Reviewing Israel’s hightech economy, November 2017
Having been away from my desk for much of the past two weeks, it has been an interesting experience taking a peak out at how the Israeli economy has been performing. The bottom line is that despite the enforced rudderless approach of Prime Minister Netanyahu, the numbers are still looking healthy. How and why?
Primarily, tax collections continue to be way ahead of expected levels. This is enabling the government to hand back around 15 billion shekels through reduced corporation and individual taxation, without impacting on the deficit. Foreign currency reserves continue to improve, while the levels of car imports – an indicative sign of consumer confidence – remain high. The customary issues of non-involvement of the ultra-orthodox Haredim in the workforce and also sectorial restrictive practices remain as unwanted abnormalities, but still the economy grows.
It is the high-tech sector that is leading the growth. Multinational car manufacturers such as Toyota and Seat are continuing to source their latest techs in the Holy Land. Start-ups are raising much larger sums that ever before. And Corephotonics is even suing Apple for alleged infringement over its lens tech.
The story of the week for me belongs to Compass. It has raised US$100m, effectively doubling its valuation to to around US$1.8 billion. Founded in 20,13 by Dr. Uri Alon and Robert Rifkin, the company now employs around 3,000 people in Israel and in the USA. In a nutshell, Compass provides a tech platform to enhance the buying and selling of real estate, a product that has been around for thousands of years.
The message here is clear. The Prime Minister has not created an impression on the economy, but entrepreneurs are not waiting for him to emerge from the welter of police investigations. In parallel, the Finance Minister seems inhibited by the weightings of coalition policy, but there is no reliance on significant change. For me, local innovation is overriding the meanderings of the typical Israeli politician in Jerusalem.