On 18 September, the people of Scotland will vote on whether their country should become independent of the UK. This article is part of our "Four futures for an independent Scotland" special report, looking at the choices a newly independent Scotland could make
EDINBURGH, Scotland's bustling and aspiring capital, has dubbed itself the Athens of the North. If Scotland gets independence, the new government should instead consider looking across the Mediterranean Sea, to Israel, for some high-tech inspiration.
Israel's nickname is the Start-Up Nation, thanks to a 2009 book of the same name that explored how a small country with 7 million people became a global player in the tech scene. Today, Israel is thought to boast the highest number of start-up companies per person in the world.
So could Scotland follow Israel's example? Scotland has fewer people – about 5.3 million – but it already has the start of a healthy tech scene. In 2006, Edinburgh had just three incubators – offices where start-ups can rent desk space, network and hold workshops. Now there are 17. Glasgow is not far behind. "It's a pretty vibrant environment," says Danny Helson of Informatics Ventures, a support network set up to work with start-ups spun out from the University of Edinburgh's School of Informatics.
The biggest challenge, many involved agree, is scraping together the funding to help companies really take off. What Scotland needs is for a few home-grown firms to make it big. "There is nothing like a couple of exemplar projects to encourage venture capitalists," says Tom Ogilvie of Edinburgh Research and Innovation, the commercialisation arm of the university.
In Israel, trendsetters include Waze, the traffic app bought by Google for $1.1 billion last year.
Edinburgh-based Skyscanner, the flight comparison site, is the closest to aping that success. Last year the company's estimated value was about $800 million.
Letting private investors shoulder the risk seems to work. Government funding kick-started Israel's tech scene in the early 1990s, but that has since been taken over by private industry, says Naomi Krieger Carmy, director of the UK-Israel Tech Hub at the British embassy in Tel Aviv. "The government was able to assume some of the risk, but to a large degree it left the reward to the entrepreneurs," she says.
To emulate this, some want an independent Scotland to scrap Scottish Enterprise, the main provider of public-sector money to Scottish firms. Without this investment competition from the public sector, the thinking goes, entrepreneurs might be keener to invest in Scottish start-ups. Israel's example also highlights the economic importance of aligning research with industry. Nearly 80 per cent of research in Israel is done by businesses; in Scotland the figure is closer to 35 per cent.
In the meantime, there are other things Scotland could do to imitate Israel, such as strengthen connections with the US and Canada, says Jamie Coleman, managing director of Codebase, a tech incubator in Edinburgh. Codebase occupies the top floors of an otherwise empty government building and has plans to extend downwards. By the end of the year, it wants to be the biggest incubator in Europe.
If Scotland can mature into a start-up nation, the benefits could be huge. "If you can get global companies established then that leads to economic development for Scotland," says Helson.
Read more: "Four futures for an independent Scotland"
This article appeared in print under the headline "Aping Israel: how to build a start-up nation"
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