In 2020, Israel is home to an ecosystem of more than 9,000 start-ups that raised a record $10 billion in that year alone. The Hebrew state is the country with the most engineers per square meter, surpassing even the density of engineers in Silicon Valley. The Israeli ecosystem is gaining in maturity and stands out in several fields such as cybersecurity, artificial intelligence, smart mobility, digital health, agrotech and fintech.

Israeli start-ups are recognized on the international scene. Almost 90% of the capital invested in them comes from abroad. The United States accounts for 80% of the amount of mergers and acquisitions and about a hundred Israeli companies are listed on the Nasdaq Composite. These financial and strategic links put Israeli companies in direct contact with the global market.

Now ranked sixth in the Bloomberg Innovation Index, eighth in the US News and World Report, tenth in the Global Innovation Index and first country in terms of number of start-ups per capita, the Israeli ecosystem is characterized by a unique density: $809 per capita invested in startups in Israel in 2020 compared to $302 in the US, $58 in China and $41 in Europe.

This success is based on a singular commitment by the public authorities for nearly 50 years. The implementation of the Yozma programme in the 1990s contributed to the development of venture capital. There are numerous tax incentives for high-tech companies. Other measures encourage this dynamism, such as the culture of risk and entrepreneurship or the training of human capital (coding courses are offered from secondary school onwards). The narrowness of the domestic market and Israel's "insularity" (compared to its neighboring countries with a certain cultural, economic and political discordance) also encourage the internationalisation of start-ups.

However, the Israeli ecosystem faces several challenges. The high-tech sector operates in a vacuum and does not benefit the entire local population. The dependence on foreign funding is also a weakness. Indeed, if the average amount of exits has increased over the last few years, their precocity remains a source of concern.

Israeli innovation has been built in parallel with the self-sufficiency of this state, which has sought since its genesis to legitimize itself with the international community: Ensuring its security in a country surrounded by adversaries, growing crops in a hostile land, finding water in the middle of the desert. An incredible but true figure allows us to visualize this need for the Hebrew State to be self-sufficient and to make defense a strategic domain: One out of four start-ups in the world that has raised funds in cybersecurity is based in Tel Aviv.

As you can see, the incubator that is Israel today was born out of the need for this state to compensate for its territorial weaknesses. A scattered state, with still vague borders shared with the West Bank, and which is not unanimously accepted by both its neighboring countries and the international community.

MarketScreener experts have created a thematic list identifying the most innovative Israeli companies listed on the stock market:

Thematic list: Israeli innovation

This thematic list aims to identify innovative Israeli companies whose activities are at the origin of major scientific developments. These disruptive innovations are likely to gradually replace older technologies and current consumption and production habits. The innovative companies on this list are mainly from the fields of information technology, communication, consumer services, genomic science, biotechnology, healthcare or industry.