Why did Israel’s technology do so well in 2021?
Despite the pandemic, a unique attitude towards business and life allowed the local industry to reach new heights at a difficult time for everyone.
We all know why an emerging nation like Israel has been able to move so far into the future in the last decade: compulsory military service, enormous influence from army intelligence units like the 8200, world-class universities, courage and a high propensity to take risks. .
While all of those reasons may be true, I think they paint only part of the picture.
How is it that in 2021 and during the pandemic, Israeli technology did so well? And not only in terms of money raised, but also in the number of SPACs -companies with a special purpose of purchase- and IPOs -initial public offering- that were generated.
In short, the indices reveal that Israel companies raised close to $26 billion in 2021 in $100 million mega funding rounds.
In that sense, it is worth exploring why local technology reached this apex. I think it all boils down to something that goes beyond standard explanations: it’s about an attitude towards business and life.
The “Startup Nation” is a unique place created by a particular unique (and sometimes unfortunate) set of circumstances.
Deal well with pressure
Overall, I think this was the main reason Israel did well during the COVID pandemic.
Good entrepreneurs look for opportunities, and the Israelis saw this as another difficult situation in which they not only learned to adapt but took advantage of the situation.
For the first time in history, almost everyone had to face the same experience.
It is clear that time in the military and the need to deal with the constant adrenaline rush of living in Israel has helped this but what we saw as a result of a flat digital world was that some brave organizations (with a strong digital footprint) They moved forward while others froze in fear.
First to face the circumstances
Israel began building a tech ecosystem long before other places, including much of Europe.
This can also be said for Silicon Valley but Israel’s ecosystem really started to take off in the early 1990s.
The reality is that Israel had to take advantage of everything it had – basically human capital – while its enemies (at the time) were awash in oil and weapons.
Today it is a fact that knowledge worker-based economies and the countries that focus on building them are the future but that was not always the case: Israel simply used what was available to it at the time, which was sharp minds and a highly usable and scalable technology.
That is, he is always ahead of the pack.
DNA of associations
Partnership building not only relied on support from the diaspora Jewish community but also from global multinationals.
One could argue that the spirit of partnership dates back to the creation of the State of Israel in the way that diaspora communities helped support the fledgling country with money, weapons, and political support.
After spending some time in New York, I came to understand the importance of having the backing of a major corporation. And that has always been the case. Israel was never the market, everything was focused abroad.
The connection between the US and Israel and the strong pro-Israel community (not just Jews) in that country helped to facilitate these partnerships, which also made it easier to develop relationships and the possibility of building an ecosystem necessary to grow companies in places outside Israel. Israel such as the Bay Area and New York.
And this includes investors, service providers, potential employees and customers.
Lots of developer talent
In Israel there are many talented software developers. There is talk of about 300,000. This is key to moving things forward. While developer talent may become less relevant in the future, it still takes this kind of aptitude to build a business.
Local wages for this type of capacity can be high but for now there aren’t many options unless a company outsources overseas.
First to try new trends
Now that remote work has become the norm, the world began to rely on the technology of the “Startup Nation”, especially in cyber and SaaS.
In fact, this can be traced back to the desire of Israeli entrepreneurs to embrace new trends like Web 3, blockchain, crypto and NFT.
Working at Big Tech, or a growth-stage startup, can offer a good salary in Israel, but this has only been the case in recent years.
Building a start-up is still the best way for an ambitious professional to succeed (instead of climbing the corporate ladder as is still the case in the US).
It is important to remember that venture capital needs to be deployed and that is what happened in 2021 when windows of opportunity appeared such as the decision for companies to go public through SPACs although, as we see now, that situation was relatively short-lived.
The bottom line is that while there are many historical reasons why Israeli tech has become stronger during this ongoing crisis, it all reminds me of Warren Buffet’s famous line: “Be afraid when others are greedy and be greedy when others are greedy.” they are afraid.”
When much of the world was terrified (or burying its head in the sand), businessmen in Israel bowed to chaos and moved on.
Given the fact that we may face another wild lapse dealing with this global pandemic, and with the continued flow of money into the ecosystem, 2022 could be another landmark year.
*Jonathan “Yoni” Frenkel is a content strategist and founder of YKC Media, a digital marketing agency that works with the global tech and startup community.