The Ever-Evolving and Ever-Growing Israeli Startup Landscape

Toot Shani, Managing Partner, CEO, Sarona Partners

Toot Shani, Managing Partner, CEO, Sarona Partners

The evolution and growth of the Israeli startup and technology ecosystem have been astonishing. But in recent years the industry has also seen some interesting shifts. For example, since the 1980s the mentality of the Israeli entrepreneur was ‘exit oriented’- that was the end goal of most founders. Most exits that have happened within the ecosystem were Israeli companies being acquired by bigger foreign corporations, like Intel's acquisition of Moovit, Google’s acquisition of Waze, Facebook's acquisition of Redkix, and Microsoft's acquisition of Adallom. But today, founders have shifted their mentalities to focus less on exiting, and more on building and growing.

Another shift the ecosystem has seen is a greater focus on R&D, so much so that Israel produces the highest number of startups per capita. With our vibrant entrepreneurial culture, robust technological infrastructure and highly skilled human workforce, Israel is home to over 350 R&D centers of multinational corporations, has the highest private investments of R&D as a percentage of GDP than any other country, has generated over 6000 startups, and is one of the most innovative countries around the world. Industry leaders, like Intel Israel’s President Maxine Fassberg and Google’s Chairman Eric Schmidt, all vouch for Israel as a prominent and pivotal component of the global high-tech ecosystem. Despite Israel being a relatively young country, we are consistently at the cusp of the next big thing from cutting edge biomedical engineering, to technology breakthroughs, fintech and the smart revolution.

The shifts I mentioned have led to Israel having more unicorns than all of Europe combined. In 2021, Israeli startups raised an astonishing $25 billion, which was a 136 percent increase from the year before. The funding Israeli startups and companies saw was 71 percent more than the global average. Israel also saw 35 new companies being valued at over $1 billion, bringing the total number of Israeli unicorns to 79. Our ingenuity and ability to cater to the constant evolutionary changes in the global corporate landscape have made these numbers possible.

Corporates are coming to realize that it is crucial to have a presence in the Israeli market, especially as Israeli startups are maturing. Our startups are keen and capable of doing business, collaborating, and co-selling with strong multinational corporate partners.

"Despite Israel being a relatively young country, we are consistently at the cusp of the next big thing from cutting edge biomedical engineering, to technology breakthroughs, fintech and the smart revolution"

At Sarona Partners, we scale up, accelerate, and finance companies. Since 2018, we have accumulated 272 startups into our portfolio, with 7 Unicorns. We have led competitive innovation for over 100 corporations and facilitated and enabled 500 contracts and POCs; Our companies have a combined valuation of $15 billion. We are very proud of the extensive corporate network of venture capital firms, angel investors, and C-level community mentors we gathered along the way and hope to continue having a role in the corporate innovation Israel drives.

Looking forward, in 2022 we are going to see some new trends in the innovation world. I am expecting to see the AgTech and FoodTech industries continue their evolution;  Life Science technologies, such as robotics applications, drug testing speed improvements, genetic data integration, and gene technology applications will gain traction; high-performance computing will become mainstream with an expansion of 5G-6G and satellite-based internet usage; continued advancement in AI, Big Data analytics, and Cloud computing; more secure and private cyberspaces; an increased number of platforms for Next-Generation Technology (NFT); growing popularity in the robotics industry; a surge in renewable energy technology as the sectors continue to feel a greater sense of urgency; blockchain technology not only continuing to gain widespread acceptance, but will be considered an essential tool; a rise in retail-tech and commerce, and lastly, and most interestingly, the Metaverse will light up. Israel will play a significant role in the Metaverse as it continues to unfold. We already have over 50 companies that are active in the Metaverse world since Israel has such a strong gaming sector– a necessary entry point to the Metaverse. The Israeli tech sector is realizing the huge opportunities this market has to offer and is adapting accordingly.

With all the new and exciting opportunities the tech ecosystem is looking to see, I hope that investors will share the journey with us. Their enthusiasm plays a crucial role in the Startup Nation.

Weekly Brief

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