With 4,000 active technology start-ups, Israel has more such firms than any country outside of the United States. With a population of nearly eight million people, Israel has higher levels of start-ups, engineers, and venture capital investment per capita than any other nation. High tech products make up almost half of Israel’s annual exports. While this may appear surprising at first, a variety of factors can be attributed to Israel’s maturation from an agricultural state to a technology hub in recent years.
Yossi Vardi, considered the godfather of Israel’s high-tech industry, believes that the nation of Israel was an analogy for entrepreneurship from its very beginning. Thousands of people flocked to the region in pursuit of a dream that they were all extremely passionate about. They wanted to be a part of something that others thought would never be possible. These unique origins have resulted in a shared culture of independence and risk-taking favorable to entrepreneurship.
Israel’s government has also contributed to the country’s aptitude for innovation. As early as 1993, the “Yozma” program established a fund that would invest in smaller venture capital funds channeling money to technology start-ups. This program facilitated growth of venture capital in Israel that has made many recent start-ups possible. A need for high-tech military technology has also provided opportunities for young Israelis to learn technical skills while serving their country.
High tech start-ups in Israel have faced many challenges along the way. In the early 1990s, the first start-up boom in Israel came at an unfortunate time as the global dot.com bubble burst soon after. Venture capital firms were hit very hard and struggled to recover. Only in the past few years has Israel seen a strong resurgence of new businesses.
Israeli entrepreneurs are not satisfied with mediocrity. They are striving to build major companies that solve large problems and create significant value for consumers. While some will be sold to American tech giants such as Microsoft and Cisco, others hope to become dominant forces in major global markets.