Emerging Automotive Silicon Valley of Middle East — Israel

About the author: Shashank Pandey is a Consultant at Zinnov with the Draup Platform team.


Waze, TowerSec, Mobileye, Softwheel, Argus, Redbend, Cognitens and many more sensational new age automotive startups, are all based out of Silicon Valley. This is indeed true, but only if read in Hebrew. They are all based out of ‘Silicon Wadi’ of Middle East i.e. Israel. Be it Autonomous cars, cyber security or mobility, Israel is a hotbed for technology start-ups that are pulling in funding worth billions of dollars from leading organizations and VC firms.

“Despite the exceptional technology advances in India, China & Britain, what might be the reason for the dark horse emergence of Israel?”

With increasing need for safer, cheaper & eco-friendly transport and the advent of AI & on-demand services — Autonomous Technologies, Electric Vehicles & Ride-Sharing are the hottest technology areas in the automotive start-up landscape. Harbouring the new age talent conversant with the automotive sector requirements, Israel has bought itself a ticket to becoming a hub for Automotive Software research and development.

Israel Automotive Startup Snapshot

Waze — The smartphone app of Israeli origins, which helps drivers to get an easy way around traffic jams using crowdsourced data, was acquired by Google for a billion dollars. This has somewhere led the newly emerging start-up to shift focus towards combating the first world problems using software.

Following the lead of Waze, Mobileye a Tel Aviv based company focusing on camera based driving assistance, has become one of the leading players in the global strife to develop advanced vehicle safety systems. It was a sure bet, that features like forward collision warning, high-definition 3D maps will catch an eye of future sighted automotive leaders fixated on autonomous vehicles. Mobileye counts almost every major global automotive firm as a customer and has built even deeper strategic ties with GM, Nissan and Volkswagen.

Argus — The advanced cyber security solutions & services startup deals with the approaching threat of hacking in autonomous and connected vehicles, making car manufacturers, their Tier 1 suppliers and aftermarket connectivity providers its major customers. Argus is also backed up by some major VC firms such as Magna International, Allianz Digital Corporate Ventures, the SBI Group and existing investors Magma Venture Partners, Vertex Venture Capital. The dominion displayed by Israel in new age automotive technology is sustained by the software start-ups in Image 2.

Waze put an automotive spin on Israel’s big software business,the focus for new automotive startups

Israel’s robust R&D programs, its proficiency in advanced technologies, its acclaimed talent for design & innovation, along with its potency in computer-aided design & manufacture have all been keenly observed by the automotive industry.

General Motor to start with, has set up a dedicated research centre for the development of autonomous vehicles. Honda on the other hand, with an aim to attract new innovations which can be used in future products, has set up a high-tech incubator in Israel.

Apart from these developments, in 2016, several Global OEMs & Tier 1s have started engaging with Automotive Start-ups in Israel. These elevated interactions may either be in form of acquisitions, accelerator programs, venture capital arms, strategic collaborations or cross industry tie- ups, as is evident from Image 3 & 4.

OEM Partnerships & Investments

However, Tier 1s were more active in acquiring the new age technology start-ups, when compared with the OEMs. This might be because disaggregation of the Automotive Value chain has rendered the Tier 1 suppliers at the risk of becoming irrelevant.

Harman followed by Denso has been the most aggressive investor in acquiring/ incubating software capabilities of Israel. TowerSec — the cybersecurity start-up & Redbend — OTA Management suite, were the 2 major acquisitions by Harman aimed at not compromising security while building functionality.

Tier1 Partnerships & Investments

Despite the existence of a potential lot of start-ups in California, many VCs headquartered there are investing in Israel’s business. Though the funding is still insignificant when compared with some of the world’s major economies, Israel has more VC funds per capita than any other country.

Leading the tribe is BMW iVentures, which invested recently in a public transport app maker Moovit, with the estimated valuation standing around $450 million. The other prominent automotive venture arms present in Israel are Robert Bosch Venture Capital and GM ventures.

From around 15,000 startups, which have popped up in last 15 years, one third still run an active business, at an accelerated pace with an elevated success rate. Israel is the country endowed with new age talent, presence of start-ups catering to the major technology trends of automotive industry, including:

(1) Electric Vehicles,
(2) Autonomous cars and Advanced Driver Assistance Systems (ADAS),
(3) Connected cars and
(4) On- demand car riding.

The presence of almost 30+ VCs funding automotive startups, 50+ tech startup accelerators in just Tel Aviv, investment arms of the eminent automotive leaders and the attention gained from the automotive industry, collectively suggest that the auto scene in Israel may be young, but it is growing fast. The locally acclaimed ‘Silicon Wadi’ of the Middle east is sure on path to be the new Silicon Valley of the world.

This blog is a research outcome of Zinnov’s research intelligence platform- GEIP. Want to know more about Zinnov’s GEIP?
https://www.youtube.com/watch?v=qQFfG96EEWs


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