Israel – a “Startup Nation”

Israel for years has been generating an impressive number of innovations and startups. Israeli entrepreneurs are not afraid to take risks and the state supports them in this. Still, in the large set of projects it produces little global companies.

Innovations in Israel are, on the one hand, the result of reaction to the deficits due to unfavorable climate, hostile environment and lack of natural resources (beyond the newly discovered gas deposits). On the other hand – an abundance of talents and financial resources. A great example is the Israeli company Netafim (revenues of $ 0.8 billion) is a global leader in water-saving drip irrigation system. And Israeli companies excel in solutions in the field of cybersecurity like for example company Checkpoint. But these days maybe even the most notable global startup  from Israel is Gett. It is the biggest Uber competitor, and has plans to have more than 1bn USD in revenue this year. Recently, they got 300m USD investment from Volkswagen and named as the coolest startup from Israel. Present in 100 cities worldwide and used by 5000 leading  companies. Other companies in the list were also well-known names like Waze, Viber, Wix, MyHeritage among others. And many Internet users had their first IM experience with ICQ.

Ride-hailing service Gett

At the end of 2016. there was very interesting info about breathalyzer from Israel that can detect 17 diseases, including cancer.

Israel managed to create an ecosystem where innovation incubators, young companies, institutions, researchers and investors conduct synergistic activities, although the state regulations are not always helpful. Every year there are created hundreds of startups. The record year was 2014, when there was almost 1,000 young companies. Most companies start operations in the field of communication (28%), network solutions (32%) and IT (19%). Therefore most startups are projects in the field of advanced technology, which is definitely the specificity of this country.

Last year venture capital investments in approximately 700 Israeli technology companies reached $ 4.4 billion. That is 30% more than in the previous year and 20 times more than in Australia. However, despite the increasing number and value of investments, employment is not growing – technology companies provide jobs to 12% of the economically active persons. A significant barrier to growth is the supply of engineers and specialists, which in 50% have been employed by technology potentates.

Israel, the state with a population smaller than New York (8.5 million), on the technological Nasdaq has the greatest number (after the US and China) of its own companies. On a per capita basis the country boasts the world’s largest value of technology investments and also the largest number of startups, scientists, specialists and patents. Its technology sector creates up to 18% of annual national income and 30% of the value of exports. No wonder that Israel is often called a “Startup Nation”.

On research and development the country spends an disproportionate amount, compared to the average of OECD countries. Only South Korea spends a similar amount. The Israeli government every year spends $ 5 hundred million on startups which support companies in the area of research, development and technical innovation. It adds up to $ 7 for each dollar spent by private investors. This works like a magnet for technology companies, researchers and investors. In addition, in each research unit there is established a Technology Transfer Office, which supports scientists in patenting and commercialization of inventions and innovations. Such a policy also contributes to promotion of education – 45% of the population of Israel has at least a bachelor’s degree, which puts the country among the most educated countries in the world.

There is only one shortage about the Israeli government – regulations. In international rankings, such as 2016 World Bank “Doing Business” Report, Israel performs very poorly in terms of friendly solutions for running the business.

Anna Ch

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