Incubating startups in the Israeli classroom

Why wait until leaving university to start a business? Campus accelerators give students a risk-free base from which to research and launch ideas.

Entrepreneur Moran Nir says of Zell: “The networking was the best aspect.”

Entrepreneur Moran Nir says of Zell: “The networking was the best aspect.”

In a twist on the classic academic approach to entrepreneurship, Israeli universities are trending toward classroom-based incubators that allow students to put theory to the test in a sheltering atmosphere. After all, what better way to learn how to start a business than to actually start one?

The formula clearly works. Among the successful companies launched while their founders were in the Zell Entrepreneurship Center at IDC, a private Herzliya university, are the eBay-acquired Gifts Project and Conduit-acquired Wibiya. LabPixies, Google’s first Israeli acquisition, was started by Zell alumni.

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“The goal is to strike a balance between hands-on practice and academic methodology,” says Liat Aaronson, executive director of the 12-year-old program, which annually accepts 20 to 22 qualified seniors.

For Moran Nir, her 2009 academic year in the entrepreneurship center was key to her success with FunkKit, a customized sneaker-sticker product now sold online and in stores in 10 countries and growing.

“I always say that I’m not sure it would have happened without Zell,” she tells ISRAEL21c. “It gives you a safety net so if your idea doesn’t work, nothing bad happens. And it introduced us to amazing, helpful people in the legal, financial and product development fields. The networking was the best aspect.”

Israel is a logical place for Zell and newer programs like it. The country boasts more high-tech startups and venture capital activity per person than any other nation in the world, and has produced more startups than Japan, China, India, the United Kingdom, Canada and South Korea.

Taking the entrepreneurship journey

In 2004, the Technion-Israel Institute of Technology’s Bronica Entrepreneurship Center opened for undergraduates, graduate students, alumni and faculty.

“Our program is an entrepreneurship journey in three steps,” explains Prof. Uzi De Haan, who left a long career in industry to lead Bronica. “At each step, the commitment to start one’s own venture increases.”

For those who continue to the stage of actually launching a business, “We give them a link with the high-tech ecosystem, with accelerators, consultancy services such as Microsoft, and private workshops for teams we feel are serious,” De Haan tells ISRAEL21c.

“Our deal flow from the starting point is quite high. Every year we have about 140 alumni teams, ending with maybe 30 potential candidates for starting ventures.”

Bronica also sponsors BizTech, a yearly business plan competition open to student or alumni teams from any university. “So far, 20 new companies have come out of that competition — one already had an exit and another has $20 million invested in it,” says De Haan.

This year, the Technion will offer a two-month pre-accelerator to all eight or 10 finalist teams. They’ll get mentoring, a business loan and workspace.

“If it works well, next year we’ll open it to foreign universities that have similar competitions, so they can send their best teams to Israel to expose them to Israelis and Israel’s ‘startup nation’ culture in the summer,” says De Haan.

The Bronica center works closely with the Technion’s master of business administration (MBA) department. “Some of the MBA students are interns for the companies in our accelerator,” De Haan says.

Preparing for the real business world

Next fall, the Technion will welcome its first class of international Start-uP MBA students.

“We conducted extensive research before deciding to launch this, because it is quite a unique academic program,” says Avital Regev Siman-Tov, managing director of the Technion’s MBA programs. She learned for herself that traditional courses are not sufficient for budding business people.

“I have a PhD in medical sciences and an MBA, and my theoretical tools gave me the opportunity to be the CEO of a startup — and then what? The real world is a completely different arena,” Regev Siman-Tov says.

“Start-uP MBA will give a student the tools to use his own ideas to establish a company during the program itself, with the assistance of our academic and industry contacts. We will help students commercialize innovations, write business plans and follow up with internships.”

Zell’s Liat Aaronson: “The goal is to strike a balance between hands-on practice and academic methodology.”

Zell’s Liat Aaronson: “The goal is to strike a balance between hands-on practice and academic methodology.”

Israel’s startup reputation is the prime selling point for this program, which will be based not on the Technion’s Haifa campus but at the recently opened Sarona “lifestyle center” in Tel Aviv to facilitate field trips to startup country.

Students will be able to take courses at the new Technion-Cornell campus in New York City, and as the only Israeli member in Yale University’s Global Network for Advanced Management, Start-uP MBA will have collaborations with leading business schools around the world.

“Usually in global entrepreneurship programs they teach you how to behave in the global arena, while here we say, ‘Come and study how it is done in the “startup nation,’” says Regev Siman-Tov.

Like a shoemaker’s apprentice

Because not all ideas can become blockbusters, Aaronson prefers to look at university entrepreneurship programs as people accelerators rather than venture accelerators.

“Sometimes success comes from failure,” she says. “Every year, one to four companies come out of the program, and a lot of those are still around. The ones that make the news have made an exit, but 20-some companies launched at Zell, or by Zell alumni, are employing people and developing products.”

Last year’s class included the founders of Roomer, a site for buying and selling hotel reservations that won $2 million in seed money. Feex, a crowd-sourced financial fee-reduction site, attracted its first investment from the founder of the hugely popular Waze, who mentored Feex’s founders in Zell.

Technion’s Avital Regev Siman-Tov: “Start-uP MBA will give a student the tools to use his own ideas to establish a company during the program itself.”

Technion’s Avital Regev Siman-Tov: “Start-uP MBA will give a student the tools to use his own ideas to establish a company during the program itself.”

Aaronson is pleased that other Israeli institutions of higher learning are starting similar academic programs (such as The Bengis Center for Entrepreneurship and Management at Ben-Gurion University) or community entrepreneurship non-profits SifTech at the Hebrew University and StarTAU at Tel Aviv University.

“I believe the more entrepreneurs who are practicing safely in the university context the better,” she says.

Serial entrepreneur Shimmy Zimels consulted with Aaronson after he agreed to head a new entrepreneurial program this year at the Jerusalem College of Technology (JCT), which offers participants stipends from a Canadian donor.

“It’s a totally new program — no other university in Israel gives funding in addition to educational support and mentoring for startup projects,” Zimels tells ISRAEL21c.

During the fall semester, 25 applicants presented their business ideas, and during the spring semester the handful chosen as having the most potential are meeting with mentors and faculty members to get their concepts off the ground.

Prof. Ayla Matalon, who teaches at IDC, the Technion and Tel Aviv University and runs the MIT Enterprise Forum of Israel, pioneered the idea of combining academic studies with practical learning. Like Siman-Tov, she had found that the working world bore little resemblance to what she’d learned in the classroom.

“I always thought it is important to understand things from the roots and learn by action,” she tells ISRAEL21c. “If you want to be shoemaker, you become a shoemaker assistant first. Even if not all the students become entrepreneurs, they become much more aware of processes in the business environment that they should be aware of.”

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About Abigail Klein Leichman

Abigail Klein Leichman is a writer and associate editor at ISRAEL21c. Prior to moving to Israel in 2007, she was a specialty writer and copy editor at a daily newspaper in New Jersey and has freelanced for a variety of newspapers and periodicals since 1984.
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