"If you combine the semiconductor design and metrology technology held by Israeli startups with the manufacturing capabilities of Korean large corporations, there is the potential to shake up the global market."
Shlomi Kofman, Vice President of the Israel Innovation Authority and Head of International Collaborations, said this in an interview with ChosunBiz recently. He said, "Israel accounts for about half of the global market in semiconductor design and metrology," and "if we cooperate with Korean corporations such as Samsung and LG, we can generate explosive synergy."
The innovation ecosystem of Israel, the "startup nation," draws its strength from bold government investment. At the center, the Israel Innovation Authority plays the role of a national VC by injecting about $500 million every year into startups and technology infrastructure. Its investment method is unique. Unlike private VCs that demand equity or board seats, it covers up to 80% of the needed funds even for early startups at the idea stage. Thanks to this, from the early founding stage to the first full-fledged investment stage(Series A), each company can receive up to $6 million. The condition is that the intellectual property(IP) of the technology must remain in Israel. Kofman said, "By serving as a reliable early investor, the Innovation Authority reduces the risk burden of private VCs," and "Korean corporations also have an opportunity to jump into this ecosystem."
This is also why he came to Korea. Deputy Director Kofman said, "Korea is a country with world-class semiconductor, bio, and automobile industries, and Israel is small in size but rich in deep-tech startups," and noted, "We aim to expand joint research and development and business opportunities by connecting the strengths of the two countries." He served as a diplomat for 25 years and was consul general in San Francisco, United States, home to Silicon Valley. He also worked in his youth in the Samsung Electronics semiconductor institutional sector, giving him deep ties with Korea.
During this visit to Korea, he said he would meet with the Minister of Trade, Industry and Energy and others to discuss ways to cooperate between the two countries. Kofman said, "Over the past 20 years, we have carried out 212 joint projects through the Korea–Israel Industrial R&D Foundation(KORIL-RDF), but there is room for much more," and added, "Our goal is to expand joint projects to 1000 within the next five years." He said, "In particular, we will more systematically increase the matching between Korean large corporations and Israeli startups," and "many tasks are already underway in semiconductors and bio, and now it is time to broaden cooperation to AI, quantum computing, and smart mobility."
—What do you think is the secret behind Israel becoming a "startup nation"?
"There isn't a single secret sauce. A complex 'engine' is running. First, talented people with strong STEM (science, technology, engineering, and mathematics) education gain experience in the military's top-tier technology units. In Israel, young people are required to serve in the military, and the real-world experience gained in the tech units often leads to startups.
Young people who complete their service in their late 20s to early 30s build careers at global corporations' R&D centers such as Microsoft and Intel, then move on to start companies. So-called "spin-offs" happen actively. Currently, about 500 VCs are active in Israel, and they quickly supply funds to early startups. This virtuous cycle is creating 600~700 tech startups every year."
—The structure in which the government invests without receiving equity is unique. How does it work?
"We support startups throughout their entire growth process. From the idea conception stage to the investment stage, each company can receive up to $6 million in government funds. Because the government does not ask for equity, founders can start their business without the burden of early equity dilution. For example, if the idea stage requires a total of $70000, the founder only needs to cover $15000, and the remaining $55000 is covered by the government.
This structure is also favorable for private investors, because the government shoulders a significant portion of the early risk. These funds come from a government fund of about $500 million per year operated by the Innovation Authority, which is divided into programs for startups, R&D infrastructure, pilot projects, and more. We discover the most innovative deep-tech startups through due diligence and also play a role in connecting them to global partners such as Korea."
—In which areas can cooperation with Korean corporations create the greatest synergy?
"There is tremendous potential in four areas. First is quantum computing. Israel has about 20 companies that are small but possess advanced technology in this field. Second is semiconductors. Israel has few manufacturing facilities(fabs), but is strong enough in chip design and metrology to account for about half of the global market. Combined with Korea's manufacturing capabilities, it can create perfect synergy. Third is bio convergence. This is a field that combines life sciences and AI to create new solutions, with ample room to cooperate with Korean corporations such as Samsung Biologics. The last is smart mobility. As seen in the case of Mobileye, which was acquired by Intel and now cooperates with Hyundai Motor, Israel's sensor technology is essential to Korea's automobile industry."
—What should Korean corporations do first if they want to work with Israeli startups?
"Going through the Israel Innovation Authority is the fastest route. We can connect Israeli startups that fit Korean corporations and push forward pilot projects. We also introduce deep-tech startups that have already completed due diligence and investment. The two countries have operated a joint fund of $4 million annually, and proposals for joint projects in semiconductors are underway now. Israel is ready to cooperate anytime, and the potential is limitless."
—What is the biggest challenge when corporations from two countries with different cultures work together? What advice would you give to Korean startups aiming to go global?
"The most important thing is to build trust and set a shared innovation goal. Don't we already have a good track record of more than 200 joint projects between Korea and Israel? While I offer this cautiously, if there is something to learn from Israeli entrepreneurs, it is the 'boldness to take risks.' Of course there is a price, but innovation comes from that very process."