5 Reasons Why Israel is Heaven For AI Startups
It’s no secret that Israel is quickly becoming a second Silicon Valley. The nation is widely regarded as a world leader for innovation, and it boasts the largest number of startups per capita.
This is great news for tech companies, and it’s even better news for artificial intelligence. Because the nation is rapidly emerging as a leader in tech and innovation, it’s also positioned as a leader for AI applications.
Let’s look at the top five reasons Israel is now hailed as a haven for AI startups.
1. Tel Aviv is an investment epicenter.
Currently, Israel ranks fourth in the world for AI technology capital. According to Stanford University, Israel is only outranked by the United States, China and the United Kingdom. In addition, Israel’s Institute of Technology, the Technion, is top-ranked in Europe for artificial intelligence.
This, combined with the culture of innovation held by young Israeli professionals, has made Tel Aviv a hotspot for investment. Venture capital firms are flooding into the country, eager to set up offices in the heart of the “Startup Nation.” Experts estimate nearly 250 VC firms (a mixture of homegrown, corporate and angel investors) have entered Israel in the past few years.
2. The talent pool is one of the best in the world.
Not only does Israel have some of the best talent in technology and artificial intelligence, but the country also has a robust networking infrastructure. Israelis are passionate about maintaining their country’s status as a world leader in AI and startup development. This results in an unmatched workforce in innovation, ability, and quality.
Deloitte Israel found that the highest percentage of engineers and scientists per capita globally is in Israel. They also noted that the country has one of the highest ratios of university degrees and academic publications per capita.
3. Israelis typically have more hands-on experience with AI.
Israel requires most of its citizens to serve a term in the Israel Defense Forces, or IDF. This compulsory military service uniquely positions many young Israelis to have a competitive advantage in the business sphere. It also gives them a substantial amount of hands-on experience with artificial intelligence.
SeeVoov CEO Asav Toker explains that his time in the military gave him essential tools for entering the grueling world of entrepreneurship. He notes that he had 80 soldiers reporting to him when he was still a teen, and this forced him to learn how to be a leader, think on his feet and find creative solutions to problems.
Toker’s story is common among young Israeli professionals. This, combined with the substantial amount of specialized experience that all military members gain, puts the country in the ideal position for AI innovation. In fact, a senior research fellow at the British Royal United Services Institute named one of IDF’s cyber-intelligence units as “the foremost technical intelligence agency in the world” and said it “stands on a par with the NSA in everything except scale.”
4. The environment is highly competitive.
A highly competitive environment may not sound like a positive thing at first glance, but in Israel’s case, it’s a healthy thing that helps startups thrive.
Most Israelis believe that one person’s success helps the entire community, so the competition is not necessarily of the cutthroat variety. Itai Green of Innovate Israel and ITTS notes that there’s “a level of knowledge sharing between the different players in the startup community that is almost unheard of, and that assists the entire ecosystem.”
Because of this, outside groups are clamoring to strike up partnerships with Israel-based ventures. This is especially true for AI startups. The country is well-known for seeking new ways to deploy artificial intelligence to solve real-world problems, both big and small.
This has led to impressive exit numbers for AI startups. Recent numbers point to the average exit deal being about $72 million. The data shows Israeli AI startups are consistently exiting around 8.2 times their total funding in five years.
5. Israeli AI startups are tackling AI problems with huge reward potential.
At least 71 percent of Israeli AI startups are focused on B2B applications. On top of this, consistent advances in AI have opened up countless new use cases for artificial intelligence to step in and solve problems related to infrastructure, image processing and data science.
The best AI needs enormous amounts of quality data to refine its processes, but this requires a substantial human labor investment. Data scientists spend about 80 percent of their time pre-processing and “cleaning” data for AI and only 20 percent of their time building machine learning models. Startups like Toloka simplify the task of data labeling to help ML teams get better results.
In addition to this, data shows that up to 37 percent of all capital investments in 2021 were Israeli AI companies. These AI startups tackle everything from cybersecurity to business intelligence to advanced medical diagnostics.
Some of the most noteworthy Israel-based AI startups in this field include A.D Knight, which uses passive data collection to improve pedestrian and traffic safety, and AdVerif.ai. This content verification platform verifies information accuracy for advertisers and publishers.
The Future is Bright For Israel’s Startup Ecosystem
Investors, innovators and entrepreneurs alike are flocking to Israel as a shining haven of promise and prosperity. Israel is ranked second in the world for R&D capabilities, and it has the backing of over 200 MNCs such as Microsoft, Google, Apple and Berkshire-Hathaway.
In particular, artificial intelligence startups are more popular than ever before. This can be attributed to Israel’s unique combination of a robust networking infrastructure, a drive for efficiency and innovation, a culture of healthy competition and a “global-first” mindset.
