Israel has been finding great success within the tech startup ecosystem, but how have they been able to accomplish this? Israel has massive startup potential with their tech and cybersecurity companies raising billions of dollars in recent years. They have invested a little more than 4% of the GDP into R&D, which is twice the OECD average. The country is currently ranked second for R&D expenditure per capita and third for the number of AI and machine learning startups in the world.
In the city of Tel Aviv, patent count has increased by more than 150% since 2021 with the city’s startup value recorded as $120 billion in 2022. The city saw startups raising $20 billion or 63% of the national total in just 2021. The city also gained 30 new companies valued at $1 billion or more (considered unicorns) in 2022. As a country, Israel is ranked second in world venture funding per capita with more than $1 B.
Israel’s government programs and tax incentives have been helping entrepreneurs and innovators find business success in the country. Several grants and tax incentive programs were created specifically for R&D while other grant programs were created for research institutions, NGOs, individual entrepreneurs, and multinational companies. Intellectual property incentives such as having intellectual property assets in Israel or transferred to Israel qualifying companies for reduced corporate, dividend, or capital gains tax rates were created as well.
The Abraham Accords Israel signed in 2020 allows the country to extend their economic ventures to the rest of the Middle East while helping to create new jobs for the four signatories. Besides the influence of the accords, their annual global investor summit helps the country grow their influence worldwide as the summit welcomes more than 9,000 people form 81 countries, 111 delegations, and 380 portfolio companies each year.
With a great history of innovation and still more to come, Israel will continue to have a significant effect on global entrepreneurship.