“We launched our global innovation hub in Tel Aviv in 2018 to collaborate with the best startups in the world. Since then, the quality, creativity, and community have not ceased to amaze us.”
Tel Aviv climbed two positions, to #5, in Startup Genome’s Global Startup Ecosystem Ranking 2023, despite a challenging year for the tech industry worldwide. Although investment volume fell by almost half compared to 2021’s record year for fundraising (to $15.5 billion), 2022 surpassed 2020 and previous years, continuing the ecosystem’s growth trajectory toward maturity. Similarly, the value of acquisitions and IPOs was down 80% from $82.5 billion in 2021 to $16.9 billion, while still surpassing 2020’s exit total by 10%.
Beyond resilience, Tel Aviv also experienced direct year-on-year growth across key categories in 2022. Seed investments grew by 10% compared to 2021. The ecosystem saw two $1 billion+ exits in 2022, including AI-based Fintech Pagaya’s $8.5 billion IPO, and the number of unicorns grew from 33 to 57. AI-powered optimization software company Granulate was acquired by Intel for $650 million in May 2022 and Sling Insuretech’s $665 million venture round in April 2022 put the company's pre-money valuation at $2.9 billion.
Additionally, a national plan for developing human capital in high-tech was approved in September 2022. A pilot project is underway and will expand in 2023, prioritizing under-represented populations. The government also has a goal of adding 4,500 personnel from the Arab sector, 2,500 from the ultra-orthodox sector, and for 45% of trainees to be women. In June 2022, the government announced an $870 million plan to boost Cleantech innovation. The Back to Tech Incentive program aims to attract Israeli technology professionals living abroad.
Ecosystem by the Numbers
AI, Big Data & Analytics
Founded in 2017, the annual Future of AI event brings together leading startups and big tech companies in AI. Data observability platform Databand was acquired by IBM for $150 million in June 2022. Streaming analytics company Coralogix, which was founded in Tel Aviv, raised a $142 million Series D in June 2022.
YL Ventures, a VC firm focused on Israel-based Cybersecurity companies, raised a $400 million fifth fund in May 2022, the largest seed-stage Cybersecurity fund ever raised by a VC firm. Go-to-market security company CHEQ raised a $150 million Series C in February 2022, putting the company's pre-money valuation at $850 million. Cloud security firm Wiz closed a $300 million Series D in February 2023 at a $10 billion valuation.
In May 2022, Israel launched a five-year plan that includes investing $127 million in advancing bio-convergence. The same month, Israel Biotech Fund (IBF) and Lonza, a global development and manufacturing partner, announced an agreement in which Lonza will offer pre-investment due diligence and support to IBF's portfolio companies. CytoReason signed a $110 million, five-year extension of its AI-powered drug development deal with Pfizer in September 2022. AI-powered healthtech Aidoc raised $110 million in June 2022, putting its pre-money valuation at $586 million.
Reasons to Move Your Startup to Tel Aviv
Established Startup Scene
Israel has the most startups per capita of any country. More than 2,000 startups were founded in the past decade, as well as another 3,000 SMEs and high-tech companies, 30 growth companies, 50 large technology companies, and 300 R&D centers. Tel Aviv University is ranked #8 globally for the number of VC-backed entrepreneurs among alumni.
The Investment Law allows foreign companies to benefit from a reduced company tax rate and investment grants. Another government incentive program provides employment grants for R&D centers and large enterprises. The four-year grant scheme covers 25% of the employer's cost of salaries for each new employee on average.
The Israel Innovation Authority (IIA) provides several support programs, including grants to cover partial R&D costs. The Global Enterprise R&D Collaboration Framework aims to encourage partnerships between multinational corporations and Israeli startups. The City of Tel Aviv Tech is an entity of the City of Tel Aviv that fast tracks municipal services, opportunities for collaboration and promotion, workforce training, and research.
Selected Startup Organizations
Startup Genome Members
Tel Aviv Global
Tel Aviv Tech is a strategic initiative of the City of Tel Aviv operated by Tel Aviv Global and focused on strengthening connections between the tech industry and the municipality and its residents. Tel Aviv Global initiates collaboration between public entities and local tech companies, fast tracks municipal services, facilitates professional training for residents, welcomes delegations and prospective companies, and advances the Startup City brand globally.
Key Ecosystem Players
News from the Ecosystem
Are you interested in diving deeper into this ecosystem? Drop us a message. Our Ambassadors and Partners can plug you in.