected to be Israeli. Fung Global Retail & Technology’s experience working with a number Israeli startups has been positive. Our team has found that the startup teams are very responsive and that the time zone difference is favorable to New York City. The startups we have worked with seem to be able to anticipate our needs, and they know the apparel business well. In addition, we have worked with Israeli startups with particular expertise in RFID tagging, voice recognition technology and cyber security.
The Fung Global Retail & Technology team met with four startups at the summit in “speed dating” sessions that were held in the afternoon. We met with leaders from an investment fund, a marketplace for modest fashion, a startup that creates footwear-sizing solutions and a logistics solutions provider.
Jumpspeed Ventures is the first venture fund built to capitalize on the Jerusalem startup scene. From 2012 to 2016, the number of new startups initiated in Jerusalem grew by 400%, and Jumpspeed has become the go-to investor for early-stage startups in the city. Jumpspeed’s founder, Ben Wiener, established the fund in January 2014, and since inception, the fund has been able to identify some of the best Jerusalem software startups at the earliest stages. Wiener says he has established a “sweet spot” of criteria that all of his investments must meet.
Jumpspeed is a hybrid venture capital fund and venture builder micro-VC fund. Over the past three years, it has invested in 11 startups. Most of Jumpspeed’s portfolio companies have gone on to raise money from other investors at higher valuations and have brought their products to market; one company, Breezometer, was named by the White House’s Global Entrepreneurship Week program as “Most Promising Startup” in 2014. Wiener is in discussions with investors about his next fund. The focus will continue to be on early-stage startups in Jerusalem.
ModLi is a marketplace for modest, modern women. The marketplace was created more than 15 months ago and is the go-between for 100 different boutiques worldwide. ModLi believes that modesty can be defined in many ways, which allows it to cater to women of different lifestyles and religions. Today, the company sells hundreds of different modest items. Products include formal and casual dresses, shirts and skirts, as well as head coverings and accessories. The company sells items ranging from preteen to adult styles, and in sizes small to plus-size. ModLi says that 90% of its sales are made in the US. The website receives more than 150,000 visitors every month. Founder and CEO Nava Brief-Fried said the company has launched private-label brands and that the market presents much growth opportunity.
Invertex created a retail and omnichannel solution that scans the body to enable more accurate sizing. Today, the technology is being used for footwear and eyewear. In less than 10 seconds, the Invertex app can scan a person’s foot and tell the user the exact size/fit he or she needs, with 95% accuracy. David Bleicher, the company’s CEO, said that shoe sizes delineated by different companies can differ by up to 1.5 sizes. He says that variation in sizing is contributing to the 30%–40% online shoe return rate, compared with the 8% rate for shoes that are bought offline. Invertex is selling its product both in stores and online with a downloadable app. Currently, the brand is working with Famous Footwear. It is also working with PQ Eyewear, using the technology for facial scans. The collaboration allows PQ to customize every frame based on face size and shape.
Freightos is a logistics technology startup that operates an international freight marketplace where retailers can instantly compare global air, ocean and trucking spot quotes from dozens of freight forwarders. Companies can also use the site to book and manage shipments and get live, 24/7 support. The Freightos marketplace is like an Expedia for freight pricing. Users are able to view and manage price quotes on their own without having to wait for a manual price quote, which usually takes upwards of four days and typically does not include any options.
The Freightos technology is also used for freight pricing and routing internally at 90% of the world’s largest logistics providers. A number of large distributers, including Sysco Foods and Marks & Spencer, also use the company’s solutions.