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The UK is rivalling the US as the primary target market for Israeli technology startups, according to Mickey Steiner, managing director of Innogy Innovation Hub Israel, an accelerator that invests in, and mentors, disruptive technology startups that have the potential to reshape the energy systems of the future.
The hub is funded by German energy company Innogy SE, which focuses on four core global technology trends: decarbonisation, decentralisation, digitisation and democratisation.
The hub has teams in Silicon Valley, Tel Aviv, Berlin and London, where Steiner is visiting to scout new startup talent.
“I think the UK is the first springboard for a startup to begin testing its solution,” says Steiner, who previously ran SAP’s research and development centre in Israel.
“First of all, there is a lot of government support, massive government support, for UK-based startups.
“Programmes such as scale-ups and catapults, that’s what they do – they help startups to establish themselves in the marketplace.”
The UK government has also committed to supporting UK-based startups through initiatives such as the GovTech Catalyst Fund, which awards contracts to small tech companies based on how innovative their products are in certain “challenge” areas.
However, many Israeli startups still naturally go to the US in search of markets, says Steiner.
“I think the UK is the first springboard for a startup to begin testing its solution”
Mickey Steiner, Innogy Innovation Hub
“I think that’s a mistake,” he says. “It’s far away, because of the time gap, because if you go to a two-day meeting in the US, you are losing a week, but if you’re going to do the meeting in London, you’re losing two days.
“It sounds so trivial, but it makes a big difference for startups, which have very limited resources.”
The fact that the UK is an English-speaking market also contributes to its attractiveness, says Steiner. “The Germans or French or Italians also have big economies, but now you have to adapt your language, both in the product and also in the day-today interaction.”
The innovation landscape
Every sector is worried about the impact of Brexit, including the tech sector, although Steiner is quick to dispel the idea that leaving the EU will adversely affect investment into the UK from abroad. “From my vantage point, which is relatively limited – I’m not a world economist and I’m not a politician – I don’t see an effect, to be honest,” he says.
“I don’t see a reason why the startups we invest in, in Germany, in the UK, the US, would not have similar access to the market in the UK after Brexit. There may be some other taxes or some other limitations on access or on personal visa issues, but these are small technical items which can be solved.”
Another development that has affected the UK tech sector in the past year is the EU’s General Data Protection Regulation (GDPR), which many feel will stifle innovation.
“I think it might stifle innovation but it will protect us, the normal people, from [companies and governments] really knowing everything about us,” says Steiner.
However, regulatory and legislative frameworks are cumbersome and take time to develop, he points out.
“Will GDPR keep up? I think it will be hard to keep up because technology moves faster, but at least it’s been created,” says Steiner.
“It created a certain framework of thinking that people really take into consideration now. Talking to startups in Israel and also to startups in our own portfolio, they all have a data privacy officer from day one, because they understand the impact of GDPR.
“So it will stifle innovation to a certain extent, but it will be balanced against that social good.”
Planning for the future
Innogy SE has set out its four visions of the future – decarbonisation, decentralisation, digitisation and democratisation – to help focus its investment efforts into areas where it sees the energy market going in years to come.
“The strategic purpose of the innovation hub, and it’s different from all the other large corporates I know, is not to serve the current business of Innogy, but to look three to five years forward and have the right skills and startups in our portfolio to help Innogy create new, disruptive energy systems,” says Steiner.
For Steiner, the most interesting of Innogy’s visions is democratisation. “There are huge power plants, nuclear or coal, which the people don’t like, we don’t like and humanity doesn’t like – the trend is towards renewables,” he says.
“Renewables is a much more – democratic is a funny word – but it’s a much more accessible way of production. You can have something on your rooftop, which will produce energy for your home, for part of your home, maybe for more than you need in your home, and then you sell energy into the grid.
“So the whole thing would be much flatter, and that’s why the whole new architecture of such energy networks will evolve.”
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Outside of this, the Innogy Innovation Hub also has its own focus areas. The first is what it calls “disruptive digital”, which is essentially using digital technologies to disrupt energy systems.
“This is the closest one to the current business,” says Steiner. “The next one is what we call a machine economy, which stands for autonomous transactions between computers/machines, which is, of course, blockchain.
“If I take you forward five years and look back on today, probably the biggest impact would be the blockchain technology, if indeed it happens as people think. I think it might still go through some tribulations before it becomes practical, like the internet did 25 to 30 years ago – it went through some waves until it really stabilised.”
The hub’s other areas of interest include construction tech, property tech and cyber security, all of which have been chosen to help Innogy SE weather the coming storm of disruption that Steiner believes will engulf the industry.