Israel has become a major world player in tech startups, receiving twenty-eight times more capital flow per capita than the U.S. in 2021, solidifying its reputation as a startup nation. With the impressive statistics and achievements of the Israeli tech ecosystem, what exactly is it that makes Israel stand out in the tech scene?
A Look at Israel’s Tech
For starters, Israel invests 4.1% of its gross domestic product into research and development, which is twice the average of countries in the Organization for Economic Cooperation and Development. The country ranks second globally for research and development expenditure per capita and third for AI and machine learning startups. One out of every three cybersecurity unicorns globally is an Israeli company. Furthermore, Israel hosts research and development centers for some of the world’s largest companies, including Amazon, Apple, Facebook, Intel, Microsoft, and Samsung.
Tel Aviv has also emerged as a startup hub, with a patent count increase of 169% since 2021, making it the seventh-largest startup ecosystem globally in 2022. Tel Aviv is home to ninety-two cybersecurity unicorns in 2022, and in 2021, gained thirty new cybersecurity unicorns and raised twenty billion dollars. Innovation centers have also been established by major corporations such as Volkswagen, Anheuser-Busch, and Citibank.
What it Takes to Become an Entrepreneur
Israel has created a haven for entrepreneurs and innovators, as various government programs and tax incentives have been put in place. For example, Yozma, a government program launched in 1983, matched outside venture capital investment in Israeli startups and asked the venture capitalist firm to return its investment if the company had a successful exit. Additionally, there are over thirty grants and tax incentive programs for research and development, including conditional grants, tax exemptions, and reduced tax rates. Employment aid programs have also been implemented, with wage subsidies for new employees ranging from 10% to 40% for several years.
The Abraham Accords, signed in September 2020, normalized relations between the United Arab Emirates and Israel, opening up new economic opportunities for both countries. This agreement extended Israel’s economic relationships in the Middle East, creating 150,000 new jobs for the four signatories. If the accords expand to include eleven nations, it is projected that more than four million jobs could be created, along with over one trillion dollars in new economic activity over a decade.
Israel’s success in the tech scene can be attributed to several factors, including a high investment in research and development, hosting research and development centers for major corporations, government programs and tax incentives for startups, and new economic opportunities through the Abraham Accords. Israel’s emergence as a startup nation shows no signs of slowing down, as they continue to be a major player in the global tech scene.