Anton Lucanus
Anton Lucanus

Investing in companies pushing new frontiers in science and technology

Israel is an extraordinary nation with a highly-skilled workforce that offers the world lucrative and safe opportunities for investment

The whole world loves a winner. And the real winners are the ones tested by the flames of adversity. Former Governor of California and former actor, Arnold Schwarzenegger, said, “Strength does not come from winning. Your struggles develop your strengths.”

To focus on the nations of the world, Israel stands out as one which was dealt an oversized hand of challenges from the nation’s inception. Jon Medved, CEO of OurCrowd, a Jerusalem-based investor platform, said “We don’t have huge natural resources, so we have worked hard to develop our skills-base in the country.”

Former President of Israel, Shimon Peres, once said, “In Israel, a land lacking in natural resources, we learned to appreciate our greatest national advantage: our minds. Through creativity and innovation, we transformed barren deserts into flourishing fields and pioneered new frontiers in science and technology.”

Israel, in fact, has outperformed itself, with Tel Aviv ranked among the six cities identified as tech hubs, after America’s Silicon Valley.

Furthermore, with global recognition as the  “Startup Nation,” of the world, having the largest number of startups per capita anywhere, Israel is also manufacturing better-than existing products through its  6000  or so active startups. During the past ten years, Tel Aviv has launched over 350 food-agri startups focused on “deep tech” innovation. Furthermore, it has been granted patents for innovative thinking in diverse areas such as med-tech, agritech, cyber security, autonomous driving, energy, machine learning, drones, aviation, travel, and aerospace.

So, it is hardly a surprise when American billionaire investor, Warren Buffet, said, “Israel is the best place to invest because of its people. There is no other place with such high-quality people with motivation and abilities.”

With Tel Aviv considered second only to Silicon Valley, entrepreneurs across the world are competing to connect with Israeli innovators, despite its location in one of the world’s most volatile regions. Recently, the Bloomberg Innovation Index ranked Israel as the 7th most innovative country in the world for 2021.

With a rapidly growing economy, Israel’s commitment to economic growth and development in an era of the pandemic, when stronger economies have faltered and regressed, is getting investor attention to the country. Apart from its spectacular performance as a startup nation, there is an interesting development in the direction of Israel’s skills innovation. Being a country that believes in every opportunity that comes its way, Israel is tuned into the brilliant success of the global entertainment industry, with 2.7 billion gamers increasing revenue to over $165 billion, during the worst economic recession of a lifetime. This exceeds the combined revenue of the movie and sports industries. Taking advantage of this situation that came about as a natural response to the lockdowns and social restrictions of the pandemic, former Google executive, Eitan Reisel, launched the first games-focused investment fund out of Israel. Besides, legalized casino gaming is considered a catalyst for developing the tourism industry in Israel.

So, even as investors look toward Israel as a worthwhile investment opportunity with a number of attractive assets, there are many who are seeking the least risky investment options to consider. This is largely because of chronic political instability in the region, Israel’s huge public debt, labor costs higher than the regional average, and a relatively high corporate tax.  

Therefore, investors seeking safe investment opportunities in Israel, need to look for several distinguishing qualities. For instance, they should seek out companies with heavy focus on research and development. Israel has the world’s highest investment on R&D at 4.8% of GDP.

Then again, Israel’s hi-tech and engineering companies are worthy investment considerations, with the country’s strongest resource, its highly skilled workforce, focused mainly on engineering and hi-tech, also cyber security and healthcare. There is significant investor interest in Israeli healthcare technology as Israel is perceived as an advanced country in terms of data infrastructure in the public health sector. Furthermore, Israel’s healthcare and information technology sectors, which comprise about 36% of the Israeli stock market, flourished during the global pandemic.

On the other hand, with remote working a widespread phenomenon in a pandemic and post-pandemic world, developing enterprise software for remote working is a bold and lucrative venture which also makes for a safe investment opportunity. Founder and Executive Chairman of international venture capital firm, Jerusalem Venture Partners, Dr. Erel Margalit, said, “Israel has been a case study for how innovation can change a country and transform the world.”

There is also the opportunity to invest safely in a diversified portfolio of Israel stocks through an Israel-focused Exchange-Traded Fund (ETF), that offers diversification at low cost, and trades like any other stock on a U.S. exchange. 

From another perspective, Israel bonds are considered extremely safe investments as Israel has never defaulted on any of its bonds since the start of the nation. 

Unfortunately, though, global investors appear to be unaware of the revolution taking place in Israel’s capital markets, especially the extensive policy reforms remodeling Israel’s economy beyond the technology sector, and which have far-reaching implications for investment opportunities.

However, venture capitalist, Edouard Cukierman sees Israel’s highly skilled workforce  powering the high-tech economic engine, as primarily responsible for luring international investors. “Technological entrepreneurship has turned us into a regional and global influencer,” he said. 

Sir Richard Branson, global billionaire business magnate and investor, said, “Israel is a country of “great entrepreneurs doing incredible things… I’m sure we’ll be investing much more in the years to come.” It is a stamp of approval worth a fortune.

About the Author
Scientist turned techie. Founder at Neliti & Reputio. Interested in sharing lessons learnt from Tel Aviv's bustling technology ecosystem.
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