Israel and its waze cartoon from January 7, 2014

A Record Year For Israeli Hi-Tech

2013 was a banner year for Israeli VCs and hi-tech start-ups. The so-called “Start-up Nation” has once again hit its stride, after a decade of setbacks due to circumstances largely beyond the control of Silicon Wadi.

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According to Ethosia, a human resources and research company, the industry’s beacon remains in the mobile sector. Even though there is a healthy dose of skepticism on the market, optimism is alive and kicking.

Of course, when there is a record high year, the next year or few are likely to be lower, if only marginally. In other words, don’t expect a capital eruption in 2014. On the other hand, don’t dismiss the possibility entirely, either.

Ethosia’s data, as reported by Globes, shows that in the first two quarters of 2013, the Israeli market saw demand increase for mobile and web developers by 52%. These numbers kept up for most of the calendar year. Start-ups founded in 2013 raised more than $380 million successfully, and of those, some 25% of the capital funding was for Internet companies. According to Ethosia CEO Eyal Solomon, “Web and mobile companies have surpassed the fundraising levels of communications and semiconductor companies, which had been the dominant leaders until now, by tens of percentage points”. Market analysts predict that this rate will likely remain similar in 2014, and in the following years.

Of course, Google’s purchase of Waze for nearly $1 Billion greatly impacted the Israeli job market, especially during the Summer. Industry data shown by Ethosia’s research team in that period, indicates that the deal increased demand for mobile developers by around forty percent, as well as raising fundraising numbers in more traditional software firms. Many of these also create and upgrade enterprise-level products and services.

Certainly, Waze was not the singular company in Israel to score such a highly publicized successful exit in 2013. Prolor, a biomet company, was bought for $480 Million. IBM bought security software company Trusteer for $900 Million. Others that received considerably less press also raked-in fantastically huge amounts of money.

“The nature of these deals indicates a certain change in the high-tech sector, overall. These are not attempts to have quick exits and dreams of instant riches anymore, but rather patience, and the gradual ripening of a process over time, and the execution of exits at prices that, until a few years ago, would have sounded fantastical; practically unattainable,” says Solomon. “More and more Israeli high-tech companies are looking to grow and get stronger on their own, slowly and diligently, even if it means foregoing or postponing a tempting exit opportunity,” he added.

The real good news is that it’s not only the well-heeled who are enjoying the extra revenues. 2013 also hit high-marks for employment numbers. New recruits represented 11% of the entire workforce – the highest such numbers in at least 5 years. Also, the average salary increase hit 4.1% – a trend continuing since 2010. On top of that, the average time to fill positions fell sharply this year; down from 8 weeks to 6.5 weeks. Naturally, younger, more junior job seekers are typically able to land new positions faster than older, more senior people.

Overall, from software to science to medical devices, and just about any sector you can think of, salaries rose. Nearly no sectors saw an overall decline in salaries (save for a handful of HR and hardware positions). Even telecoms, with increased competition, saw growth, and are expected to see it again in 2014.

All of this means, of course, that if you’re happy in your job, or on the hunt for a new job, or you’re an investor looking to put some Israeli hi-tech assets into your portfolio, 2014 may not be 2013 … but it may well increase your bottom line, and quite respectably.

So here’s wishing you and everyone many happy returns this year … whether you have found the best ways to get there with acumen, or just stumbled upon it by accident.

Full disclosure: In addition to caricaturing and skewering popular subjects with the tip of his pens, Yasha Harari has worked for a number of start-ups in the U.S. and Israel.

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