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Israel's Tech Industry is scaling up – and probably will never stop

It is beyond doubt that Israel is the epicenter of the tech ecosystem nowadays. With more than 6000 active startups and the world’s leader number of start-ups per capita (around 1 startup for every 1,400 people), the country has certainly earned its reputation of “The Startup Nation”.

But it is not just a matter of quantity, but also a matter of quality. Take Waze, for example, which was bought by Google for USD 1.3 billion, or Mobileye, which was bought by Intel for USD 15.3 billion. There are at least 36 companies valued at USD 1 billion operating in the country and just in 2019, 338 Israeli startups raised USD 3.9 billion.

But how did that happen? It is a long list, but it can all be summed up in two reasons: people and their culture.

Not what you expected, huh? Don’t worry, it will make a lot of sense in one minute. In Israel, parents encourage their children to be brave and bold with the idea that despite the chances of failure, they have to try, in any way possible. It is a concept called “chutzpah”.

Why? It is a matter of context. Israel is a really small country with almost no natural resources available and in constant danger of war. So being brave is part of the equation since birth. People know that, and prepare for it. Not only at home and at early school stages, but constantly. For instance, take the mandatory military service. Young people receive technical training, acquire a great sense of responsibility, the skills to make life and death decisions, and learn to work as a part of a team.

The result? A creative, educated, skilled, entrepreneurial and ambitious workforce, one of the world’s highest percentage of engineers and scientists per capita, and one of the highest ratios of university degrees and academic publications per capita, becoming one of the most educated societies in the world.

If we add government support and a GDP investment that ranks second in the OECD ranking of R&D expenditure per capita, you get a country where the world's leading multinational companies have been investing. Microsoft, Motorola, Google, Facebook, Berkshire-Hathaway, Intel, HP, Siemens, GE, IBM, Philips, Lucent, AOL, Cisco, Applied Materials, IBM, J&J, EMC, Toshiba… you choose. Moreover, entrepreneurs started to acknowledge their potential and stopped creating and selling their businesses to bet on developing them themselves, creating a growing layer of not only startups but scale ups, that are staying independent and growing well. This layer, with companies like Fiverr, IronSource, Wix, Taboola, Outbrain, AppsFlyer, SimilarWeb, WalkMe, Payoneer, Storedot, Datorama, and others, are becoming a new and unmistakable feature of the Israeli tech ecosystem.

Is that enough to be the epicenter of the world’s tech ecosystem? Maybe, but there is more. Is not only the quality of the tech products and services what makes Israel “Silicon Wadi”, it is mostly innovation. Israel has always been at the forefront of the industry, and today is not different. The country’s entrepreneurs are focusing on clean energies and health tech solutions, and the world is looking closely. Take a look at RayCatch Ltd., a startup developing artificial intelligence-based diagnostics and optimization software for the solar energy market, in 2018 it raised USD 4.5 million, it successfully enhances over 4GW in solar assets worldwide, and Microsoft’s new accelerator has taken it under its wing; or, a pioneer business in turning the smartphone camera into a clinical-grade medical device that has raised USD 90 million in investment and has Samsung Next as investor.

As Larry Page stated “always deliver more than expected”, and Israel, being a country in the middle of the desert, with only 9 million people and a territory of 22K km2, it certainly does, and has been doing so ever since 1960, and that won`t change.

Why? It can all be summed up for two reasons: people and culture. And that’s something everybody could bet on.



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