Tel Aviv Ranked the Top Startup Ecosystem in the Middle East

Israel’s Ecosystem Value crossed $100 billion this year with the count of patents increasing by 169% since 2020.

By TPS

Tel Aviv remains the Middle East and Northern Africa’s (MENA) leading startup ecosystem, ranking seventh globally, the 2021 Global Startup Ecosystem Report (GSER) published by Startup Genome shows.

Israel’s Ecosystem Value crossed $100 billion this year, and the Israeli city scored well in Knowledge, with the count of patents increasing by 169% since 2020

Israel, dubbed “the Startup Nation,” has more startups per capita than any nation in the world, an outcome of its “tight-knit entrepreneurial community, impressive R&D capabilities, educated population, and strong government support,” the report noted.

Tel Aviv is the heart of this red-hot ecosystem, with a significant majority of the country’s tech ventures concentrated within its greater metropolitan area, and nearly 3,000 within the city limits.

Startup Genome ranked Tel Aviv second in the 2021 GSER: Cleantech Edition, and fourth globally in its GSER: Agtech and New Food Edition.

Tel Aviv’s startups have together been valued at $120 billion. The city’s startups raised a record-breaking $20 billion in 2021, a whopping 63% of the national total.

Also in 2021, Tel Aviv gained 30 new unicorns, startup companies valued at over $1 billion, and 20 of its scaling companies went public, raising $4 billion.

“With hundreds of active investors and venture capital funds in the country’s central region, the message is clear: watch this space,” the report says.

Multinational companies, including Volkswagon, Anheuser-Bosch, Apple, Citibank, and over 130 others have established innovation centers in Tel Aviv.

“In addition to the high concentration of talent,” the companies enjoy over 30 different grants and tax incentive programs for R&D activity, including conditional grants, reduced tax rates, tax exemption, and other tax-related benefits offered by the state, the report points out.

In 2021, Israeli cybersecurity startups raised $8.8 billion, more than triple the amount raised in 2020. In Tel Aviv alone, the sub-sector also produced a record nine new unicorns in 2021, and one out of every three cybersecurity unicorns in the world is now an Israeli company.

Israel ranked third in the world by the number of artificial intelligence (AI) and machine learning startups, with the majority concentrated in Tel Aviv. Eleven Israeli-founded companies were featured in the 2021 AI 100 finalists report from research firm CB Insights.

A committee on AI has released a comprehensive plan to promote AI in Israel. An initial 550 million shekels ($168.2 million) of the 5.26 billion shekels ($1.6 billion) in funding proposed by the plan was approved in April 2021.

Israel accounts for 84% of the Middle East’s share in total Venture capital (VC) funding in 2021, followed by the United Arab Emirates (UAE) at 8% share. Despite its small population of approximately 8.6 million people, Israel is paving the way in tech innovation, both in the region and globally.

Overall, Israel is ranked second in the world in R&D expenditure per capita. Israel invests about 4.1% of its GDP in R&D, twice the OECD average.

In January 2022, Israel launched a $70 million program to promote entrepreneurship among Arab communities and is advancing numerous initiatives to promote diversity and inclusion.

Startup Genome is a global policy advisory and research organization for public and private organizations.