Exploring the Israeli cyber security and start-up ecosystems

Exploring Israeli cyber security

Growing Australia’s cyber security ecosystem is at the heart of AustCyber’s mission and there is much we can learn – good and bad – from international examples. We are always researching and exploring examples that demonstrate best practice globally, and it’s well-known that few countries do a cyber security ecosystem better than Israel.

AustCyber’s Program Director for Innovation and Capability Development, Mike Bareja, seized the opportunity to accompany CyRise, Australia’s only cyber security-specific accelerator, on its tour of Israel’s cyber security ecosystem in late 2018. Participants included the newly announced second cohort of CyRise, as well as a number of other Australian cyber security companies who were interested in learning from this unique country.

With support from Austrade, the tour also benefitted from the expertise of the Australian Tel Aviv Landing Pad, who hosted the participants and worked with CyRise and AustCyber to tailor the program of speaker sessions, workshops, mentoring, open office hours and networking.

CyRise leads a tour to Israel for each of its cohorts, as it provides an opportunity for its companies to observe and appreciate the scale and pace of a world-leading ecosystem. Although it might seem daunting, the Israel experience shows how quickly you can move with very little, and the high tolerance for risk and failure needed to ultimately succeed.

AustCyber’s goals for growing our ecosystem here and exporting Australian capability to the world acknowledge some of the lessons learnt from Israel’s experience. One of those lessons is very simple: that it’s critical to have a network of people and companies that help each other out. This is how entrepreneurial knowledge is transferred from veterans to rookies, and competitors in the cyber security market can become each other’s proof of concept testers and first customers. Arguably, Israel does this better than anyone.

Since January 2017, AustCyber has been steadily helping to build our domestic community through pitch events, conferences, international missions and education initiatives. We’ve seen a huge increase in connectivity and cooperation between companies – and AustCyber has facilitated a number of valuable business partnerships.

Israel successfully exports its cyber security products to the world because it has a reputation as the best. This reputation is built on the Israeli Defence Force’s (IDF) signals intelligence and cyber capability, Unit 8200. Australia can’t replicate Israel’s unique circumstances, but national reputation is key to export.

AustCyber is building on Australia’s reputation as a trusted and stable partner, and promoting our world-leading research and development in hardware and software, to make export markets more accessible for Australian cyber companies, especially in the US, the UK and the ASEAN countries. For example, our partnership with Austrade for the Mission to the US in February and March 2019 will help Australian companies connect with investors, find new customers and learn from the best cyber entrepreneurs on the US east and west coasts.

Over the last few years, seed rounds in Israel have grown in value, on average doubling from US$600k to US$1.3m, while investor equity in seed rounds remained stable. On the other hand, 80 per cent of the 1,300 start-ups established in Israel every year fail. This is evidence of a high-risk tolerance in customers and investors.

This risk tolerance is in contrast to Australia, where venture capital tends to be quite timid when it comes to cyber security and technology companies. Similarly, Australian entrepreneurs are generally less willing to take big risks than those in Israel – although it’s likely that the regulatory and cultural context in Australia has an impact on their ability and appetite for risk-taking.

A key learning for the Australian cyber security ecosystem from the Israeli way of thinking, is to: “start fast and slowly go faster”. The CyRise cohort and other participants certainly received that message loud and clear during the visit, and it’s something that all Australian cyber security companies can heed.

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The Israeli team