Munich Startup: With a relatively small market and a lot of startup competition, Israel, at first glance, seems like a poor place for the international expansion of young Munich-based companies. Why is it still worth putting the country on your mind map?
Bavarian Office Israel: The Israeli market is of limited interest to Munich-based startups in terms of customer acquisition, even though there is certainly potential there. Israel is nevertheless exciting for the following reasons:
- There are over 430 venture capital firms in Israel, and they are increasingly interested in the European market. Just last year, the Israeli VC Fund Maniv Mobility invests in Munich-based startup 2tradeThe Munich startup ecosystem should quickly position itself in this area. We at the office want to actively support this and are planning several activities in this area, including collaboration with Baystartup.
- Talent and R&D: International companies like Apple, Google, and Cisco are leading the way – one R&D center after another has opened in Israel in recent years; there are now over 100 in the Tel Aviv area alone. This is due to the highly trained specialists in Israel and the excellent cooperation with universities. Therefore, when startups are looking for new employees, they should definitely keep Israeli talent on their radar.
- The third and most important reason: 300 days of sunshine a year. And, of course, hummus.
Munich Startup: How do you get in touch with Israeli investors? Is a branch in Tel Aviv necessary?
Bavarian Office Israel: Israel is a small market, and startups and investors operate internationally. Israeli investors are accustomed to working with legal entities not registered in Israel. Therefore, a branch in Israel is not a requirement.
Build and maintain networks
In Israel, everything is done through networks – cold calling or direct approaches are rare. Therefore, networks should be built and maintained. It is perfectly normal and recommended to ask existing contacts for introductions. There are also many exciting events in Israel, such as the Ecomotion in the area of mobility or DLD Tel Avivthat make it easy to get to know the ecosystem. We at Bavarian office in Israel are part of the local network and offer support.
Munich Startup: What are Israeli financiers looking for?
Bavarian Office Israel: In Israel, investments are primarily made in enterprise software, mobility, life sciences, ag- and foodtech, IoT startups and cyber security – precisely the areas in which Munich is also strong.
Munich Startup: Who can help a Munich startup establish a presence in Israel?
Bavarian Office Israel: There are numerous organizations that can help Munich startups: the German-Israeli Chamber of Commerce, the Israeli Trade Office in Munich as well as our Bavarian office in Israel. For young entrepreneurs, BIPA (Bavarian Israeli Partnership Accelerator) is the best way to get to know the Israeli market.
The mission of our office is to promote Bavarian and Israeli economic relations. Should a Munich-based startup be interested in the Israeli market, they can contact us at any time. As a government organization, our services are free of charge and, of course, confidential.
Munich Startup: What legal framework or hurdles should you definitely be aware of?
Bavarian Office Israel: As with any international expansion, startups should contact a qualified lawyer and/or tax advisor early on. It's recommended to work with local legal advisors who specialize in international companies. This can help avoid mistakes from the outset, especially regarding international tax issues. If you're planning on sending employees abroad, you'll need to familiarize yourself with Israeli visa law.
Munich startups lack global thinking
Munich Startup: What can Munich learn from the success of the Israeli startup landscape?
Bavarian Office Israel: Two things: self-confidence and global thinking.
Israel is the second most important startup center in the world after Silicon Valley. Israel is (rightly) proud of this and knows how to market its ecosystem. Although the Munich startup world is smaller, it is in no way inferior to the Israeli startup ecosystem in terms of innovation, especially in the areas of deep tech, enterprise software, and mobility. Many exciting startups are emerging from Munich, and the Bavarian ecosystem is also catching up in terms of funding. Therefore, the Munich startup scene should continue to market and expand its international reputation. Above all, emphasis should be placed on Munich's strengths: its extremely well-trained talent, its immense customer potential in the B2B sector, and the growing number of exciting and highly innovative startups.
The second is global thinking. The Israeli market is small, and therefore even very early-stage Israeli startups incorporate international scalability into their business models. Startups from the DACH region have a larger market in which they can initially "grow up," but they should still pursue global expansion.
“Israeli communication is extremely direct”
Munich Startup: What are the differences in corporate culture between Germany and Israel, and are there important customs in the business world that Munich startups should definitely pay attention to?
Bavarian Office Israel: Israeli communication is extremely direct. This can be irritating at first and sometimes perceived as rude, but upon closer inspection, it holds great potential for effective collaboration. Unlike in Germany, spontaneity prevails in the Israeli business world. Meetings tend to happen at short notice and aren't planned weeks in advance. Decisions are made much more quickly, and action is taken swiftly. This is something Israelis also expect from their partners and customers. This requires adjustment, but it should be easy for startups.
Munich Startup: Which no-go should you absolutely avoid?
Bavarian Office Israel: Showing up to a meeting in a suit and tie and beating around the bush at length can quickly be perceived as a negative trait in the Israeli business world.
Munich Startup: Do you have a special tip for Munich startups?
Bavarian Office Israel: In the Israeli startup world, everyone knows everyone, that should never be forgotten – but that should sound familiar to the people of Munich…
Contact the Bavarian Office Israel
The Office of the Free State of Bavaria for Business, Science, Technology, Education and Youth Exchange in Israel was opened in December 2017 and is based in Tel Aviv. Johanna and Jonathan are responsible for Bavarian-Israeli economic relations.
