Starups in Israel

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Israel has long been known as the Startup Nation, and while it is true that Israel has a vast number of startups, they make up only one part of Israel’s high-tech sector.

The high-tech sector is made up of three clear subgroups: 1)The famed "Startups", i.e., new companies pursuing innovations, usually with funding from venture funds; 2) Relatively mature companies that have gone public, either on the NASDAQ or the Tel Aviv exchanges, or 3)Subsidiaries of multinationals that have established R&D or other facilities in Israel, (often as the result of a purchase of one or more Israeli companies).

Israeli companies in their startup phases raised a record $6.4 billion in 2018 up 17% from a year earlier. Six-hundred-twenty three different companies raised capital in 2018 through investments. Of course, many startups will never succeed. Of those founded during 2011-2016, 37% had folded by the end of 2016. The number of startups that are folding has increased yearly — from 263 in 2014; to 307 in 2015; and 396 in 2016. This increase is a natural reflection of the larger number of startups created each year.

The segment of the high-tech sector defined as "startups" employed 27,500 people. Like their counterparts in Silicon Valley, startups in Israel have grown in size, hire larger teams of employees, and raise more money. Startups generally pay well, with the larger ones, paying on average NIS 21,200 per month in salary (which is 2.3 times the national average). The aforementioned salary figure, includes all of the support people, severely understates the salaries for engineers and developers, which can easily total twice (and sometimes three times) that number.

It should be noted that 78% of Israel's startups are located in the Tel Aviv area — with most in the city of Tel Aviv itself and some in its surrounding towns, such as Herzilya and Ramat Gan.

Start-ups continue to raise ever larger somes of money. In 2020 they
raised $10.2B ; up from $8.3B in 2019 for growth of 23%. Israel now has 21 unicorns (private companies valued at more than $1 Billion),11 of which have been created in the last year.