HP, SAP, and other big tech companies have a new way into the red hot Israeli startup scene

Israeli startup accelerator The Junction
Israeli startup accelerator The Junction Genesis Partners

In the last six months, an exclusive startup accelerator called The Junction, created by Israeli VC Genesis Partners, has come up with a way for huge multinational corporations to use Israel’s bustling tech startup community to their own sweet advantage.

These companies partner with The Junction, helping it fund its operations and mentor its startups, and in exchange they get to help it decide which startup technologies to pursue and which startups to accept. Then they work with the startups to test and shape the tech they build.

Business Insider has learned that HP (the PC/printer company) has joined The Junction in this way. In addition, The Junction just announced that huge multinational insurance company Munich Re has signed on as such a partner, following SAP who signed on six months ago, as did Australian wireless company Telstra.

HP is looking for entrepreneurs working on 3D printing, Internet of Things, and 3D visualisation graphics.

Multinational corporations have always shopped Israel’s startup up community looking for cool tech to acquire. But in the past six months, they have been flooding into the country, trying to get even more involved at earlier stages, mostly through investing, says Barak Rabinowitz, a partner with Genesis who runs The Junction.

“Their main interest is to have a first look at cutting-edge of innovations, then generate commercial pilots with companies,” Rabinowitz tells us. While a partnership with The Junction doesn’t give them special first-rights to fund or acquire the startup, it gives them such close relationships that this is often a practical outcome.

Israeli Startups, startups, office workers, The Junction

The Junction is a particularly exclusive accelerator, too. It accepts only five companies per class, and they enter a six-month program that includes the option to accept either $50,000 or $100,000 seed money for 5% or 10% of the company. Startups don’t have to take the investment, and can raise a seed round elsewhere, although Genesis Partners retains the right to participate in the first round of funding should the startup make it that far.

The program also includes sending the founders to Silicon Valley for 2 to 3 weeks where they can show the tech off for feedback and to find more investors.

200 hopefuls applied to The Junction last year. With help from these corporate sponsors, they were whittled down to 25 finalists who then spent two days and nights, holed up in a kibbutz, trying to convince The Junction and the corporations to accept them into the program.

As we previously reported, 2015 was a particular break out year for the Israeli startup scene. The country grew its first bunch of $1 billion valuation unicorns, broke records for VC funding, saw private equity investors swoop in and cut big checks, and caught the eye of Asian investors, especially from China, who are have swarmed in, too.

US multinationals like HP, Apple, Intel, Microsoft have also stepped up their presence there. HP, for instance, has a full-time person in the country looking for startups to fund.

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