Israel has transformed into a tech powerhouse and solidified its reputation as the startup nation, receiving twenty-eight times more capital flow than the U.S. on a per capita basis in 2021. In 2022, Israel’s high-tech companies raised $14.95 billion through 663 deals, including share purchase agreements, and fifty-seven Israeli companies went public, raising almost three times the $1.7 billion raised by IPOs in 2020. The country is also ranked second globally for research and development expenditure per capita and ranked third in the world for the number of artificial intelligence (AI) and machine learning startups. Notably, one out of three cybersecurity unicorns globally are Israeli companies. Israel’s success is largely due to factors such as government programs and tax incentives, an elite cybersecurity intelligence unit, and the establishment of several innovation centers for major companies like Amazon, Apple, and Google.
The city of Tel Aviv has emerged as the seventh largest startup ecosystem globally, with a patent count that increased by 169% since 2021 and a $120 billion startup value in 2022. In 2021, Tel Aviv-based startups raised $20 billion, 63% of the national total, and gained thirty new unicorns, bringing the total number to ninety-two in 2022. The city has also established innovation centers for companies like Apple and Volkswagen.
The country’s success has been driven by a thriving venture capital community, small local markets and security threats, and Israeli entrepreneurs’ ability to operate globally. The Abraham Accords, signed in September 2020, also extended Israel’s economic relationships in the Middle East and could create over 150,000 new jobs. Israel’s success has been a product of a combination of factors that have enabled the country to create an innovative and entrepreneurial culture.
