How Israel Became A Leading Start-Up Nation

Startup companies can be a valuable indicator of a country’s economic success. Startup companies are more likely to be successful when the country is stable, has high GDP per capita and low levels of corruption. But the rise of innovation and start-ups need not be limited to large countries. For example, the rise of start-up companies in Israel can be attributed to the country’s location in the Middle East and high number of highly educated immigrants. “The startup ecosystem is something that you need to have a lot of organized, focused resources and policies for,” said David Kezerashvili to the Israel National News. “That’s why the government does most of the innovation and entrepreneurship funding and allows foreigners to invest in nearly any field.” 

The success of the Israeli startup industry is what many call a “miracle”. Israel has a population of only 9 million people, yet it has the second-highest number of startups in the world. It also ranks among the top 10 countries in terms of density per capita and number of exits.

Despite its diminutive size, its contribution to science, technology, and worldwide progress is gigantic. The start-up culture emerged sometime in the early 1990s, and it has grown tremendously since.

When the Israeli government started supporting its seed-stage entrepreneurs, it opened up the path for a flow of foreign investment.  This is a significant reason that Israeli start-ups often receive foreign venture capital funds. The first money might come from the government or local sources, but later stages are foreign. Over time, the state and private individuals together build a great environment where start-ups are supported, especially in their early-critical period. The snowballing effect started to appear, and with many successful ventures over many years, Israel won the title of the Start-Up Nation. 

Israel’s Path To Tech Competency

It wasn’t always like this for Israel. The country had to endure many hardships before reaching a status as the leading startup nation. Those struggles are part of the reason Israel became one of the major technology hubs. Creativity and new ideas thrived. It took a few generations to start producing these geniuses who would go on to make exceptional advancements, and today there are many promising Isareli startups. Several industries have seen Israeli innovation, ranging from agriculture to computer science. When the engine started running, it never stopped. 

In the 21st century, Israel is a leading nation across all science and research fields. This is why the biggest companies like Microsoft, Intel, or Apple have offices in the country. They want the very best to innovate for them. Israel has become the partner to provide just that. Since a staggering percentage of Israelis are highly educated and hardworking individuals, eventually the question of starting their own company pops up in their heads. As statistics show, a lot of them are highly successful. 

One of the businesspeople who has been interviewed regarding investments in Israel is David Kezerashvili. When asked what makes the Israeli startup environment appealing to foreign investors, he stated that the fundamental difference between Israel and many other countries is that Israel does not have different regulations for foreigners when it comes to mergers, acquisitions, and takeovers. Prior to entering the Israeli market, he was best known for investing in private media in Georgia, but through his venture capital firm, he has shifted his focus to primarily investing in tech startups. 


Looking at statistics, it’s hard to deny that Fintech is here to stay. Twenty percent of all the fund’s venture capital firms invest in Fintech startups. Israeli Fintech companies are incredibly successful, and the nation is renowned for producing many unicorn companies. A unicorn company is one that manages to stay privately owned while maintaining a valuation of over a billion dollars. They are called that because they are incredibly rare, and somehow Israel manages to produce more than a dozen every year.

From tech insurance companies to trading platforms, there is seemingly a successful company in every imaginable area. Backed by incredibly advanced Israeli internet security, all of these start-ups have a solid foundation that’s very hard to contend with. By now it’s easy to understand why Kezerashvili is not the only investor feeling certain that the next big thing will come out of Israel soon!