When the State of Israel was founded in 1948 the global average life expectancy was somewhere in the 50s, if not earlier. Life stresses, disease, and recent wars took people at an earlier age then today. Israel at 71 is coming into its own as a global entity, and it’s not just surviving against the odds for so long that the odds turned in the Startup Nation’s favor. Israel is not just growing older and more mature, but like life expectancy in similar developed countries it is entering a golden period. Ironically, it is many of the medical innovations created by Israeli entrepreneurs that have helped lengthen the global life expectancy. We focus a lot on the reasons to do business in Israel, but it’s worth reflecting on those achievements over the past few years as Israel celebrates it’s 71th birthday.
While the local tech investment scene in Israel has grown significantly over the past decade, and there are more wealthy Israelis now than ever, what is truly astounding is the amount of foreign investment pouring into Israel. Historically the United States and Europe contributed to the bulk of that investment but over the past few years, China, and other Asian powers have begun investing in a variety of different ways.
As this recent NoCamels article states “foreign investment as a share of total capital raised by Israeli companies reached 77 percent in the third quarter of 2018, the highest since 2015. US investors were involved in 35 percent of deals over the past five years, with Israeli investors came in second most active with 30 percent. Chinese, British, Japanese, and German investors held around three percent each.” Corporate innovation programs, direct investments in startups, and LPs in VCs are some of the ways the East has been leveraging capital to find innovation.
Israel’s ecosystem, clustered around Tel Aviv (though that is changing with other Israeli cities developing robust ecosystems) is not just world class, it’s arguably outside the Bay Area the most innovative ecosystem in the world. Like the Valley, there is a combination of trends that have helped create this ecosystem; a pool of highly technical talent from the IDF, acceptance of failure as part of success, and most importantly, the mindset of risk taking paired with clear problem-solving skills.
While Israeli tech has excelled in deep tech and cyber, those areas cross over into the dizzying array of tech verticals such as AI, IoT, food-tech, and the list goes on. There are over 1,400 new startups created in Israel every year supported by a robust ecosystem of working spaces, accelerators, non-profit groups, meetups, and resources provided by service providers.
For all the bluster in Europe and other parts of the world the two main tech powerhouses that have emerged over the past 10 years are the United States and China. They are the winners when it comes to the influence and power the tech companies originating from these countries project. It’s the direction the world is moving towards, with very clear winners and losers. Circa 2019 there are over 500 corporations operating in Israel and that number will only increase.
It’s in this backdrop that multinationals are flocking to Israel to tap into the innovative ecosystem. As noted above there have been many Western European and Asian companies engaging the Startup Nation. This engagement can look like innovation scouting, co-investing with a local VC, opening an R&D center or a corporate innovation center. With that interest however, as more and more areas in developed countries such as Australia, parts of the United States and Canada look to build their local ecosystems, we’ll see another wave of interest in the Startup Nation.
71 years old and another year of successful growth as part of the Startup Nation’s trajectory. We cover many of Israel’s wins in the business and tech world, but sometimes we need to take a step back and marvel on what the citizens of this small country in the desert were able to build with only their wits and persistence. We’re going to see continued growth here in Israel so now is the time to consider doing business with the Startup Nation. As they say in Israel “ad 101”, until 101 years old.