Starting in 2012, Startup Genome publishes an annual report ranking the hottest startup ecosystems from around the globe. The report uses a variety of metrics to determine rankings of both cities and countries startup ecosystem strength. This demands a lot of leg work to be done, as Startup Genome receives info from 1.3 million different companies, from 250 different cities and countries, with the cherry on top being direct insight from over ten thousand global startup executives. So after all that, what does the report actually tell?
Is Israel a good place for startups?
The report shows Tel Aviv comfortably landing at number 6 on the ranking list, tied with the city of angels, Los Angeles. Just above the two, we can find Boston followed by Beijing and sliding in next a tie between London and NYC, who are both looking up at Silicon Valley sitting on top. Furthermore as part of the report. both Stockholm and Tel Aviv were mentioned as R&D superpowers.
According to the report, the median Seed investments in Israeli startups are somewhere around $1.4 million which is almost 3 times more than the global average. Another interesting figure tells that the median Series A investments in Tel Aviv based startups are double the global amount at an impressive $5.7 million. Also amongst the report findings, we can see that the average salary for software engineers in Tel Aviv runs around $6,000, which almost double the average global salary that stands at a little over $3,000.
Overall, Tel Aviv received pretty high scores spreading over the determining metrics like startup performance, ability to land funding, talent, and Tel Aviv’s connectedness to the rest of the world. However, the report also shows that based on Hirsch Index, which measures the productivity and impact of scientist and scholar publications, Tel Aviv is severely lacking in the knowledge department.
In comparison to last year’s rankings, Tel Aviv’s ecosystem shot up from a value of $30 billion in 2019 (compared to a global average of $5B) to $47 billion this year (compared to a global average of $10.5B). This leap is also shown in early-stage startup funding which experienced a jump from $1.9 billion to $3 billion in just a year.
Cyber, AI, and Big Data lead the way
The Startup Genome report puts Israel at 3rd place regarding the number of AI and Big Data startups in the ecosystem. They used as examples that Google opened its first accelerator outside of the U.S. in Israel back in 2018, as well as Intel’s acquiring of Habana Labs for $2 billion in 2019, as positive determining factors behind Israel’s industry success.
Based on the report, about 40% percent of all Tel Aviv based startups work in the AI industry, while coming up next at 38% of the city’s startups we see more cloud and Big Data companies.
The report highlights Israel’s standing as a leader in cyber, showing that revenue from Israeli cyber products easily hits $6.5 billion annually, as well as further noting, that Israeli cyber startups were acquired for a total sum of $3.4 billion, with the most notable of them being Palo Alto Network’s purchase of cyber-security startup Demisto for a staggering $560 million.
Tel Aviv once again stands out in the report, as the city sits in second place behind only Silicon Valley in the number of startups per capita. Tel Aviv is also home to an incredible 107 R&D centers for international corporations. While most of the report’s determining metrics are based on data from before the COVID-19 crisis, Startup Genome does note the Israel Innovation Authority’s startup stimulus plan in a positive light as an empowering reaction to the crisis.
Tel Aviv’s ecosystem once more receives a thumbs up from the report, showing that the Israel Innovation Authority pumps into the ecosystem cash as momentum for early-stage startups, offering life-giving grants up to $30,000, cementing the city as a great ecosystem that allows early-stage startups to flourish.