Controversial

Why Israel is the Hot Bed for Payments Start-Ups

Israel, with its emerging tech scene embodied by the entrepreneurs of “Silicon Boulevard” in Tel Aviv, has gotten the world’s attention as “Start-Up Nation.” PYMNTS correspondent Andy Freedman is in Israel with a view as to just what makes this Start-Up Nation such a hot bed for payments start-ups.

Israel is a nation that knows a thing or two about adversity. Surrounded by enemies on all sides, constantly facing the threat of war and subject to much criticism for their politics, values and very existence. Most countries would cower under such conditions. Most countries would stop fighting for their existence. Most countries would fail to put a focus on areas like education, innovation and technology. But, Israel isn’t most countries and over the course of my first few weeks living in Tel Aviv, I have gained a new appreciation for the passion, intelligence and directness (known as ‘tachles’ in hebrew) of the Israeli entrepreneur.

 

There is something special happening in the Israeli tech scene — from the holy city of Jerusalem, to the home of Technion (MIT-Middle-East) in Haifa, to the country’s very own ‘Silicon Boulevard’ in Tel Aviv. Many have written about the movement-taking place in StartUp Nation and the driving forces behind Israel’s success. My hope is to share my own experiences, perspective on Israeli startup culture and highlight both the incredible FinTech businesses being built and the biggest challenges of the Israeli entrepreneur.

 

To start, a few impressions about what makes Startup Nation a particularly fertile FinTech market and some challenges that limit Israel’s global impact:

  • National Pride: If nothing Israelis are proud people — they are quick to highlight the incredible story of Startup Nation, give you their pitch on how their fraud monitoring solution is exactly what US retailers need, right after taking you to the best hummus spot in town (note: I’ve been to roughly 10 best hummus spots in my first few weeks). This strong sense of community has developed one of the most collaborative environments I have ever experienced – a shared duty of all entrepreneurs in Israel to look out for one another and celebrate every success. And there have been many of note: Paypal acquiring Fraud Sciences in 2008; Google acquiring Waze last June; Apple acquiring PrimeSense and Wix with a successful IPO this past November to name just a few.
  • Startup Strengths: The Israeli startup scene is rich of developer talent, data scientists and product managers. The early training ground of engineers in the country was not in the labs of MIT or Stanford, but working as part of elite teams within Israel Defense Forces (IDF).  I’ve met developers whose talents range from being classically trained musicians to journalists – all bringing a rich blend of real-world experience to their roles as risk analysts and developers at new fraud monitoring companies like Billguard and Riskified.   
  • Gaps and Opportunities: Despite the ability to build incredible products, there have been very few Israeli startups that sold me on their grand vision. This is a challenge is common across industry where most of the concepts offer a very specific feature. Michael Eisenberg, of Benchmark Capital who recently launched Aleph, a new VC fund in Tel Aviv, wrote a compelling blog post that analyzed why the Israeli entrepreneur struggles with developing vision and brand. The product demos I see here are often impressive and demonstrate incredible technical potential, but it making the connection between product and brand vision is what makes all the difference.

Overall, my initial immersion into Israel’s startup scene has been energizing. Over the coming months, I look forward to sharing my discoveries, profiling some interesting FinTech companies and hopefully exposing the payments world to the opportunities in Israel.

 

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