10D shares the recipe for Israel’s Secret Sauce: What makes the Israeli entrepreneurs so successful?

Israel, a small nation in the Middle East with a population of just 9 million, roughly the size of New Jersey, has earned global recognition as the “start-up nation”. This innovation powerhouse is responsible for approximately 15% of global companies achieving $100 million in Annual Recurring Revenue (Centaurs), boasts 10% of global unicorns, and attracts 4% of the world’s tech funding, all while representing a mere 0. 1% of the global population.

What fuels the remarkable success of Israeli entrepreneurs? In this exploration, 10D, a leading Israeli venture fund with a track record of success and vast experience, will delve into the unique blend of factors that have given rise to Israel’s thriving tech ecosystem and share about role in shaping this landscape.

Nurturing Talent Through Education

Globally Ranked Higher Education Institutions

One of the key drivers behind Israel’s pipeline of tech talent is its globally ranked higher education institutions. The country has seven major universities, all top ranked universities for mathematics and computer science. These institutions provide a solid foundation for students, equipping them with the skills and knowledge needed to excel in the tech industry. Israel boasts one of the highest levels of education in the world and ranks among the top countries with the most engineers, scientists, and PhD holders per capita[1]. In fact, according to a study by Pitchbook, when it comes to universities that produce the most VC-backed founders, the top 20 in the world predominantly consist of American institutions, with two exceptions: Tel Aviv University, ranked at #8, and Technion – Israel Institute of Technology, ranked at #12[2].

Defence Tech Training

Israel’s edge in the IT sector is deeply rooted in its defence tech training. The Israeli Defence Forces (IDF) invest significantly in the development of advanced technologies through their internal independent R&D units. Units such as Unit 81, Unit 8200, and the secretive Unit 9900 play a crucial role in exposing a select group of military-aged Israelis to cutting-edge, proprietary technology[3]. This unique training provides them with exceptional insights and skills that are highly sought after in the tech industry. Notably, the IDF’s intelligence corps has been instrumental in the development of state-of-the-art products and solutions, acting as a catalyst for the flourishing hi-tech industry in Israel. This strong foundation has propelled numerous leaders and companies to collaborate and achieve substantial international scale and profitability.

The Israeli Entrepreneurial DNA

The Spirit of “Chutzpah”

Israeli entrepreneurs are known for their “chutzpah,” a Yiddish term that roughly translates to audacity or boldness. This spirit of challenging the status quo and questioning everything is deeply ingrained in the Israeli culture. It encourages entrepreneurs to think outside the box, take risks, and pursue ambitious goals.

Strong Drive and Must-Win Attitude

Israeli entrepreneurs have a strong drive to succeed. They possess a must-win attitude that fuels their determination to overcome obstacles and navigate the challenges of building a startup. Failure is seen as a learning opportunity rather than a setback, and resilience is a common trait among Israeli entrepreneurs.

Going Global from Inception

Unlike startups in many other countries, Israeli entrepreneurs often think globally from the very beginning. The local market is small, so entrepreneurs understand the importance of reaching international customers and scaling their businesses on a global level. This mindset allows Israeli startups to tap into larger markets and attract global investors and partners.

A Highly Supportive, Fostering Ecosystem

Israel’s tech ecosystem thrives on collaboration and knowledge exchange. A spirit of “paying it forward” is ingrained in the culture, with experienced entrepreneurs and industry leaders readily offering mentorship and support to newcomers. The close-knit community fosters connections among entrepreneurs, investors, and industry experts.

Collaboration is a driving force behind innovation in Israel. Large multinational companies often collaborate with local startups to create open innovation platforms. These partnerships facilitate the exchange of ideas, fostering a culture of innovation and cross-pollination.

Access to Funding and Investment Opportunities

Israel’s robust investment landscape is another crucial element of its success. A high concentration of venture capital firms – about 150 Israeli VC firms, about 70 foreign firms and about 60 corporate VCs, and angel investors, along with government support through various funding programs, provides startups with the necessary capital to fuel their growth and expansion. 

Navigating Challenges: The Unyielding Resilience of The Israeli Entrepreneur

Amidst the ongoing challenges and conflicts faced by the Israeli nation, the resilience ingrained in the Israeli entrepreneurial spirit becomes even more evident. The current circumstances, highlighted by the brutal attack on October 7th and further exacerbated by the War in Gaza, not only emphasize the capability of Israeli tech companies to navigate adversity but also highlight their dedication to sustaining regular operations and consistently delivering innovative solutions.

In times of uncertainty, the qualities that define the Israeli entrepreneur and the entire tech ecosystem – resilience, agility, and a forward-thinking mindset – are showcased as integral elements that contribute to its enduring success. As the nation faces external pressures, the adaptability and strength of the Israeli tech sector remain unwavering, a testament to the indomitable spirit that has propelled it to the forefront of the global tech landscape.