Start-Up State Meets Start-Up Nation

Glenn Hamer

October 15, 2015


TEL AVIV – At an American Israel Public Affairs (AIPAC) dinner last year, Gov. Doug Ducey referred to Arizona as the “Start-Up State.” Having read Dan Senor and Paul Singer’s New York Times bestseller, Start-Up Nation: The Story of Israel’s Economic Miracle— a book that has now been translated into 29 languages —Gov. Ducey obviously saw the similarities between our state and Israel.

As part of Gov. Ducey’s trade mission to Israel this week, we had the pleasure of visiting Start-Up Nation Central, the non-profit that is carrying out the book’s vision. After our visit, I believe that opportunities for collaboration between Arizona and Israel are real.

Why is a deep relationship between Arizona and Israel a win-win? Both Israel and Arizona are leaders in tech and innovation; the opportunities to collaborate and learn from one another are boundless. Here are some stats on Israel that are simply staggering:

    Israel attracts twice the venture capital per capita than the United States, and a recent study by Ernst and Young ranks Israel at the top of the list globally in total venture capital invested.

    Israel, with a population of approximately 8 million people, has 77 companies listed on NASDAQ; only the United States (population 300+ million people) and China (population 1.2+ billion people) have more.

    Israel is ranked third in innovation, behind only Finland and Switzerland and ahead of the US and Japan, on the World Economic Forum’s annual Global Competitiveness Report, which evaluates 144 of the world’s economies on various measures of innovation, including the quality of scientific research institutions and spending on research and development.

    More interesting than any of these statistics alone is that the investment and innovation continue even in times of difficulty here in Israel and regionally.

    Arizona, too, has long focused on growing its tech and entrepreneurial sectors. Consider:

    Arizona has been nationally recognized for its start-up-friendly environment, even earning the number 1 spot on the Kauffman Index of Entrepreneurial Activity in 2012.

    Bruce Wright, associate vice president of the research parks at the University of Arizona (including the Science and Technology Park, the Arizona Bioscience Park, and the Arizona Center for Innovation), has spent years building relationships with Israeli tech companies and Start-Up Nation Central. University of Arizona President Dr. Ann Weaver Hart will soon be visiting with the leaders of Start-Up National Central.

    Arizona State University was recently named the most innovative university in the United States according to US News and World Report, thanks to the visionary leadership of Dr. Michael Crow.

    Key synergies exist between Arizona and Israel. Both are thriving in arid climates, having made water management and stewardship a major priority. In fact, Arizona’s water success story earned Gov. Ducey an invitation and speaking engagement at one of the world’s top water conferences, WATEC-Israel.

    But water is not the only sector where synergies exist. There are also connections in biotech and digital health, agriculture, big data, and cyber-security to name a few key sectors, and both are making strong moves into education technology, as evidenced by the star-studded ASU GSV Summit.

    There are essential parallels that have led to Israel and Arizona’s economic success:

    The government in Israel has created a low tax and low regulatory structure for start-ups. A strong university system has been established and the government provides some funding to incubators. In Arizona, we have created a terrific business environment with competitive tax rates, fewer regulations, and a low capital gains tax rate — all of which are attractive to venture capital and investment — not to mention a world class university system and our Arizona Commerce Authority, which directs one of the country’s most robust innovation challenges.

    Israel is a nation of immigrants, experiencing perhaps its greatest surge in population during the 1980s and 1990s, when nearly one million Jews from the former Soviet Union relocated to Israel. While this surge was one of the most unusual in world history in that it consisted of a great proportion of highly trained and skilled people, including doctors and engineers, one of the essential characteristics important to the start-up nation is that there is no stain of failure. The U.S. is similar. Arizona ranks high among states for in-migration, which is a source of strength.

    Israel has compulsory military service. The most elite units compete for the brightest minds. Soldiers have great freedom in choosing units. This is the ultimate meritocracy. While this prong is a point of greatest difference, there is nevertheless a similarity here; Arizona is a meritocracy. As a native New Yorker, it constantly amazes me that my birthplace has never been an issue, but the thought of a native Arizonan running the state chamber in New York? Fuhgeddaboudit!

    This is not just about making a buck. One look at the headlines and it is obvious that Israelis could be forgiven for focusing inward. The opposite is what’s happening, though.

    At a dinner the other night for Start-Up Nation Central, we were introduced to a number of innovators who are solving some of the most pressing problems it the world, including AIDS, the electrification of rural villages, and stopping the spread of cervical cancer in poor areas of the world. These heroes are putting into practice the Jewish idea of tikkun olam, which literally means “repairing the world.”

    Gov. Ducey is committed to growing Arizona’s profile around the world by sharing our state’s vibrant entrepreneurial spirt. This trip has proven that half a world away we have willing partners in a place that looks a lot like Arizona, and friends who are just as excited about innovation and the future as we are.