The Startup Ecosystem of Israel

Israel has 14 cities in the top 1000 and has a vibrant startup scene that ranks 3rd within the competitive global top 10.

COUNTRY RANKING

Israel’s startup scene remains stable in 2023 on the 3rd position, having gained 1 more city in the global top 1000.

Population

9.5
Million

Regional Ranking

1st
0
In Middle East

Global Ranking

3rd
0
Worldwide

Ecosystem

Startup Ecosystem Overview

view of high rise buildings and roadways under blue sky

Israel is known as the startup nation for a good reason; it’s a small country which still manages to leave a substantial mark on the global startup ecosystem. The Israeli startup ecosystem has not only survived but thrived in multiple challenges over the years. Most of those challenges have been external, and seem to have only increased the Israeli ecosystem potency and ability to innovate. This year, however, the situation is very different, as the nation's startup ecosystem is faced with a challenge from within. The controversial proposal for a judicial overhaul threatens to impact investment in the country's startup ecosystem and break the trust between the country and its entrepreneurs. Regardless of the need for judicial reform, the way it has been introduced has infuriated the vast majority of the Israeli tech scene and its entrepreneurs. It is extremely rare to see a country that blatantly engages in policies which alienate the majority of its most successful entrepreneurs. It is worthwhile for the same decision makers who until recently successfully promoted the narrative of the “Startup Nation” to make sure they are not taking steps that will be almost impossible for the ecosystem to recover from in the foreseeable future. Israeli entrepreneurs are targeting a global market, and can easily relocate to other ecosystems if pushed to do so. It should be noted, however, that the civil backlash caused by the proposed overhaul was so powerful that it resulted in delay, showing how vibrant and strong Israel’s democracy is.



In spite of its turbulence through the years, the Israeli ecosystem is truly outstanding. Per capita, the number of unicorns started by Israeli founders is the highest in the world. The mystery of the Israeli ecosystem’s success is best explained by Uri Adoni in his book “The Unstoppable Startup.” In a nutshell, Israeli entrepreneurs have chutzpah, which is defined as "The challenging and the defiance of the prevailing order."


Israel is not only a startup nation, but also a brain drain nation. Over 80 Israeli unicorns are now operating in the US. Part of this exodus can be explained by the need to be close to clients and major markets. However, a substantial part is also related to Israel's relatively low friendliness toward startups. Israel's startup ecosystem books outstanding results, although the country significantly lags behind competitors in its business climate. The paradox of Israel’s ecosystem success and its entrepreneurs' talent can be tracked by basic financial apps, as Israel is also trailing on policy, regulation, and infrastructure. Fintech is broken in Israel, where Stripe and Revolut are not available, while leading Israeli fintech companies such as Payoneer, EToro, and Lemonade thrive internationally. UBER doesn’t operate in Israel, and the public transport system is notoriously inefficient, yet automotive startups such as Moovit and Mobileye secured exits at astonishing valuations.


This reflects a massive gap between the quality of local entrepreneurs and the ability of public sector policy makers to create an environment that encourages vibrant startup ecosystems. In the last decade, there have been some positive signs that this gap can be narrowed, and if it will, Israel has a massive potential to produce a substantially better startup ecosystem than it has already.


It should be noted, however, that the Israel Innovation Authority is an example of massive public sector success in Israel. The Authority’s programs and initiatives are used as models for many other ecosystems globally, and should be held in high regard. We are also impressed with the activities of Startup Nation Central, a philanthropic organization that spends vast resources to help the local startup ecosystem grow. Last but not least, the public sector organization which unintentionally had the biggest positive influence on the local ecosystem is the Israeli Army, which can be regarded as a massive startup accelerator. The IDF incubates solutions which can be later used by private companies, while it also allows networking among potential co-founders in integrated units. Israel is a great example of how countries can turn a difficult geopolitical situation into an advantage. Adverse situations make innovation a necessary strategic advantage for survival. Many innovations were born out of existential necessity in Israel.


Recent decades in Israel showcase how startups can transform a low productivity, developing economy into a high efficiency, developed economy. The Israeli startup ecosystem is a cash cow, generating tax revenue for the country both from exits and high salaries. Israeli apps like Waze, Wix, Fiverr, and Viber have made their mark around the world, but a few, like Mobileye (sold to Intel for US$ 15 billion), are the hidden powerhouses within the ecosystem. There is a wide variety of industries where Israel excels, including autonomous driving (Mobileye, Waze), advertising (Taboola), and services (Fiverr). One maturing industry that shows substantial potential is cybersecurity, leveraging the unique challenges that the Israeli army faces.


The high cost of living in Tel Aviv and the presence of global companies such as Microsoft, Intel, and Google make it challenging for startups to find affordable talent. This shortage of tech talent and a high cost of living present real challenges for Israeli startups. Israel is not doing enough to attract talent from outside. The Israeli ecosystem cannot rely solely on native founders if it wishes to close the gap with international hubs such as San Francisco and London.


We believe that Israel relies on an important ingredient: the quality and mindset of its entrepreneurs. As long as the country manages to keep them happy, the Israeli ecosystem should continue to thrive.

Startups

Israel Top Startup Industries

Software & Data icon
Software & Data
#2 worldwide

733 startups

Hardware & IoT icon
Hardware & IoT
#3 worldwide

295 startups

Healthtech icon
Healthtech
#3 worldwide

143 startups

Ecosystem HealthCheck

Israel Ecosystem Health Check

The health check tables allow you to look at the performance Israel has in each of the parameters that are part of StartupBlink's ranking algorithm. There are five tables, corresponding to the three subscores, the subscore analysis and industry ana...

  • Overperformance
  • Performance equal to global ranking
  • Underperformance
ParameterParameter Global rankParameter rank change since 2022ResultContribution to total scoreRank gain / loss due to parameter
Total Score3046.573100%0
Quantity Score5-16.87414.76%-1
Sample size of startups120162911.35%-1
Sample size of accelerators11-124691.44%0
Sample size of coworking spaces4291141.43%0
Community Score5N/A0.1070.23%0

ECOSYSTEM

Browse the startup ecosystem database of Israel

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Ecosystem

The Startup Ecosystem in Israel

Our startup ecosystem map for Israel includes a sample of 1765 tech companies. We have identified as unicorns 26 startups that have passed the USD 1 billion valuations. Contributing to the vitality of this startup ecosystem are the 9 pantheon member entities.

Global Rank

Israel is ranked within the top 10 startup ecosystems globally.

Top Industries

Israel’s startup scene is best represented in Software & Data, Hardware & IoT, and in and Healthtech.

Top Cities for Startups in Israel - Ranked by StartupBlink
StartupBlink ranks the startup ecosystems of 100 countries and 1,000 cities. Download our latest Global Startup Ecosystem Report.
Rows:
2023 National Rank & Change ▲
2023 National Rank & Change City
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Global Rank & ChangeTotal Score
Access subscores for 1000 cities and 100 countries
Quantity Score
Quality ScoreBusiness Score
1st
0
10th
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1
56.774
00.00
00.00
00.00
2nd
0
79th
+
7
8.476
00.00
00.00
00.00
3rd
0
133rd
+
11
5.255
00.00
00.00
00.00
4th
0
295th
+
13
1.394
00.00
00.00
00.00
5th
0
324th
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13
1.164
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6th
0
378th
-
38
0.912
00.00
00.00
00.00
7th
+
1
484th
+
30
0.525
00.00
00.00
00.00
8th
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1
499th
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12
0.500
00.00
00.00
00.00
9th
0
543rd
-
20
0.427
00.00
00.00
00.00
10th
+
1
617th
-
7
0.338
00.00
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Startups

Notable Startups in Israel
Similarweb startup icon
Similarweb
StreamElements startup icon
StreamElements
Guardio startup icon
Guardio

Startups

Successful Software & Data startups in Israel
Similarweb startup icon
Similarweb
Guardio startup icon
Guardio
Elementor startup icon
Elementor

Featured Startup Ecosystems

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