Dont go to India! The negotiations take ages, the sales cycles are longer, and the prices are adjustable. That is not a market you should target. Amit Mizrahi received all these warnings early last year when ICV, the Israeli HR tech startup he works for, decided to foray into the Indian market.
The red flags were raised by the companys angel investors and other Israeli corporate executives in his network. ICV ignored the naysayers and spent the next six months customising its product.
How? Mizrahi, who heads business development at ICV, explains: An average CV in Israel is a page long. It goes up to three pages in the US. In India, we saw some CVs that are 50 pages long! On average, they go up to 12 pages. Most systems cannot handle such vast amounts of data. So we developed machine learning tools that understand various educational degrees, designations and institutions prevalent in India, among other factors, to find out what makes for a suitable candidate for a company and how we can enable quick and cost-efficient hiring for them.
ICV is currently doing pilot projects with 20 Indian companies to fulfil their staffing needs. Its India story has prompted one of the investing firms, Prytek, to aggregate 43 Israeli tech companies from its portfolio and offer them as a suite to Indian companies.
This has also made ICVs critics eat their words.
Enter the Wadi Israel has, over the last decade, emerged as a hub for deep-tech startups. Thousands of these ventures have mushroomed around Tel Aviv and nearby cities, earning the area the moniker of Silicon Wadi (wadi means valley in Hebrew). However, Silicon Wadi had a small domestic market to cater to Israel has a population of less than 10 million.
So the Wadi companies looked westward and created products and services for the lucrative US market. Many managed to raise a lot of funds and ensured profitable exits for investors. Soon, Silicon Wadi became the B2B tech support for Silicon Valley heavyweights such as Google and Facebook.
Now, things are changing in the Wadi. Companies like ICV are creating products thinking about India first, says Anat Bernstein-Reich, who runs A&G Partners, an advisory firm that helps Israeli companies find more business in India.
Since 2002, her firm has helped 100 such companies set up shop in India and majority of the deals have happened in the last three years, 18 of them this year alone. Israelis are finally looking at India as not just a backpacking destination after their compulsory military training, but as a country that means business, says Bernstein-Reich.
Of course, growing bilateral ties between the two countries and advisory companies have a lot to do with this new Israel to India wave. Most of all, it is India Incs growing interest in the Silicon Wadi that is causing this shift. Ten years ago, Israeli companies like Ness Tech and Click-Software were acquiring Indian companies.
Now the trend has been reversed by the likes of Wipro, Flipkart and Sun Pharma that have acquired Israeli tech companies in the last three-four years, says Bernstein-Reich. Indian companies are also aping the Silicon Valleys strategy with respect to Silicon Wadi by attending startup events, setting up R&D stations, and assigning a staffer to stay in Israel for longer periods to scout for companies to acquire or collaborate with.
Collaboration with Israeli tech gives India a competitive advantage in the global market, says Ankur Pahwa, partner-ecommerce & consumer internet, EY India. Israel spends close to 4% of its GDP on R&D which makes it one of theleading countries in global innovation.
The Beeline
Thanks to this push (from the likes of A&G) and pull (from Indian companies), Israeli tech firms have been able to crack the B2B Indian market in six major sectors: telecom & internet, agriculture, cybersecurity, education, healthcare and automobiles.
Today, an Israeli mobile marketing analytics and attribution firm called AppsFlyer occupies 75% of the market share in India, adding top consumer internet companies such as Paytm, Hotstar, Nykaa and Swiggy toits list of 250 Indian clients. Ariel Assaraf, CEO of a log analytics company Coralogix, tells ET Magazine that the Israeli company now ranks India alongside the US as its top market.
His company managed to unseat two Silicon Valley unicorns to bag deals at one of Indias leading streaming platforms and an online ticketing company that are now among Coralogixs 10 major clients in India. It is no mean feat considering most Israeli tech companies see the US as their biggest market and India as only the latest one too small to make a significant contribution at the moment.
Only one or two leading Israeli companies manage to make $10-15 million in annual recurring revenue from their India operations, say the stakeholders. But the numbers are getting better with each passing day, according to Mark Granot, vice president of software testing firm Applause.
Have a new app you want to test for user interface and user experience across different operating systems before the big rollout? Want to check how user-friendly is your streaming players interface across all shapes, sizes and brands of screens? Granots firm offers a select set of users from a community of over 400,000 people. It has been doing that for a few years for Google, Facebook, Netflix, Walmart, Starbucks and Nike.
Two years ago, Applause decided to venture into the Asia-Pacific region and chose India first. Currently, we are working with 10 Indian companies in addition to Indian branches of American companies. India contributes a high single-digit percentage to our overall revenue, says Granot.
Meanwhile, in the world of Indias overthe-top content players, Israeli tech companies such as Kaltura, Screenz, Applicaster and Cloudinary, are common names now. ZEE5 is working with at least 12 Israeli companies while VOOT with half a dozen. MindCET, an incubator for edu-tech startups, has helped at least 20 Israeli companies find opportunities with Indian firms and institutions in the last couple of years, says founder Avi Warshavsky.
In April, Bernstein-Reichs A&G Partners signed a deal with EM3 Agri Services in Noida to launch an accelerator called Agribator to connect Israeli agri-tech companies with Indian agro firms and farmers. In just a few months, Agribator brought in six Israeli companies into India, says Rohtash Mal, chairman of EM3. More deals are being signed as we speak, he says.
There are at least a dozen other big Israeli establishments in the agri-tech space that have set shop in India in the recent past, says Randhir Chauhan, managing director of the India arm of Netafim, an Israeli agri major present in the country since 1997.
From nowhere to nearly everywhere, the Silicon Wadi is gradually forming another Mini Israel in India. Only there is nothing on the ground everything is in the cloud, as software as a service or SaaS. It is also evident that these synergies are not being forged on the back of solid tech alone, but on the basis of similarities in culture and values.
As Gily Netzer, chief marketing officer of Cymulate, a cyber tech firm that entered India last year, notes, People dont buy a product, they buy into the people. Our ambitious yet straightforward nature appeals to the Indian business community.
We are always pushing ourselves to find solutions to problems but we are also not afraid to say no. Cymulate simulates cyber breach and attacks for security testing. In other words, it inflicts multiple artificial attacks on the clients system to find out how badly it needs to be secured and then shows just how it can do that.
Last week, the company signed a deal with one of Indias largest banks whose name Netzer says she is contractually bound not to disclose. Meanwhile, NSO Group, an Israeli tech company, hit the headline in India after its spyware was allegedly used to snoop on WhatsApp accounts of dozens of Indian users.
NSO later denied the allegations. Israelis are constantly under threat. They have a tendency to keep innovating because if they dont evolve, they fear they wont exist, says Saket Agarwal, managing partner of Onnivation, a Mumbai-based firm that invests in the India business of Isreali tech firms and runs their sales and growth operations.
Started in 2016, Onnivation made $1 million in revenue in its first year. Last year, it made nine times that figure. Agarwal contemplates a co-investing model for working with Israeli startups now and hopes to make $14 million by May next year. So far, Onnivation has helped 15 Israeli companies find business opportunities in 100 Indian companies.
Among them is ZEE5 that evaluated tech partners from several markets before picking the Israelis. We are attempting to do a lot in a short period of time to deliver value to our audience. For us, the pace at which the Israeli partners work is encouraging.
You need the kind of discipline that comes from them. Perhaps their compulsory military background also ensures they are regimented towards timelines, says Rajneel Kumar, head of product at the streaming service.
For Akash Banerji, business head at streaming platform VOOT, it is Silicon Wadi over everyone else because unlike the American, Chinese, or even Indian techies, the Israelis design products and services for a foreign market first. So you wont find many direct to customer products there, but several successful SaaS companies.
Given their wealth of experience and exposure, they are more sensitive and agile to foreign markets, and also have cost-effective solutions. Another reason Indian companies end up working with multiple Israeli tech firms, he notes, is that the Wadi is one organic creature with different strands, all rooted in one place.
You meet one player, they recommend several others that could be useful for your business. The Silicon Valley in the US, on the other hand, is far bigger, but also full of individual creatures, he adds.
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The Wadi connection: Technology startups from Israels Silicon Wadi have found a fertile ground in India - Economic Times