Startup Nation Israel-7 Things You Should Know About It

Startup Nation Israel-7 Things You Should Know About It
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Startup Nation Israel-7 Things You Should Know About It

The ease of doing business score of 94.1, the number of days needed to start a business is 3, and the Business discontinuation rate of only 5.3% are just a few reasons why Israel is nicknamed as a “Startup Nation Israel”.

Startup Nation Israel

In the last few decades, a small state in the heart of the Middle East, Israel, emerged as the leader of startups in technology. One startup per 1400 people makes Israel the country with the highest startups per capita globally. Driven by innovation, Israel has become the powerhouse of technology and a model to follow for the world.

In their book, Dan Senor and Saul Singer called Israel to be the startup nation Israel with the highest number of tech startups registered on NASDAQ. The country’s entrepreneurial ecosystem is attributed to the high Research and development budget, government support for entrepreneurial activities, and innovative culture.

Just to name, some world-leading companies that have been working in Israel are Google, Intel, Facebook, IBM, Philips, Apple, Lucent, Cisco, HP, Berkshire-Hathaway, Toshiba, Siemens, and AOL. Besides these names, there is a long list of more than 200 multinational corporations that consider Israel an ideal place to make investments.

This blog is intended to explain why Israel is on the hot seat of being an attractive place to make investments in high tech startups. Let’s start it.

Society and Culture

The prosperous society and unique culture of Israel support its startup ecosystem. The entrepreneurial spirit is inculcated in the Israeli people, just like any survival skill. The biggest pro of Israeli culture making it the start-up nation is the youth’s frequent tinkering with technology. Failing is not a sin in their culture. Instead, it is just an option. Young entrepreneurs diving in the sea of technology considers failure as a part of their growth process. This behavior has encouraged Israelis to venture more and more in new businesses.

Government Support

The indecisive role of the Israeli government is appreciative of making Israel a true startup nation. Since the 1990s, the government has been involved in taking various steps to promote the country’s startups’ culture. The office of chief scientists has been established by the government to support and promote the industry.

Some Israeli government initiatives to support their startups include a $30 million technology incubator program for small scale startups. Furthermore, a $300 million R&D program is also providing funds to the companies with more than 50% budget of R&D. Two pre-seed-stage and seed-stage funding programs under the names of Heznek and Trufa, respectively, are also operational. Their government supports them from idea generation to its nurturing and till the time of IPO. From financial assistance to strategic advice, the Israeli government guides its entrepreneurs to become leaders of technology.

High literacy rate and skilled workforce

Whenever the name of Israel is taken, human resources are the foremost topic to be discussed. With 24% of the labor force having university degrees, make Israel a highly skilled and educated workforce. 135 out of every 1000 people are engineers in Israel, whereas mitigation of 1 million scientists and engineers in the 1990s also added to Israel’s tech ecosystem’s impact.

Furthermore, compulsory military training develops the leadership and entrepreneurial skills in the young generation of Israel. Besides this, the immigration of top world talent to Israel has also added to Israel’s highly skilled workforce. There exists a perfect mesh of cultures, values, academics, and innovation.  Therefore, it can be claimed with much confidence that a high literacy rate has contributed a lot to make Israel, the startup nation Israel.

R&D of the startup nation

It is a known fact; Innovation is what drives productivity and economic growth. And to bring innovation, research and development is a necessity. The startup nation has welcomed the disruptive innovation to lead the world in their tech startups. It was not possible without its strong R&D. Israel is among the leading countries having a high ratio of R&D to GDP. A share of 4% in GDP is spent on research and development, promoting the entrepreneurial ecosystem of high-tech startups in the world’s startup nation Israel.

Investment ease

What makes a country ideal for investment? Their competitive advantages. For China, it was the labor force, but their strict laws became a hurdle. For India, the cheap labor force was their competitive edge, but investment limitations held back the companies. A score of 94.1 in ease of doing business makes the startup nation Israel an ideal place to make investments.

Furthermore, the investment laws in Israel favor international investment in the country. Reduced tax rates to investment grants provided by the government encourage companies from the international horizon to land in Israel. The setting up of R&D centers and employment grants has also smoothened the way of enthusiastic young entrepreneurs to come forward and contribute to the startup ecosystem.

Venture capitalists Industry

According to an approximate estimation, the startup nation Israel hosts more than 70 venture capital funds, and more than 14 are international funds. The Venture capital volume per capita has also contributed to make Israel the startup nation with a lot of funds to support its innovative business ideas.

The adaptive and creative economy

In the diversely changing dynamics, only those can succeed who are daring to change themselves. And that’s what was precisely done by the startup nation Israel. Among the economic competitiveness measuring metrics, adaptability is considered as one of the top attributes. And this is known to everyone that creativity leads to innovation. The most significant competitive edge of the Israeli economy has been proved to be its flexibility in responding to the changing dynamics of global markets and translating them into strategic organizational decisions. The consistency in performance and creativity to bring constructive innovation make Israel the startup nation to idealize.

Final Words

Israel’s journey was accompanied by many hurdles and difficult decisions, shifting from agricultural lands to high tech startups’ powerhouse. The support of their government and consistent efforts of the entrepreneurs have made Israel proud in the world. The dedication to innovation and R&D has made Israel flag bearer of technology and a nation to look forward.

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Javier Nieto León

When I started as a Business Development Manager at a Tech Startup Vendor in 2014, I faced the issues and the pains about how hard it is becoming a global Tech Startups. The Startups Tips mission is to help your Tech Startups to go from Local to Global.

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