- Israel, a low-power distance culture, has a high concentration of startups.
- The country’s $1 billion impact investing market is still low on female founders.
- As resilience becomes a key factor in which startups survive COVID, investing in women will become all the more critical.
The “move fast and break things” ethos of startup culture puts those who are used to challenging assumptions and authority at a distinct advantage. That’s why Israeli venture capitalist Uri Adoni thinks Tel Aviv is one of the top startup ecosystems on the planet.
It’s a theory that also has implications for improving diversity in funding decisions.
First, it’s worth noting that Israel’s startup culture is pretty singular. The only place with more startups per capita than Tel Aviv is Silicon Valley itself. Israeli startups raised a whopping $612 million in the month of August alone — nearly double what was raised in the same month in 2019, and in the face of a global economic calamity. Their success rate is so high that New York City offered to cover 50% of R&D expenses for Israeli startups if their technology addressed the COVID-19 pandemic and they were willing to relocate.
How much of that market is tied to impact? The $6.2 billion raised by Israeli startups in 2018 included $1.6 billion for startups in impact-aligned sectors. Because of the fertile ground for technology in particular, many of the country’s impact funds focus on early-stage social enterprises — something relatively rare even among countries with well-developed investment markets. Social Finance Israel and Israel Venture Circle anchor the infrastructure for impact investors and entrepreneurs.
Adoni’s new book The Unstoppable Startup: Mastering Israel’s Secret Rules of Chutzpah attributes this success to cultural forces — specifically chutzpah. This Yiddish word is often translated to audacity, but, as Adoni explains in the book’s introduction, “depending on the context, it has many meanings…spunk, insolence, being a visionary, proving your mettle — or just being a jerk.”
Israelis do not have a monopoly on chutzpah. The dynamic or personality it describes is one common in the “lower-power distance” cultures, as identified by Dutch social psychologist Geert Hofstede. In places with this culture, including Israel, the “emotional distance” between the people in charge and the people who aren’t is relatively small. This means that it’s a lot easier to push and persist because there’s a reduced fear of consequences from the literal or figurative powers-that-be.
Certainly, launching any startup requires that sort of persistence. It also requires capital, which needs to be raised if the founder does not already have it. This is where even the most tough and visionary social entrepreneurs can run aground if they are part of a “higher-power distance” culture or belong to a non-dominant group. Women in particular find themselves walking what could be described as a chutzpah tightrope to get funding; the dismal numbers for capital raised by female founders suggest that few are succeeding.
As recently as 2015, Israel appeared to be defying this gender bias; Tel Aviv had the fifth-highest concentration of female business owners in that year’s Global Startup Ecosystem Ranking. In the 2020 edition, however, the city did not even crack the top 25; just 9% of its founders are female (in dubious fairness, no startup ecosystem anywhere in the world has more than 25%).
Adoni is right: audacity does not fully capture the many meanings of chutzpah. The synonym that comes more readily to mind in the case of the gender gap in funding is fearlessness — a requirement for challenging a system that too often rewards lookalikes rather than ideas. Chutzpah is an excellent mindset for anyone in business, but it might be even more effective in the fight to create a more equitable society.