Israel: Unlocking the Entrepreneurial Spirit

"It was the emergence of Israel’s export based high-tech sector in the early 1990s that really put the country’s economy on track, with GDP growth of at least 4% a year. Specializing in computer hardware and software, medical technologies and pharmaceuticals, this sector became world renowned for innovation. Flash drives, cardiac stents, instant messaging and shopping.com are only a few of Israeli-bred innovations that have emerged in the last few decades. High-tech industries represent almost 50% of total industrial exports today, according to OECD data. Between 1995 and 2004, Israel increased its spending on R&D, calculated as a percentage of GDP, from 2.7% to 4.6%, a rate higher than any OECD country."
OECD Observer

"It’s never been more important for both big multinationals and leading wellness companies to study the most innovative start-ups if they want to stay ahead of the game in the fast-growing wellness space."
"And Israel, with so many brilliant new companies, is definitely one of the key places to look at."
"The GWS will not only put Israel’s creative health and wellness solutions on the world stage, it will introduce Israel’s powerful investment landscape to global wellness companies."
Amir Alroy, co-founder, Welltech1, Tel Aviv wellness innovation hub and microfund 

Saul Singer with a copy of “Start-Up Nation” (Photo credit: Nati Shohat/Flash90)

• 600 new start-ups are established every year.
• 500 multinational corporations (including Apple, Amazon, Google, Microsoft, etc.) have set up incubators or venture capital arms there.
• The country ranks #1 in the world for R&D and VC investment as a percentage of GDP and raises venture capital per capita at two-and-a-half times the rate of the US and 30 times that of Europe—with a record $6.5 billion in high-tech start-up funding in 2018.*
• Because so many unicorns (companies with $1 billion+ valuations) are Israeli founded: from Salesforce and SodaStream to GPS navigation system Waze, to real estate tech start-up Compass, to online home design platform Houzz, to home insurance disrupter Lemonade.
• A storm of forces has come together to create this thriving start-up and health/wellness tech ecosystem.
• There is the experience that entrepreneurs acquire during their mandatory army service, the emphasis on learning and world-class academic institutions, widespread immigration, and the Israeli entrepreneurial spirit.



An illustrative image of program developers, startups and innovation (scyther5; iStock by Getty Images)

• In addition to a powerful private funding landscape, the government’s Innovation Authority makes Israel one of the only countries that funds start-ups without taking equity: giving grants to entrepreneurs (from Israel and elsewhere) to develop innovative technology without taking on debt. Israel distributed an estimated $500 million to start-ups in 2018 and recently established Digital Health as a crucial growth engine with its own budget.

Israel began its life as the world's only Jewish state re-establishing its presence in the Middle East on its heritage geography, to become known as an exporters of oranges from a part of the world where desert, not arable land, dominated the arid landscape. At that time, the Jewish state became known for its kibbutzim, socialist-inspired communal farms where swampland was drained, the dedicated, hard work of idealism-inspired proud Israelis resulting in an agricultural economy.

It was a desert-to-agriculture exploit under a Labour government that amazed the world and brought the young-old nation plaudits and recognition from Socialist International. Israel is no longer the darling of the left and hasn't been for quite some time. While its agricultural roots remain intact, it is now better known as the 'Startup Nation', a leader in information and communications technologies. And it was under a succession of Likud governments, characterized as right-wing, that made the transition from farm to science and technology.

Since 1996 when during his first stint as head of government, Israeli Prime Minister Benjamin Netanyahu nursed the country toward excellence in technology, unlocking the entrepreneurial spirit of the Israeli mindset. As science and technology minister he liberalized currency and forged ahead with privatizations and in a decade new ICT companies dotted the urban landscape giving Israel a higher ICT share employment of any OECD country, as ICT exports boomed.

Medicine, biotechnology, materials technology, military technology startups formed at the rate of 500 annually In 2003 when the Likud Party was returned to govern the country during a recession, as minister of finance Netanyahu sliced the corporate tax rate by half, and the top individual tax by a third, while raising the retirement age, lowering welfare dependency, and privatizing banks, refineries, the national airline and shipping. Much of the economy was deregulated.

The result was a soaring of economic growth, plunging unemployment and new highs in foreign investment. Israel now boasts among the highest economic growth rates and lowest unemployment rates among developed countries of the world.  The Jewish state ranks among the world's leaders in patents filed and science Nobel prizes per capita. Over 400 in-country research centres have been established through foreign multinationals like Microsoft, Apple, Intel and Samsung.



John Chambers of Cisco described Israel as "ahead of every other country in innovation", while Google's Eric Schmidt stated: "Israel is the most important high-tech centre in the world after the United States". Israeli start-ups amount to one for every 1,400 of its population. Those searching for explanations to account for the nation's entrepreneurial success, feel that military conscription has the result of teaching young people discipline, leadership and teamwork skills.

In the 1990s, one million Jews emigrated from Russia to Israel, among them many highly skilled in mathematics, engineering and science. The Soviet system wasted those skills but once in Israel they bloomed. In the wake of the 1967 Six-Day War, a French arms embargo led Israel to develop its own military arms design and production, leading to technologies enabling Israel to enter the market of weapons exports.

Behind all of these decades of skills development, scientific enquiry and research and development lay the mind of the muse who led the country to its current status as a world leader in vital areas such as agronomy research, desalination, medical interventions, pharmaceuticals and innovative products, but most of all information and communication technologies; computers and the Internet. Now, it is also exploiting natural energy resources in vital partnerships with like-values nations.

Illustrative image of the end of the year and the past decade (DaLiu iStock by Getty Images)