In recent years, Israel has secured its position as the “Startup Nation," functioning as one of the world's most developed technological epicenters. Having established a distinctive high-tech ecosystem, Israel, a country with a population of only eight million, continues to celebrate its innovative capacity with one of the largest density of startups globally.
Numerically, Tel Aviv ranked number six in the Global Startup Ecosystem Report of 2017, with an estimated 3,000 startups active across Israel as of last year, around half of which are located in Tel Aviv. The country, with a per capita investment more than double that of the US, has founded a number of the world's most in demand products including Waze, Gett and Fiverr.com.
What's contributed to its phenomenal growth in the high-tech field? In the book Start-Up Nation, authors Dan Senor and Saul Singer identify the country's level of entrepreneurship as a product of "…the tight proximity of great universities, large companies, startups and the ecosystem that connects them - including everything from suppliers, an engineering talent pool and venture capital." They also address other crucial factors including strong team work, willingness to resource share and the determination of startups to dream big within small realms. Alongside this, a solid integrated framework of accelerators, incubators and co-working hubs provide the space and support to nurture current and future talent.
Women in High-Tech
In the 2015 Global Startup Ecosystem Ranking, Tel Aviv placed as the 5th city with the highest percentage of businesses founded by women. Standing at 20 percent, hovering two percent above the global average, Israel's development of equal opportunities and support for women in the field has played a vital role in this statistic.
One of the more prominent establishments is Yazamiyot (Hebrew for “female entrepreneurs"), a community launched in 2012 by entrepreneur Hilla Ovil Brenner with the goal to empower and supporting women working within the high-tech, bio-tech and innovation fields. “We are the leading community for Israeli female entrepreneurs to meet, network, learn and help each other, and our vision is to dramatically increase the presence of women entrepreneurs across these industries in the next few years," says Co-Founder and COO Shiran Melamdovsky. “In Tel Aviv, there is much awareness as to the gender gap, but our community aims to combat this by creating great collaborations and opportunities."
Yazamiyot cooperates with Google Tel Aviv on Google Campus for Moms, a program designed to empower new mothers to pursue entrepreneurial roles, as well as working alongside other initiatives including Microsoft Accelerator, Rise – Barclays innovation program, WIX and the US Embassy as a way of presenting accelerated entrepreneurial programs to women. “This awareness has contributed to a small increase, but women still find themselves in rooms full of men," states Melamdovsky. “Only a few women reach senior managerial positions and there are not enough mentors and role models for women to emulate. The shortage is already starting from junior management positions like team leaders."
Yet, despite the under-representation of women in technological fields globally, Tel Aviv is moving in the right direction to provide growth opportunities for women. The city ranked 24th out of 50 on the Dell Global Women Entrepreneur Cities Rankings 2017, based on characteristics and factors including programs, local policies, capital, talent, technology and culture. The last few years have seen a substantial leap in the number of female entrepreneurs spearheading startups in Israel, in addition to an increased presence of women working in venture capital and investment firms.
Making an Impact
Other establishments are succeeding in their facilitation as a springboard for women in business, to offer support, insight and networking opportunities across Israel. From Women in Wireless, established in 2015 to “…connect, inspire and empower female leaders in the mobile and digital space," and WMN, a co-working space and ecosystem for women led ventures; to Let's Get to 51 percent, a platform for female entrepreneurs to connect with industry high-tech professionals, and Women of Startup Nation (WOSN), an online community founded by Barr Yaron which documents the success stories of women in the field of high tech, a wave of cultural support for female-led initiatives is gaining momentum.
What's more, Israel has produced some remarkable female talent: Yasmin Lukatz, founder of the Israel Collaboration Network (ICON), an organization linking selected Israeli entrepreneurs with venture capitalists and key connections in Silicon Valley; Dr Kira Radinsky, now eBay Israel Chief Scientist, who sold her consumer analytics company SalesPredict to eBay for millions of dollars; and Maxine Fassberg, whose 30 plus years at Intel-Israel, the last decade of which she served as general manager, saw the company's export profits increase by over $1.16 billion within three years.
Whilst the figure hovers at around three percent of entrepreneurs in Israel as female, the crack in the glass ceiling is materializing as more women step into top tier positions - trailblazers of their time, paving the way for others to boldly follow suit.
Female-led Startups on the Rise
At the crux, the issue of success in the field is centered around the support and opportunities for female entrepreneurs to secure funds. “The demand from VCs and investors for women-led startups is increasing, as more women-led businesses around the world show increased results and higher ROI," states Melamdovsky. “There are thousands of women in Israel and hundreds of thousands worldwide that have the ideas, skills, and experience to establish and lead successful and global companies, with the right support and mentorship."
The success stories are trickling in, with more than a handful of Israeli founded female-led startups making their presence known internationally:
Feelter - Founded by Smadar Landau in 2014 as a plugin for ecommerce, utilizing social media content to help increase website conversion rates. It was voted by Inc. as one of the 20 Israeli Startups to watch in 2017 and won first place in the 2016 G-Startup Worldwide competition.
Missbeez - led by co-founder Maya Gura as a mobile marketplace for beauty services matching busy women with self-employed professionals. The startup has so far raised more than $5 M.
Sidekix - an urban discovery app, co-founded by Jenny Drezin, which provides interest based routes across categories including shopping, culture and nightlife. The app has had half a million global downloads since its launch in 2016 and has secured over $2 M in funding to date.
Shupperz - led by Tal Rubinstein, is a worldwide social network of skilled shoppers that enables anyone to shop like a local. This first-of-its-kind social platform is said to be the next big thing in retail innovation. The company has so far raised over $4 M.
Business entities can be defined as the corporate, tax and legal structures which an organization chooses to officially follow at the time of its official registration with the state authorities. In total, there are fifteen different types of business entities, which would be the following.
- Sole Proprietorship
- General Partnership
- Limited Partnership or LP
- Limited Liability Partnership or LLP
- Limited Liability Limited Partnership or LLLP
- Limited Liability Company or LLC
- Professional LLC
- Professional Corporation
- Nonprofit Organization
- Cooperative Organization
As estates, municipalities and nonprofits do not concern the main topic here, the following discussions will exclude the three.
Importance of the State: The Same Corporate Structure Will Vary from State to State
All organizations must register themselves as entities at the state level in United States, so the rules and regulations governing them differ quite a bit, based on the state in question.
What this means is that a Texas LLC for example will not operate under the same rules and regulations as an LLC registered in New York. Also, an LLC in Texas can have the same name as another company that is registered in a different state, but it's not advisable given how difficult it could become in the future while filing for patents.
To know more about such quirks and step-by-step instructions on how to start an LLC in Texas, visit howtostartanllc.com, and you could get started with the online process immediately. The information and services on the website are not just limited to Texas LLC organizations either, but they have a dedicated page for guiding fresh entrepreneurs through the corporate tax structures in every state.
Sole Proprietorship: Default for Freelancers and Consultants
There is only one owner or head in a sole proprietorship, and that's what makes it ideal for one-man businesses that deal with freelance work and consulting services. Single man sole proprietorships are automatic in nature, therefore, registration with the state is unnecessary.
Sole proprietorships are also suited to a degree for singular teams such as a small construction crew, a group of handymen, or even miniature establishments in retail. Also, this puts the owner's personal financial status at jeopardy.
Due to the fact that a sole proprietorship entity puts all responsibilities for paying taxes and returning loans, it directly jeopardizes the sole proprietor's personal belongings in case of a lawsuit, or even after a failed loan repayment.
This is the main reason why even the most miniature establishments find LLCs to be a better option, but this is not the only reason either. Sole proprietors also find it hard to start their business credit or even get significant business loans.
General Partnership: Equal Responsibilities
The only significant difference between a General Partnership and a Sole Proprietorship is the fact that two or more owners share responsibilities and liabilities equally in a General Partnership, as opposed to there being only one responsible and liable party in the latter. Other than that, they more or less share the same pros and cons.
Registration with the state is not necessary in most cases, and although it still puts the finances of the business owners at risk here, the partnership divides the liability, making it a slightly better option than sole proprietorship for small teams of skilled workers or even small restaurants and such.
Limited Partnership: Active and Investing Partners
A Limited Partnership (LP) has to be registered with a state and whether it has just two or more partners, there are two different types of partners in all LP establishments.
The active partner or the general partner is the one who is responsible and liable for operating the business in its entirety. The silent or investing partner, on the other hand, is the one who invests funds or other resources into the organization. The latter has very limited liability or control over the company's operations.
It's a perfect way for investors to put their money into a sector that they are personally not experienced with, but have access to people who do. From the perspective of the general partners, they have similar responsibilities and liabilities to those in a general partnership.
It's the default strategy for startups to find funding and as long as the idea is sound, it has made way for multiple successful entrepreneurial ventures in the recent past. However, personal liability still looms as a dangerous prospect for the active partners to consider.
Limited Liability Company and Professional LLC
Small businesses have no better entity structure to follow than the LLC, given that it takes multiple good ideas from various corporate structures, virtually eliminating most cons that are inherent to them. Any and all small businesses that are in a position to or are in requirement of signing up with their respective state, usually choose an LLC entity because of the following reasons:
- It removes the dangerous aspect of personal liability if the business falls in debt or is sued for reparations
- The state offers the choice of choosing between corporation and partnership tax slabs
- The limited legalities and paperwork make it suited for small businesses
While more expensive than a general partnership or a sole proprietorship, a professional LLC is going to be a much safer choice for freelancers and consultants, especially if it involves risk of any kind. This makes it ideal for even single man businesses such a physician's practice or the consultancy services of an accountant.
B, C and S-Corporation
By definition, all corporation entities share most of the same attributes and as the term suggests, they're more suited for larger or at least medium sized businesses in any sector. The differences between the three are vast once you delve into the tax structures which govern each entity.
However, the basic differences can be observed by simply taking a look at each of their definitive descriptions, as stated below.
C-Corporation – This is the default corporate entity for large or medium-large businesses, complete with a board of directors, a CEO/CEOs, other executive officers and shareholders.
The shareholders or owners are not liable for debts or legal dispute settlements in a C-Corporation, and they may qualify for lower tax slabs than is possible in any other corporate structure. On becoming big enough, they also have the option to become a publicly traded company, which is ideal for generating growth investments.
B- Corporation – the same rules apply as a C-Corporation, but due to their registered and certified commitment to social and environmental standards maintenance, B-Corporations will have a more lenient tax structure to deal with.
S-Corporation – Almost identical to a C-Corporation, the difference is in scale, as S-Corporations are only meant for small businesses, general partnerships and even sole proprietors. The main difference here is that due to the creation of a pass-through entity, aka a S-Corporation, the owner/owners do not have liability for business debt and legal disputes. They also are not taxed on the corporate slab.
Cooperative: Limited Application
A cooperation structure in most cases is a voluntary partnership of limited responsibilities that binds people in mutual interest - it is an inefficient structure due to the voluntary nature of its legal bindings, which often makes it unsuitable for traditional business operations. Nevertheless, the limited liability clause exempts all members of a cooperative from having personal liability for paying debts and settling claims.
This should clear up most of the confusion surrounding the core concepts and their suitability. In case you are wondering why the Professional Corporation structure wasn't mentioned, then that's because it has very limited applications. Meant for self-employed, skilled professionals or small organizations founded by them, they have less appeal now in comparison to an LLC or an S-Corporation.