The world pays attention to successful entrepreneurs and to the quality of their work. As American essayist once said, ““Build a better mousetrap, and the world will beat a path to your door.” And one country noticed for building better-than existing products, in this case, through startups, is Israel. 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.”
True enough, Israeli startups are applying innovative thinking in diverse areas, including cybersecurity, med-tech, agritech, autonomous driving, energy, machine learning, drones, aviation, travel, aerospace, among others. It is, therefore, no wonder that Israel’s tech business hub is second only to California’s Silicon Valley, with Israel embracing Silicon Wadi as the term to symbolize its location. Israel is known as a world leader in tech and the “Startup Nation,” of the world, recording the largest number of startups per capita anywhere. There is one startup for every 1,400 people of Israel’s 8.5 million people, amounting to around 6000 active startups and companies.
With so much tech business led by Israelis, it is not surprising that entrepreneurs across the world compete to connect with Israeli innovators. Apart from the quality of the workforce, the level of creativity, the speed of thinking and the unerring execution, innovator Itai Green says, “(T)here’s a level of knowledge sharing between the different players that is almost unheard of, and that assists the entire ecosystem to quickly evolve and develop superb and elegant solutions that assist global corporations.”
Over the years, Israeli startups focused on building global companies and solutions in cybersecurity, Artificial Intelligence (AI) and big data, including VoIP (Voice over Internet Protocol). Following the undeniable successes, Israel chose global food and nutrition as its next frontier on innovation. According to Israeli non-profit Start-Up Nation Central (SNC), Israel, in the past decade, launched over 350 food-agri startups focused on “deep tech” innovation. This helped to position Israel as a key player in the food-agri tech sector, with a recent estimated industry value of $8.7 trillion. Among many notable global corporations pursuing innovative food tech solutions with Israeli partners, is Mars Incorporated.
The achievements of Israel’s tech industry brought in their wake, huge, enviable profits. For instance, money raised by tech firms in 2019 was $8.3 billion, a 30% increase from 2018. From 2010 to 2019, they raised a total of $39.1 billion. Shmulik Zysman, a tech industry leader, said, “2019 marked a record year, capping a decade of successive increases in capital invested in the Israeli high-tech industry.” The investments ranged from software and the internet through life sciences to semiconductors, with increasing foreign capital investments in the tech sector.
The amount of money raised continued in a similar vein in 2020, despite the global economic meltdown during a rapidly rising pandemic. Startup advisor, Hillel Fuld, said, “In Israel I feel like we’re always in survival mode. So, when there is a global crisis, we don’t necessarily buckle under the pressure like many other places. We thrive under the pressure and we flourish.”
In Q1 of 2020, Israeli private high-tech companies raised a record $2.74 billion, that included 139 deals, and an increase of 76%. In Q2 of 2020, overcoming the negative economic and public health impact of the pandemic, Israeli private high-tech companies raised $2.5 billion, up from $2.2 billion a year ago. Israel Venture Capital (IVC) Research Center Director, Marianna Shapira, said, “Israeli growth stage companies have a strong support from the global community of investors, even though the company valuations are driven down due to the weakened economies globally.” Of the 170 deals of Q2, 90 were in early stage rounds.
Despite the global economic woes if 2020, Israel’s raising of $1.2 billion of new equity in September alone, smashed records of the most amount of money raised in a month. SNC Finder database said this demonstrated the force of Israel’s entrepreneurship ecosystem.
Leading from this financial victory, the money raised in Q3 of 2020 by Israeli private high-tech companies was an incredible $2.74 billion, a 24% increase from 2019, despite the global economic downturn. Life science firms took prime place in Q3, with one in four deals being from this sector.
Furthermore, in the first nine months of 2020, Israeli tech companies raised $7.5 billion, and was close to the total amount raised in the whole of 2019. And incredibly, in a year where global economies have been brought to their knees.
Many people believe that Israel’s focus on technology started seriously only in 2012. However, as early as 1998, Newsweek named Tel Aviv one of the ten technologically most influential cities in the world. By 2010, Israel had 140 scientists and technicians per 10,000 employees – one of the highest ratios in the world. And in 2012, an international study ranked Tel Aviv second only to Silicon Valley, as the best place in the world to launch a high-tech start-up company.
Venture capitalist, Edouard Cukierman believes that Israel’s highly skilled workforce who power the high-tech economic engine, are primarily responsible for luring international investors. “Technological entrepreneurship has turned us into a regional and global influencer,” he said. In fact, around 85% of funds invested in Israeli startups comes from overseas, mostly from the U.S., but also from Europe and Asia.
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.”
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.”