Why Israel is a Startup Nation

Uriel Peled
9:30 pm on Jun 19, 2013

Uriel Peled is the co-founder of Israel-based startup Visualead, a company that transforms QR codes into visual QR codes using its patent-pending technology.


Some call it a miracle. Others an enigma of the culture. But the statistics surrounding the amount of high-tech startups that are conceived in Israel is astounding. A small country, with roughly 7.6 million people, has approximately 4,800 startup companies and attracts far more venture capital per person than any other country in the world. Dubbed as The Startup Nation, Israel outweighs the United States in venture capital investment per person, totaling $170 per person compared to $70 per person in the US. Not too bad for a country that was established 65 years ago.

Some examples of well-known startup companies that have originated in Israel include Waze, a mapping company that was recently acquired by Google; iOnRoad, a mobile app that warns drivers when they are getting too close to the car in front of them; and Conduit, a community toolbar that has received international attention.

A country that breeds one of the most concentrated centers of innovation also houses large, established companies like Teva, a drugmaker listed on NASDAQ with a market capitalization of $43 billion and Check Point, founded by an army intelligence group, that is now valued at $11 billion.

So what makes Israel a base to nurture the creativity, innovation, and risk that comes with starting a company?

The Military: In Israel, most citizens join the army prior to entering college. In the military, it is common to be an expert in a technology at an early age since technology is a key component in military warfare and military communications. There is also an environment and culture in the army that encourages entrepreneurship and leadership. After leaving the army, a lot of young soldiers know that they want to start a company and solve the world’s problems through technological solutions. They just have to figure out what problem to solve.

Universities: Aside from government incentive, Israel also has some of the best universities in the world that focus on technology, such as the Technion in Haifa. The universities are, in a sense, a playground for entrepreneurs to meet others with similar interests who may later go into business together.

Government Resources: The Israeli government encourages young entrepreneurs to take the risk of beginning a startup company by providing early-stage funding. The government also goes to great lengths to provide support to young entrepreneurs by introducing companies to investors, creating partnerships and programs that can provide support for young companies.

Mentors: Since the first generation of innovators are now in their retirement phase, they are offering both financial support and mentorship to the leaders of the next generation. The retiring business leaders are both acting as investors in these high-tech startups and are providing strategic counsel on how to develop a business model and go to market successfully.

One of the strengths and weaknesses of Israeli startup companies is that they often develop a startup and plan to exit early on making a nice chunk of change but never fully develop the company into a large corporation. Everyone wants to be their own boss; however, for major economic growth, employees are necessary.

Perhaps another reason disruptive technology has been emerging out of Israel is that the first settlers of the country had limited resources, pioneering a land that was primarily desert. So whether in agriculture, technology, or business, Israel is a land filled with pioneering minds and entrepreneurs.

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  • Bonan

    Waze from Israel? Thats very good product. We check Visualead too and also very impress.

  • Usman Azam

    They are good startup nation, they think out of the box because they are not like us. They have eaten “Man-o-Salwa”, thats why they have edge on us. Now search for man-o-salwa in wikipedia. Period.

  • Usman Azam
  • http://www.ansr.io Siim Teller

    There’s an excellent book on the same topic: Start-up Nation: The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer. Well worth a read for inspiration.

  • http://insidemy.co Moshe Kaplan

    Great post.
    My 2 cents. It is a matter of culture. Israel is a place, where people a willing to take a risk, and they get a social acceptance to it,

    Moshe Kaplan
    The startup nation feed

  • http://www.mycurrencytransfer.com Daniel Abrahams

    We’re a British startup that moved out to Israel 3 months ago. The one thing I can say about the role of the military is that it definitely breeds a more mature & well rounded entrepreneur compared to Western European countries. Going on to hire a couple, we’ve found this DNA of young people who have survivability, teamwork and leadership to be an invaluable soft skill. Congrats on your economic miracle!

  • http://www.RickshawApp.com Jonathan Fein

    While places like Hong Kong or Singapore or most places in the world have some kind of start-up community, this community is a very small and even peripheral part of society – a part that people might get involved with in their 20s. In Israel, the entire society is geared towards entrepreneurship. From when you are a kid, you learn that founding a start-up is a normal path. Building your own innovative business feels like the status quo, like it does in silicon valley. This is very different than other societies where people are herded into stable, acceptable, long-term employment, and where start-up founders feel like they are breaking out of a safe zone into No Man’s Land.

  • omar

    very good impress of people israel

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