Can Bulgaria Attain Israel's 'Power to Astonish' in Research and Innovation?Special Report |Author: Angel Petrov | April 16, 2015, Thursday // 07:14| views
Last year's Global Competitiveness Report of the World Economic Forum placed Bulgaria 54th. Compared to countries roughly the same size (in terms of population) as Israel for instance, this is not quite an optimistic result, given that Israel came 27th in the ranking.
But Bulgaria's latest record is also up for a third year in a row, and if combined with its position as Europe's third most preferred outsourcing destination, could also be looked on the positive side. At least this is what some of the participants in a Bulgarian-Israeli innovation forum held Wednesday in Sofia believe.
In the Footsteps of the Israeli Model for Innovation
That was also what Anne-Marie Vilamovska, the Secretary for Healthcare Policy and Innovation Policy to Bulgarian President Rosen Plevneliev, told guests during the conference’s opening. Pointing to the country’s achievements, she said the cooperation between Bulgaria and Israel should contribute to the process of building up innovation capacity, a goal to which authorities should aspire.
“I hope that Israel will extend a hand to Bulgaria in two fields, education and high technology,” Education Minister Todor Tanev said for his part, adding his team at the ministry, which took over in November, “does not distinguish between education and science”.
Tanev expressed his hope that Bulgaria could make use of Israeli know-how to create “clusters between Bulgarian industry members, scientists [and students].
"We are witnessing a huge desire within the government to pursue innovation and adopt startup culture," the Israeli Ambassador to Bulgaria, noted H.E. Shaul Kamisa Raz, whose embassy co-organized the forum titled In the Footsteps of the Israeli Model for Innovation alongside the VUZF University of Finance, Business and Entrepreneurship.
Speaking as an envoy of a country that comes among the world's most competitive nations, he added that, in order for a startup business to succeed, setting challenges, assistance from the state and cooperation with the academia and businesses were essential.
"Americans came to the Middle East looking for oil, so they didn't stay in Israel. We came looking for brains, so we stopped."
Warren Buffett's words are quoted here by Elan Zivotofsky, a General Partner and Head of the Investment Team at leading global equity crowdfunding platform Ourcrowd (Mr Zivotovsky's interview with Novinite ahead of the forum is available here). The first speaker stressed the economic successes of Israel over the past decade to outline key factors behind the positions the country is taking now.
Zivotofsky reminded that since 2004, Israel has outpaced other OECD advanced economies' growth by a wide margin, with GDP boost not being driven by construction or property deals, but by innovation. He added that his country could currently boast a USD 600 per-capita venture capital investment rate, compared to an EU average USD 30. Much of this is generated by foreign investment, with foreign venture capital amounting to 85% of the total in 2014. So far dozens of world-leading companies have bought at least one startup business based in Israel, Zivotofskyu added.
But why Israel? As for Mr Zivotofski, he compared Israel "to a startup of its own kind" where some 100 years ago only sand could be seen. He argued the reason for Israel’s innovation boom lies within various factors, such as the specific culture in Israel, human resources (including the importance of migration to the formation of the State of Israel) or the role of the army in a country under neighborly threat where military research and development has played a key role in society.
Government policies could also play a key role: up until 1993, Israel’s economy was centralized and with no substantial R&D record. But the Yozma government program of sponsorship for research and innovation unbundled substantial economic forces to an extent where, as Mr Zivotofsky put it, most people tend to believe the country was always been an R&D pioneer.
Israeli startups have always had to go global from Day 1, since the only option to develop abroad was beyond immediate neighbors with which the historical perspective has soared relations.
He concluded that, judging by his impressions of Bulgaria, some of the factors are already in place, such as talent and ability to go global - given that "the IT industry is export-focused already", and that "seeds of early venture capital" are seen taking shape in the country.
In his words, an innovative ecosystem should be built to both allow companies to develop and thrive and avoid government interference in businesses, with authorities giving the industry freedom to achieve self-regulation.
Where Nature and Technology Meet, Innovation Is Born
The intersection between innovation and nature was at the core of the presentation by prof Oded Shoseyov, a faculty member of the Hebrew University of Jerusalem whose research is in plant molecular biology protein engineering and nano-biotechnology. What he and his team and the Hebrew University of Jerusalem realized was that nature “produced top-performing materials in 3 billion years of evolution”.
Prof Shoseyov gave several examples of his activity in nano biometrics which could be widely applied to the industry, but also to healthcare. The first was collagen, which composes a significant share of human bodies and which can be extracted from animal tissue, but the practice is now not encouraged worldwide for safety reasons. With the use of transgenic tobacco plants, taking pollen from one plant, cloning to another and introducing human genes, a company is able to produce Type I human collagen from plants for the purpose of tissue repair.
Observing sequoias, which are basically made of fibres of cellulose “100 times stronger than steel”, Mr Shoseyov’s team decided to develop CNC – a wood pulp which can also be extracted from the paper industry waste. With 11 million tons of paper waste sludge produced annually, a huge environmental problem can be “converted into a goldmine,” the professor believes. To this end, companies such as Melodea, of which he is the scientific founder, have engaged in the development and manufacturing of Nano Crystaline Cellulose (CNC) from pulp and paper industry waste in order to coordinate lab results with market needs. A possible application of the results lies within the packaging industry, which is worth some USD 100 B annually.
Cat fleas are another example. Their ability to jump at a height which is 200 times their own size (as if a human being could reach the Empire State Building) has pushed Mr Shoseyov's team to clone genes from the insects and produce copies of tissue building their body and making tests with its basic material called resilin.
Such materials, especially ones combining CNC foam and resilin, cannot make one jump as high as the Empire State Building, but might be of use in the production of sports shoes, in construction or 3D printing.
Mr Shoseyov ended by recalling the old proverb: "If you want a new idea, open an old book."
"The idea was writen three billion years ago - on the DNA of life. All we have to do is read the DNA," he concluded.
What About Bulgaria?
Bulgaria’s coming to terms with the need to focus on R&D activities resulted several years ago in the establishment of the Sofia Tech Park project, where research facilities and technology space in the areas of ICT, life science and energy are expected to be in place by the end of this year.
According to Elitsa Panayotova, Sofia Tech Park General Manager, the capital Sofia was picked as the most adequate site for construction due to the concentration of academia and innovation; but with as many as 54 universities spread across the country, higher education institutions have to be made to start working together, she added. This is what keeps only a few of them, such as Sofia University St Kliment Ohridski, the Bulgarian Academy of Science (BAS), and the Technical and Medical Universities, are involved.
Various facilities are to be part of Sofia Tech Park, such as a biopharmaceutical lab (which could assist in the extraction of natural products in a country which often has no capacity to process the product), a cybersecurity lab, an intelligent community lab, and so on, along with a number of other laboratories and centers of excellence. Joint educational facilities running University to University or Business to University cooperation programs and projects in partnership with leading academic institutions that are members of the R&D&I consortium and business clusters are also envisaged.
And certainly the tech park hopes to incubate innovative start-up and spin-off companies as well.
But It’s Not Just That Easy
Closing remarks of the speakers’ panel were mostly focused on the question what Bulgaria needs to trigger and Israel-type innovation boom. According to Dr Tony Spasov, the Dean of Faculty of Chemistry and Pharmacy at the Sofia University, “the preconditions for being better are there”, since most of the university graduates are well-prepared, talented, “and we are losing human capital but not completely”. Dr Spasov was referring to the decision of thousands of young people to leave the country in search of better economic opportunities.
Dimitar Dimitrov, Vice President at SAP Labs Bulgaria's technology and innovation unit, added there are already a number of initiatives to encourage understanding among young people in schools and universities that to build a start-up in Bulgaria is possible.
Dimitrov attributed the the main hindrance to the whole business environment. “The successful businesses here are not Bulgarian ones. entrepreneurs have to find the right connection,” he argued.
But in the view of Guy Setton, an international business development executive experienced in the health and nutrition industries, the most important thing is the need for one to discover an empty niche on the market and avail themselves of it.
Mr Setton pointed to the fact that he, Mr Zivotofsky and Prof Shoseyov did not know each other before the forum, but had been all recently researching into medical cannabis, “a market that [soon] will be worth USD 25 in retail.”
“We are looking for a partner… there is plenty of potential in Bulgaria. Every single idea of our business plan you can develop in Bulgaria,” Mr Setton added.
At the same time he opined a more proactive approach in R&D would bring about better results for Bulgaria:
“All we’ve heard today is how Bulgaria can follow. And you can be a leader.”