Indian Startup Ecosystem vs Israel Startup Ecosystem

Dharmik Sai Mikkilineni

India has made tremendous strides in the startup ecosystem in the recent years and has lately been in the eyes of many foreign investors. This is especially pronounced with this year’s acquisition of Flipkart by Walmart and the latest news of Warren Buffett’s significant interest in Paytm. Investors want a large and high growth market. With the maturity of China’s investment market, foreign entities are starting to look elsewhere, and India fits the bill. The Indian Government has also provided significant contributions in terms of funding, easing of regulations, and expedition of doing business with start-ups. In fact, India is amongst the leading countries in terms of government support for start-ups. However, India still does not even feature among the top 50 countries for innovation as ranked in the Global Innovation Index (GII) by the WIPO (World Intellectual Property Organization).1 While you would think the immense competition faced in the Indian market due to its substantial population and market potential would drive innovation further, many entrepreneurs seem to be opting for copy-cat products with cost-cutting strategies to move past their competition rather than focusing their efforts on innovation.

Counterintuitively, Israel is a country with a population of only ~8.6 million people. This is less than 1% of India’s population, lesser than even the population of Bangalore City, the startup hub of India. Yet, Israel has the most number of startups per capita and is one of the largest startup bases in the world. The country is widely acclaimed the “Start-up Nation” of the world and is home to not only the large number of startups but also 250+ corporate R&D centers.2 Most MNCs, if they are serious about disrupting their industries, have a home/office in Israel as the country now houses a lot of the world’s innovation.  

Why is this the case and how did Israel accomplish this are a few of the questions that arise in mind. I recently got the opportunity to spend a month in Israel for a short summer program on Business and Entrepreneurship and Cyber Security and with that experience I would like to take a stab at this question, with a special emphasis on the two countries’ education systems on a macro level and how they do or do not contribute to innovation.

Let us start with Israel.

Israel’s education framework is divided into four categories: state schools (attended by majority of the students), state-religious schools (emphasize Jewish culture, traditions and history), private schools, and Arab & Druze schools.3 Most schools are government-funded and hence, education is free until the age of 18 for all students. In fact, school attendance is mandatory from nursery school years all the way till age 16. School runs 6 days a week, not too dissimilar to many Indian schools. There is a national curriculum and hence, uniform subject material is covered in all of the schools. This is very different to the Indian education system, where syllabus and content vary significantly not only across states/regions but even within a single locality. Israeli’s education system does not focus on periodic tests with just one final exam, providing much more freedom to students than the Indian counterparts, who are incessantly quizzed and tested throughout the academic year.  

Moving on past the academic years, Israelis are mandated to attend the Israeli Defense Forces (IDF), i.e. the Israeli military for ~3 years for men and 2 years for women. This enforces young adults to learn in a very hands-on environment with a laser focus on discipline and structure. Additionally, when they move on to college after their stint in the IDF, should they choose to do so, they are more mature than the Indian students who attend college right after high school. IDF also provides vocational training making the trainees highly skilled and labor-force ready. Israel also has special accelerated programs for the brightest of students where they complete higher education at a very young age and undergo practical training, such as learning computer programs and writing software code. This has led to the country being the leading nation in Cyber Security.

Contrary to this, India’s education system focuses heavily on theoretical learning and text-book memorization disabling graduates to immediately contribute to the workforce. Culturally, there is immense academic pressure to excel in exams. It is commonplace for students to undertake at least 4-5 hours of tuition on a daily basis in supplement to the usual 8-9 hour school days and additional homework to be completed, leaving no time for extracurricular activities such as sports, arts, music, dance, etc. While students gain deep knowledge in chosen subjects, students do no take a diverse range of classes apart from the select few options. Furthermore, due to India’s large population, there is heavy competition for limited number of seats whether for college or job. This cripples students who are neither able to secure a highly coveted seat nor have the skills necessary to explore other avenues. Additionally, with the conservative mindset of the Indian population, risk-taking is not encouraged amongst the general public making for only the few bold and brave to navigate the rough waters of entrepreneurship. Meanwhile, now that Israel has established its name amongst the leaders of innovation, the high risk of failure of starting a company does not faze the Israeli folks.  

There is a significant need for educational reform in India, where we encourage students and young adults to explore a diverse range of courses and extracurricular activities. We also need to alleviate the academic pressure we put on our students and support them in their risk-taking endeavors at an early age. Educational institutions across the nation should also focus on providing more practical learning and vocational training activities enabling the youth to be more skilled and attractive to the job market. While the Israeli education system is not perfect in itself, there is substantial learning we can take from their nation which can be tailored to suit the Indian ecosystem.

This blog post is the first of the series and was only a bird’s eye view of the two nations’ education ecosystem to foster innovation in the respective countries. One of the alarming statistics mentioned in this blog with respect to the Indian startup ecosystem is our poor standing in the global innovation index. This would be the subject for the next article which will highlight some of the reasons for our subpar track record in innovation as well as some steps we can take to promote intellectual property (IP) development in our country. Other articles in this series will delve deeper into Israel’s innovation ecosystem, the broken Indian education system and its reform, and the accelerated development needed for Indian startup ecosystem and how we can utilize our advantages as a nation more effectively.

References

1.       Hari Pulakkat. Global Innovation Index ranks India the 57th most innovative nation.
https://economictimes.indiatimes.com/news/economy/indicators/india-maintains-position-as-top-it-exporter-lags-in-ease-of-doing-business/articleshow/64935501.cms

2.       Medici Team. Israel: The R&D Center of World.

https://gomedici.com/israel-the-rd-center-of-world/

3.       Lisa Nielsen. 15 Surprising Facts abt #Education In Israel - My #VibeEdu @VibeIsrael Tour. https://www.techlearning.com/tl-advisor-blog/10128