Erel Margalit envisions creating technology hubs and infrastructure projects to solve big problems where local officials can work together in ways that national politicians may not.

Erel Margalit: “The next generation wants to work together to solve these problems. Governments should step back and let entrepreneurs lead.”         Source- The National Post

Entrepreneurs need to think bigger, says top Israeli venture capitalist Erel Margalit.

But then, he’s always been mission-driven. At age 30, as head of economic development for Jerusalem, he helped attract 70 high-tech firms to the Holy City. In 1993, he founded Jerusalem Venture Partners (JVP) to help the city grow its own tech talent. He showed a golden touch for spotting winners: in 2004 Margalit made Forbes magazine’s Midas List as the top venture capitalist (based on value created) outside the United States.

Having raised more than US$1 billion for startups, launched 100 companies, and taken a dozen of them public on NASDAQ, Margalit is one of the pioneers of Israel’s “Startup Nation” brand. He is certainly the most visionary person I met in a visit last month, as a guest of the Israeli government, to experience Jerusalem’s startup scene. My previous column explored what Canada could learn from Israel in building a more innovative, entrepreneurial future. But Margalit represents the next step in the evolution of a startup nation: from creating wealth to exporting it.

He calls this innovation diplomacy. And in this area, too, Canada can learn much from Israel’s head start.

Margalit, 56, has always linked entrepreneurship and social change. Once JVP was making money, he founded a non-profit to reduce social inequality among Jerusalem youth. After 11 years as a self-described activist, Margalit went into politics. He joined Israel’s opposition Labor Party determined to promote job creation and economic development. After winning two elections, he failed this year in a bid to lead his party. So this fall Margalit returned to JVP, more certain than ever that business is the best vehicle for social change.

In 2011, JVP wanted to do something to kickstart growth in the struggling desert city of Beersheba. So it opened a cybersecurity accelerator there. Today Beersheba is a world leader in cyber, attracting scores of startups as well as multinationals such as IBM, PayPal, Oracle and Lockheed Martin.

To stimulate the economy of the north, Margalit and JVP are working with the mayors of the Galilee panhandle to open a Food-Tech Hub to promote food-production research and entrepreneurship. Agricultural innovation – from irrigation to hydroponics – was key to Israel’s initial economic success. Now JVP is focusing on nutrition-related food, such as modified and functional foods, and the burgeoning field of macrobiotics. “We’re rewriting the story of Galilee,” Margalit says. “Wellness and food will create the next frontier for Israeli technology.”

Having demonstrated that focused innovation investments can change a country, Margalit says, “We asked ourselves the next question: What if we could use innovation to transform an entire region?” Israel has always had trouble with its neighbours. But when Margalit studied the regional ecosystem, he realized the main challenge is not Arabs versus Jews: “It’s extremists versus pragmatists.” Poverty – compounded by the shortage of water – is the real enemy, he says. “Poverty invites extremism.”

His motto is “Yalla!” – an Arabic word that means “Let’s move.” He is pushing for a coordinated, collaborative approach to innovation throughout the Mediterranean basin – from Casablanca to Barcelona; Istanbul; Dubai; Cairo and Ramallah, the administrative capital of Palestine. He envisions creating technology hubs and infrastructure projects to solve big problems – from economic development and airport security to water desalination and the environment. It’s significant that he names cities, not countries, as his partners – because local officials can work together in ways that national politicians may not. “The next generation wants to work together to solve these problems,” he says. “Governments should step back and let entrepreneurs lead.”

To read more of this Financial Post Article, please click here.