The Israel Innovation Authority (IIA), which encouraged the government to increase investment to enable tech to grow quicker, stated on Tuesday that 20% of the nation’s economic output currently comes from the high-tech industry in Israel.
TakeAway Points:
- Israel’s high-tech sector now accounts for 20% of the country’s economic output, the Israel Innovation Authority (IIA) said on Tuesday as it urged the government to invest more to allow tech to grow faster.
- Dror Bin, the CEO of the IAA, stated that the state has to “double down” on tech investments even if his budget has increased to support programmes totaling $250 million to assist entrepreneurs struggling to raise capital because of the war and a challenging global fundraising climate.
Israel Tech Sectors adds 20% to the economy
The state-funded organisation stated in its 2024 State of the High IT Sector in Israel report that the IT sector is still Israel’s primary development engine and is still expanding, albeit more slowly than in 2021 and 2022, despite the eight-month-old conflict with the Palestinian Islamist organisation Hamas in Gaza. 53 percent of all exports are made up of it.
About 600 new businesses were founded in the previous year, and tech companies raised $8 billion in 2023—a 55% decrease from 2022. Israel is home to about 9,200 tech companies employing 400,000 people.
Dror Bin, the CEO of the IAA, stated that the state has to “double down” on tech investments even if his budget has increased to support programmes totaling $250 million to assist entrepreneurs struggling to raise capital because of the war and a challenging global fundraising climate.
“Israel does not have a lot of natural resources – we are not an oil and gas superpower,” Bin said. “We are a country on the verge of a desert so we don’t have a lot of water. The only natural resource we have is the grey cells in the brains of people here and we need to make sure this continues to prosper and grow.”
Isreal Government Advised to Assist Companies
Minister of Invention, Science, and Technology Gamliel said that the government “must continue to help companies and establish the required infrastructure” and that invention is Israel’s most valuable resource.
Due to the uncertainty surrounding funding rounds, Bin expects 2024 to be similar to last year. Despite this, foreign investors are still making significant investments since they are aware of the dangers associated with doing business in Israel and want to take advantage of low valuations. He expressed his desire to see more Israelis make investments.
Fintech and cybersecurity continue to be the most popular industries for investors, but one in six new firms were in the climate tech space as founders tackled problems like “how to provide food, water, and decent health care services in an ageing society” and a globe that is “growing warmer.”
According to him, about 8% of computer professionals were called up to the army reserve, and others were persuaded to participate despite feeling uncomfortable in their own skin.
They thus got to know new people and saw a wide range of defence and civilian demands.
“Following the war, we will see a baby boom of startups in Israel because of all these crazy things that happened here since Oct. 7,” Bin said.
