Israel Start-Up Nation: Have 4 elections made a difference?
Yesterday, Israel went to the polls for the 4th time in 24 months. It seems that the PM, Netanyahu, may be able to form an almost-stable coalition. Putting the politics aside for a moment, where does this new situation leave the ‘start-up side’ of the economy?
Let’s start with 2 bizarrely contrasting perspectives. This time last year, Israel was boasting that it had nine Unicorns in its hightech economy. Today? See my latest post on LinkedIn, which shows how the number has soared to over 70.
Just yesterday, Israeli cloud security company Orca Security announced that it had completed a $210 million Series C financing round on a US$1.2 billion valuation. The company was only founded in 2019, ironically at about the same time as the start of the country’s political crisis.
This leads me conveniently to the second viewpoint. For all this time, the government has never been able to provide the country with a national budget. To spell it out: As success as led to more success for Israel’s start-up nation economy, there has been no central direction from the numerous Ministers of Finance.
It has become quite obvious for several months that it has been the hightech sector that saved the Israeli economy from imploding during the height of the corona crisis. Orca Security is not alone. For example, Israeli adtech platform ironSource will list via SPAC at $11.1b valuation.
There is a dearth of suitable talent to fill the continuing numbers of positions opening up. According to Startupblink’s 2020 Startup Ecosystem Ranking, Israel is placed third place in terms of its startup ecosystem (following behind the UK and the USA).
So, who needs a budget and governmental direction?
There are core parts of the Israeli economy and society that need support, ignored for years or devastated by the fall out from corona. For all those names listed here and who have made it big-time, there are thousands of start-ups, both starved of resources and with little hope of reaching influencers or required investment levels. The government appears to have lost its ability in this arena.
Over the past 12 months, talent has oozed out of the top civil service posts in the Treasury in Jerusalem. And the immediate task of an (assumedly) new Netanyahu government will be to save him from the courts, and also to provide his coalition allies with as much money as needed to keep them silent.
The Orcas of Israel will not be bothered by such a course. The problem lies for those who struggle but deserve to have a chance as well. These start-ups are the future of the country’s economy.