Israel Encourages Technology Expansion To Concentrate Outside Of Tel Aviv

Tel Aviv is the most populous city in Israel and it is the Israeli equivalent of Silicon Valley. There are over 2000 tech companies in the city alone, whereas peripheral cities around Tel Aviv are hugely deprived of this kind of development. 

The data published by the Israel Innovation Authority backs up the fact that the outskirts of Tel Aviv are underutilized and hold considerable potential for expansion. This initiative comes hot on the heels of the government’s announcement of increasing the amount of tech employees by 15 percent and they hope to reach those numbers in 2026. 

It doesn’t mean that Tel Aviv should halt all its technological development and advances in the industry, it just means that the country wants to diversify its tech landscape instead of having everything focused in the city. 

“Building high tech companies away from the bustling Tel Aviv could increase investing benefits. Currently, the competition for hi-tech roles in any tech company is extremely strong, which may increase a company’s pool of highly talented and productive individuals, but at the same time, companies are missing out on other talents that may not have a strong resume.” Explains an Israeli expert, “Fresh graduates or candidates that simply do not have flashy credentials are often glossed over in a competitive market, but that doesn’t mean that they don’t have anything to add to the company.” Aside from standing out in a less saturated market, expansion also means added diversity. 

The outskirts of the city, otherwise known as the periphery, should take precedence in the near future for those looking to invest in high-tech companies. This could also enhance the company’s economic standing as the rest of the country slowly catches up to the level of development that Tel Aviv has achieved. 

“We want to close the gaps between poverty and power,” A government official was quoted as saying, “There is currently an underpopulation of workers and an overpopulation of unemployed individuals. By expanding into the periphery, we bring equal opportunity to all.” 

There isn’t a lack of anchor points around Tel Aviv – just a lack of determination to drive its development. The capital of Negev, Be’er Sheva, is touted as one of the points with the most potential. It is home to Ben-Gurion University, SCE, Soroka Medical Center, and the Hi-Tech Park. The potential that can be found in Be’er Sheva can also be identified in various states of Israel, but it is just a matter of finding the right investors and start-up owners to push the boundaries of technology-based development in Israel. 

It is especially important now that there is rising concern over the Tel Aviv bubble, Israel’s celebrated tech sector. Layoffs headline the news almost everyday as the country struggles to regain its footing in a post-pandemic world which is currently grappling with the rising prices and uncertainties that the Ukraine and Russian war has set in motion. 

The tech sector will have to do its best to ensure its survival, another reason why the peripheral areas of Tel Aviv are much more suitable for future developments: lower prices. Being the most populous city in Israel, Tel Aviv is the sixth most expensive city in the world. With hiking prices, investors and entrepreneurs are better off in surrounding areas which aren’t quite as affected by the economy.

Recent reports have also shown that Israel is driving digital growth and digital is something that can be handled anywhere in the world, even outside of Tel Aviv. Remaining accessible to the start-up capital of Israel may still be necessary to facilitate collaborations or workshops, but the development of SCA tools or other digital platforms do not necessarily need to take place within a bustling city, and investing in a company space in the outskirts would mean lower expenses while still being accessible to the start-up capital of Israel.

However, a major national plan will have to be set into motion in order to push for the kind of development that the government wishes to see. Tax incentives could help push companies out of the city center and invest in properties surrounding the desert. The government could also provide different programs for startup owners or investors in order to make it more attractive to those thinking of investing in a startup in Tel Aviv.

Currently, there are no major plans to enact the motion of expanding outwards of Tel Aviv except the fact that tech is expanding at an unprecedented level. Tel Aviv will become crowded and extremely saturated to the point where a lack of diversity will be strongly felt in the years to come. Fortunately, it does seem that investors are still more than interested in Israel and are keen as ever to invest, since the technology sector is ripe and startups are a good venue for money. As a global leader in tech, Israel is leading the fray and calling the shots in its own growth.

About the Author
Justin Doebe is the President of Nevelis Media. Justin is interested in Israel's startup ecosystem and aims to share his insights learnt from expanding to and managing business in Israel.
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