Israel’s Startup Nation reputation has been solidified by its enormous capital flow. The country raised $14.95 billion in 2022, nearly three times the amount of the previous year’s IPOs. One of the major reasons behind Israel’s business success is the 4.1% of gross domestic product it invests in research and development, which is twice the OECD average. With 84% of the Middle East and North Africa’s total venture capitalist funding going to Israel in 2021, it is no surprise that the country has become a haven for entrepreneurs and innovators. In addition, the country’s elite cybersecurity intelligence unit, Unit 8200, has produced a group of cybersecurity experts, who are starting their own companies.
Unicorns in Israel
The entrepreneurial spirit is evident in Tel Aviv, which is the seventh-largest startup ecosystem in the world with a startup value of $120 billion. Tel Aviv has also gained thirty new unicorns, companies valued at $1 billion or more, in 2021 alone. Israel has created various government programs and tax incentives for entrepreneurs and innovators. The government launched Yozma, a program in 1983, that matched outside venture capitalist investments in Israeli startups and asked the venture capitalist firms to return their investment if the company had a successful exit. Israel also offers over thirty grants and tax incentive programs for research and development.
The Abraham Accords signed in 2020 normalized relations between Israel and the United Arab Emirates, and a few weeks later, with Bahrain. These accords have extended Israel’s economic relationships in the Middle East and could potentially create more than 150,000 jobs. If these accords grow to include eleven nations, it could potentially create more than four million jobs and $1 trillion in new economic activity.
Overall, the high-tech industry that Israel has experiences exponential growth, and the country has become a major player in tech startups.