Silicon Valley is often credited for the rise of the ever-expanding technology industry, however, the trend has been globalized. In recent years, Israel has become the new home for tech venture capitalists and innovators alike. With over 4% of its GDP invested in technology, Israel seeks to prove itself as the technology capital. In fact, large companies such as Amazon, Microsoft, and Apple have established research and development centers in Israel. Let’s explore what makes Israel a Startup Nation below.
Relative to the rest of the world, Israel generates the second most world venture funding per capita, around $959B. But what drives this large inflow of funding? It can be attributed to the government-sponsored programs and tax incentives for startups. Mainly, Israel offers a program to match venture capital with Israeli startups, as well as offering tax cuts and grants. Additionally, Israel has favorable treatment for investors and corporations with intellectual property by qualifying them for further financial incentives. Among these, the numerous R&D grants and deduction in research expenses also help to drive global companies to Israel.
However, creating a startup is only half of creating an international company. So how does Israel help their startups globalize? The first major step was the signing of the Abraham Accords in 2020, which helped to create informal relations between Israel and foreign countries. The U.S., and the UAE are among the signers, which extends Israel’s relations to not only the Middle East, but also globally. The accords also implicate the creation of 150,000 Israeli jobs between the currently signed countries.
Popular Israelis startups that have expanded internationally include Overwolf, Waze, and Justt, all of which secured over $67M in funding. As a whole, Israeli startups have found great success, with many of them being tech companies due to the heavily specialized financial incentives. Despite this specialization, Israel produced 10% of all the world’s unicorns (companies with at least a $1B valuation). It is likely that their success is intertwined with the ease of expansion into first-world countries as a result of the Accords.
Beyond simple production of companies, Israel is also home to forums for technological discussion. For instance, OurCrowd holds an annual summit that has over 9,000 people from 81 countries registered to attend. Among those registered are around 900 entrepreneurs, 300 members of the press, and over 1,000 multinational corporations. The summit has also secured over $2B in financial commitments and incites discussion about Israel’s potential technological future. This summit, along with similar events, is likely the reason that a number of important technological figures have been fostered. Amongst them, Google engineers and scientists, Nobel prize winners, Princeton professors with broad specializations ranging from software engineers to machine learning scientists.
This wide breadth of talent allows Israeli entrepreneurs to onboard various talented individuals, helping their business grow to the international level. Ultimately, the environment fostered in Israel on both the commercial and societal level has allowed this prosperity to flourish. If the tech industry continues to thrive in Israel, it might just be home to the next Silicon Valley.