What makes Israel so attractive for overseas companies?

Since over a decade ago, Israel has gained its rightful nicknames such as “startup nation” and “the 2nd silicon valley”. Israel is a very small country (the same size as SHIKOKU in Japan) with a population of 9 million people, so how is it possible that such a small country grows 500 to 1000 startups every year?

The reason is said to be the unique ecosystem. The Israeli ecosystem consists of government vehicles and grants (max. 85%) that support startups and investors, VCs, universities, tech-accelerators, and global companies. There are other unique reasons for Israel’s innovation power. Israelis need to serve in the military at the age of 18 up to 20, thus they develop both a professional network, as well as being exposed to state-of-the-art technologies. Israel is also a country with few natural resources, so people had to develop technologies to make the best use of those resources and to overcome unique solutions to multiple unmet needs. Thus, these unique conditions greatly contributed to the growth of startups.

As you may know, there are almost 400 global companies which have R&D centers in Israel. What makes Israel so attractive for them? In order to grow profitability and market share, tech-oriented companies are spending huge R&D investments and manpower, however, in such a competitive business landscape, M&A and distribution of foreign technological solutions have taken the place of long and expensive R&D investments. Working with Israeli startups could be a shortcut to accelerating to improve time to market, increase ROI, and be involved in the early stages of development. Since the market size of Israel is so small, many startups are always aiming to go to the global market in collaboration with foreign companies, that is why there are big opportunities for foreign companies including Japan to collaborate with them.

Network in Motion has been doing business specializing in connecting and consulting Israeli and Japanese tech-companies since 2015, so if you are thinking of partnering with an Israeli company, or need information about Israeli innovations, please feel free to contact us.