Israel is known as a startup nation, not just for its relatively short history and rapid growth, but also for its economy—which has evolved into one of the world’s most renowned markets of state-of-the-art technology for aviation, computers, and medicine, to name a few.
Despite numerous wars that could have wiped Israel off the map, a challenging climate that makes sustaining a growing population difficult, and inconsistent support from global trading partners, Israel has managed to climb to the top where it commands attention from the world’s biggest buyers: the United States and China, respectively.
How is it that so many Israeli companies are finding success?
It all started with a tax cut…
In the mid-1980s, Israel’s economy was mostly stagnant, and the government responded by cutting taxes for Israeli businesses and offering tax incentives for investors.
This timed perfectly with the software boom of the 90s and kick-started Israel’s technology boom—giving birth to what is known today as Silicon Wadi, the Silicon Valley of the Middle East.
Today, high technology is one of Israel’s largest exports. The United States is their biggest buyer and trade partner, with more than $47 billion exchanged in 2016.
In Israel, there’s more than just laws propelling business forward—the culture encourages everyone to move and keep moving!
Failure is an option
Israeli culture embraces innovation and risk-taking. In Israel, failure is seen as a valuable experience, not necessarily a red flag for potential investors.
Whereas in the United States, an entrepreneur will show off the successful endeavors and hide the failures… Israelis value the ideas and the efforts themselves.
An Israeli entrepreneur will often be proud to show what they’ve learned from failure to inform their plans for success. The critical concept Israeli investors look out for is chutzpah, which is a commonly used Yiddish word that means shameless audacity, gall, or confidence.
Once the companies are up and running, risk management is not as much the focus of Israeli startups as it is being mobile enough to take more leaps of faith and perform corrective action as needed.
Generally, Israelis don’t ask if something can be done, but instead ask how it will be done. That mindset was how they won war after war against all the odds, how the first pioneers transformed the desert wasteland into thriving kibbutzim, and how Israel continues to evolve to serve the world and its people.
In the United States, many businesses tend to focus inwards on local and niche markets in our vast country. While this makes it easy to get started and run a sustainable business, there is a larger market to tap into for those who think globally.
In Israel, most startups are looking outwards for global opportunities from the get-go. This outlook not only leads to the development of valuable technology for Israelis to sell, but also cultivates close partnerships with countries around the globe.
All boats rise with the tide
- Israel’s partnerships with African countries that gained their independence in the early 1960s were invaluable for their development, and many African nations developed political loyalty to Israel despite strong ties to Israel’s enemies.
Today, Israel is an oasis of democratic thinking, and their influence is spreading. Read more about Israel’s positive influence in the Middle East here.
- Countries such as Germany have Israel to thank for special research projects conducted in the Dead Sea, where Israeli and German scientists are teaming up to study newly discovered life forms that can survive in the extremely salty waters.
The research will help them understand how to cultivate plants that are more tolerant to salt water, which could eventually lead to farmers watering their fields with salt water from the ocean! Read all about saline agriculture here.
- The United States is by far Israel's largest trade partner and closest ally. In addition to economic support, the U.S. and Israel have enjoyed a military alliance that has led to the development of all sorts of technology that helps keep Americans and Israelis safer. Read more about our long-standing partnership here.
A different military mind-set
In some countries where military service is required, there are ways around getting drafted that the upper class often takes advantage of. But in Israel, everyone serves, and everyone is faced with challenges that enhance growth and maturity.
While most militaries are known for inhibiting individual thinking, the Israeli Defense Forces encourages their young leaders to be bold, act, and learn from mistakes. The leadership skills are invaluable, but the confidence these young men and women gain from serving their country can only be gained from experience.
These qualities carry over well into the business world, where a competitive and rapidly evolving market is constantly challenging.
Everyone is a big fish in a small pond
Israel’s small population and mandatory military service make networking inevitable. It would not be unheard of for a young entrepreneur to reach out to a CEO of a tech company to discuss a business idea, because while the two individuals may not know each other, it is likely that they have a mutual friend or colleague.
Israeli companies are also known to support one another, rather than engage in brutal competition. For the most part, Israeli companies share a common goal, as does the country of Israel itself—to make the world a better place.
That mission is what brings so many great companies and organizations together in Israel… and when you’re working toward a goal like that—the rewards are sure to follow.
It's your turn to invest in Israel
There have always been signs that foretold Israel’s success if you know where to look for them:
“For the Lord will comfort Zion [Israel], He will comfort all her waste places;
He will make her wilderness like Eden, and her desert like the garden of the Lord; joy and gladness will be found in it, thanksgiving and the voice of melody”—Isaiah 51:3
God has been pointing us toward Israel all along. His promise and commitment to protecting the Holy Land has brought people out of diaspora and into destiny. But God isn’t helping them alone—YOU are also invited to help, and your efforts will not go unnoticed!
Find out what you have to gain from investing in Israel's startup economy by downloading our FREE investment guide!