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March 2015

by: Jason Weiss

Government and Their Friends

Hoe does a country create a successful innovative technology ecosystem? What is the role of government, university, private sector? These questions and more were discussed and debated at the first Global Government Venturing Summit in Eindhoven, Netherlands last month. Organized by our partners Global Corporate Venturing, Axis innovation was invited to attend and share our perspective in the global startup ecosystem. Throughout the two days of discussions with over over 200 attendees from 40+ countries, we identified 3 key trends and lessons:

  1. Small businesses and entrepreneurship are the future. Chris Wade, government advisor and venture partner at Oxford Venture partners, shared that over 50% of job creation today in Europe comes from SMB’s. Corporations are looking more and more outside of their own organizations to find innovation. Just 2 weeks ago, Axis Innovation hosted Cisco’s new Entrepreneur-in-residence program, the first accelerator by the global corporation to engage and work with early stage IT companies. Putting together the facts of job growth and corporate’s interest in startups, its easy to see why governments care about supporting early stage innovation.
     

  2. Governments are looking global and ready to invest big. One of the key roles of government is to create conditions to help their populations thrive in the world, and venture capital is a very attractive and efficient tool for economic growth. According to data by Global Government Venturing, in the final quarter of 2014 governments backed more than 200 companies, committed more than $1B to VC funds, and promised to invest even more in 2015. China alone announced the creation of a $6.5Bn fund for 2015. Through a combination of investing, smart regulation and tax policy, and cooperation with universities and private investors, governments can set the framework to help their entrepreneurs succeed locally and globally.
     

  3. Israel gets it right. To answer up the question about which country created an innovation ecosystem that should be modeled, the unanimous answer was Israel. Investors, professors, and government policy makers from Singapore, Japan, Norway, the US, Netherlands, and the UK all agreed that Israel has created the most successful relationship between government, private sector, and university. Israel’s strong cultural support for entrepreneurship and attractive regulatory environment have led to more venture capital investment in Israel than all of Europe combined. Marcos Battisti, Managing Director of Intel Capital for Western Europe and Israel, shared in his keynote address that Intel Capital made 7 investments in 2014 — an astounding 6 were in Israel and only 1 in Europe.
     

Finding the right balance between government and private sector is always a challenge, especially in the ever changing technology world. However, with government venturing playing a growing role in venture capital, it is necessary for all players — startups, investors, academia, and others- to see government as a critical partner in successful innovation.