Intellectual Ferment

Exodus to Germany

INFARM 2
Prolific Israeli business concepts in Berlin.
  • Why it matters

    Why it matters

    • The new wave of Israeli immigration to Germany could be a cultural watershed in the development of both countries.
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  • Facts

    Facts

    • An estimated 17,000 Israelis currently live in Berlin.
    • Some Israelis are choosing Berlin over Tel Aviv to launch new businesses.
    • Berlin receives more risk capital than any other German city or state.
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  • Audio

    Audio

  • Pdf

Black sprouts and purple basil leaves blossom under bright LED lights in a Berlin backyard in Kreuzberg, a district known for its lively immigrant community and, increasingly, gentrification. Amongst the indoor flora, Israeli and German entrepreneurs mingle with McKinsey consultants and angel investors.

The crowd sips gin cocktails made with crushed basil leaves, farmed directly a few meters from the bar.

Started by three Israelis this year, Infarm is an offbeat hit in Berlin’s dynamic, creative food scene, attracting Germans and Israelis who often meet other new arrivals to the German capital over Saturday brunch. Hidden in a courtyard, Infarm is a combination urban organic grower, restaurant and trendy bar with dark walls wedged behind the anonymous facade of an unrenovated apartment building off Reichenberger Straße, the front line in Berlin’s gentrification battle.

Israel has given birth to start-up successes such as smartphone navigation app WAZE, which Google bought last year, the free text-messaging app, Viber, and free website builder, Wix. Now, some Israeli  entrepreneurs – drawing on the pool of young German talent, investors and European business connections – are establishing start-ups in Berlin, where they are experimenting with more daring business concepts around cutting-edge technology.

While Berlin and Tel Aviv both have a vibrant nightlife, they also are nourishing innovative start-up scenes.

Israel, described by the American authors Dan Senor and Saul Singer in their bestseller as a “start-up nation,” and Berlin, which McKinsey last year predicted would become “Europe’s next start-up-metropolis” are increasingly in a symbiotic relationship, feeding off each other’s talent.

Germany’s well established industries – coal, steel, iron and anything that can be made out of it – attract Israelis, whose inventions often make use of these materials.

One such business is Tel Aviv-based Arilou Technologies, which has developed a software firewall that protects the electronic systems of new cars from computer hackers intent on theft. Its founder, Ziv Levi, is exploring the German market because it is “a big market for cars.”

Germany’s reputation for thoroughness and experience in the steel sector is also a reason why Michel David, an Israeli who moved to Berlin seven years ago, decided to base himself in Berlin and develop escalators that wrap around each other in helix formations.

 

eiffel (2)
Helix escalators at the Eiffel Tower. Source: Michel David

 

Combining art and technology, Mr. David developed a concept for curved escalators to transport far more people than possible with standard linear escalators.

“It’s continuous. You don’t wait around until the escalator comes down again,” Mr. David explained.

The British architect Sir Norman Forster, who redesigned Germany’s glass-domed Reichstag, and Germany’s biggest steel maker, Thyssen Krupp, have shown an interest.

“But it is too high-risk for them at the moment,” Mr. David said. “As the escalator doesn’t exist yet, there’s no proof that it will work.”

But helix escalators, as opposed to a software app, will require a huge infusion of investor money. From Berlin, Mr. David is on the hunt beyond the usual haunts in Berlin’s nascent start-up scene, which is long on ideas but short on money and tends to favor software developers.

“In this city, the start-up scene and I don’t necessarily speak the same language,” he said.

Mr. David has recently turned his attention to German ship makers, which uses many of the same materials he would need for his helix escalators.

 


Helixator, the new business idea by Michel David. 

Benjamin Rohé, an Israeli investor who runs the MAS Angel Fund, said many Israeli start-ups don’t necessarily need money and even if they did, Germany still trails Israel and the United States in start-up financing. A study by the consultancy McKinsey showed that in Berlin €184.3 million risk capital was invested in 2013 which is still much lower than what is given to Silicon Valley entrepreneurs (€11.2 billion).

But not everyone shares this opinion. Eran Davidson, who just founded the first fund to give loans to start-ups in Germany, says this is an illusion that frustrated people in start-ups believe.

“There is plenty of money in Germany. If start-ups fail to secure funding, they gave up too early.”

Mr. Levi, the Arilou founder, received his initial financing in Israel before moving to Berlin.

“At the beginning, we received a grant from the Chief Scientist organization, an Israeli state-run program that supports entrepreneurs,” Mr. Levi said in an interview with Handelsblatt Global Edition.

Mr. Rohé, the angel investor, said Israelis are increasingly drawn to Germany because of its established, reliable business networks.

“Israeli entrepreneurs look for a place where they can tap into a well-established ecosystem of industry partners, international employees and a lot of young talent,” Mr. Rohé said.

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