JANVEST Founder, Managing Partner Daniel Frankenstein Discusses Entrepreneurship in Israel with Bauer Students
Entrepreneurial DNA has created a thriving startup market in Israel, according to JANVEST Capital Partners founder and managing partner Daniel Frankenstein.
With more startups per capita than any other country in the world and physical locations of more than half of Fortune 500 companies, the nation is leading the way when it comes to entrepreneurial innovation, he told Bauer College students during a recent talk.
“For a relatively speaking small country that’s pretty far away, economically and from a talent perspective, Israel really taps well above its weight,” Frankenstein said.
In a visit coordinated by the Israeli consulate, Frankenstein spoke with Bauer students enrolled in ENTR 3310 last month. He also discussed his own journey founding JANVEST, which invests in technology startups in the country.
Government assistance has been critical in allowing Israel to thrive in entrepreneurship, he said, noting that the country contributes about 4.5 percent of its GDP to research and development efforts for new businesses.
“Essentially, the Israeli government is paying for the research and development behind my private sector investment,” Frankenstein said. “That is a huge risk vacator for the investment community, as it creates these businesses that have a longer ability to burn at an earlier stage.”
He added: “One of the things that you realize when you start a business is you have to have money to actually hire employees, to actually develop your product to go to market. If someone else is footing your bill for the research and development for your product, that makes quite a big difference.”
The country also requires mandatory military service for both men and women, Frankenstein added, which has helped train over 90 percent of Israel’s population in technology. The fact that women are included in the process is vital to the country’s success, he said.
“When you look to provide equal opportunity to both men and women in your society, that creates also a very significant entrepreneurial dynamic,” Frankenstein said.
In addition to government support, military training and free higher education, Israel benefits from what Frankenstein calls “entrepreneurial DNA,” a spirit of innovation motivated by a different approach to failure.
“There are certain aspects to the neighborhood that Israel’s in that creates a different level of risk and a different level of risk tolerance,” he said. “Living with that type of a circumstance really does create a higher degree of risk tolerance that provides the framework for people to take the kind of risks necessary to innovate and do amazing things. Most Israelis see failure as an exit on their highway to success.”
Frankenstein also addressed his experiences as an investor in startups, sharing with students what JANVEST looks for when considering partnerships with new companies.
“The number one key determinant is people. After that, it’s ‘Are you unique, do you have intellectual property? Are you going into an existing market that I believe is sizable and do you have an advantage?’ That’s what we look for, but 80 to 90 percent of why we invest in a company is because we think the people are reliable.”
The lecture ended with a question-and-answer session, where Frankenstein offered advice to students interested in pursuing entrepreneurship as a career path.
“If something isn’t working, be that a startup or a large company, the best thing you could do is be super transparent and just be honest about what’s going on,” he said.
He also encouraged students to take rejection in stride and view failure as a learning opportunity.
“If you get a no and you don’t learn from it, you’ve missed an unbelievable opportunity,” he said. “When people tell you no, ask them why. When people tell you yes, ask them why. You have to learn from every interaction.”
“I think everybody has the wiring to be an entrepreneur,” he added. “But it’s all about your mindset.”
By Priscilla Aceves