StartHY why?
The Startup Market in Israel
Released in 2011, the New York Times bestseller ‘Start-up Nation: The Story of Israel’s Economic Miracle' was a book that laid claim to the idea that Israel was an unusual type of country. It had produced, and was poised to produce, an enormous number of technology startups, given its relatively small size. Now with more start-ups per capita than any other country, Israel is second only to Silicon Valley in its level of innovation, with a ratio of 1 start-up per 1,400 people[1].
This tiny nation is also home to the highest number of engineers per capita and boasts the world’s second-highest research and development (R&D) expenditure rate. Indeed, this places Israel first across several indicators in the 2019 Global Innovation Index, in terms of researchers per million population, gross R&D expenditure as a percent of gross domestic product (GDP), and research talent in business enterprises.
Israel might not have a Silicon Valley, but it has the ‘Silicon Wadi’ – its high-tech cluster. While the capital of Israel is Jerusalem, Tel Aviv is its technological capital, also the state and the city of startups. Much of Israel’s high-tech industry has emerged from former members of the country’s elite military intelligence units, such as the Unit 8200 Intelligence division. From age 13 Israel’s students are exposed to advanced computing studies, and the cultural push to go into tech is strong. Traditional professions attract low salaries compared to software professionals, which encourages the growth of high-tech startups and an entrepreneurial trend.
As of 2020, Israel has over 26,535 entrepreneurs (founders and co-founders) in the high-tech sector[2] and form nearly 33% of the total figure of the Israeli technology workforce. This number is also overwhelmingly male with over 91% founders, co-founders or CEOs being men.
[1] Yerman, J. (2019). A Startup Nation: Why Israel Has Become The New Silicon Valley. Airline Passenger Experience Association (APEX). Retrieved from https://apex.aero/2019/05/22/startup-nation-israel-become-siliconvalley
[2] Israeli Entrepreneurial VC Ecosystem Overview, August 2020: https://www.ivc-online.com/Portals/0/RC/POSTS/IVC%20Israeli%20Entrepreneurial%20VC%20Ecosystem%20presentation_AUG_2020.pdf?ver=2020-08-05-123113-190×tamp=1596620058478
What Drives Us
Israel's entrepreneurial spirit is rooted in its history of overcoming obstacles, and at present, it is home to numerous pioneering startups, backed by robust public sector support, strategic partnerships, and extensive domestic and international investment. Israeli innovators today are advancing the technological landscape in practically every sector, including cyber, medtech,
autonomous driving, energy, machine learning, agtech, and aerospace.
Over 8% of the workforce in Israel is employed in the high tech sector, as compared to just over 2% in Europe. In addition, women represent over 36% of all high tech employees in Israel, as compared to 32% in Europe. There are over 7,000 startups throughout the country and some 1,000 operating in Tel Aviv alone[1].
Today Israel boasts a dozen Nobel Laureates, including six in chemistry. Israel also has the fourth highest number of companies listed on NASDAQ (after the US, Canada and China), with 94 companies listed as of 2018. Israel is the only country in the Middle East with companies traded on NASDAQ. As of 2019, there are four Israeli companies listed on the NASDAQ[2].
[1] Facts About Israel: Innovation, Israeli Ministry of Foreign Affairs 2018: https://mfa.gov.il/MFA/AboutIsrael/Documents/Israel%20Innovation%202018.pdf
[2] Doing Business in Israel: Overview, by Dreyfuss, Bromberg, Gabbay, Even-Chen, Blumenfeld, Perlmutter and Shuhatovich, Lande; May 2020: https://content.next.westlaw.com/Document/I2ef12a3b1ed511e38578f7ccc38dcbee/View/FullText.html?transitionType=Default&contextData=(sc.Default)
Israel’s reinvention as a high-tech powerhouse does not just create opportunities for companies and entrepreneurs, it also offers valuable lessons for policymakers around the world hoping to boost their own country’s start-up and innovation culture.