How Israel is dominating the tech race despite being such a small nation in Cyber war?

Israel is a hub for cutting-edge research, lucrative economic prospects, and substantial returns on investment. There is a long list of over 200 MNCs that have decided Israel is their ideal investment opportunity because of these factors, including Microsoft, Motorola, Google, Apple (three R&D centers), Facebook, Berkshire-Hathaway, Intel, HP, Siemens, GE, IBM, Philips, Lucent, AOL, Cisco, Applied Materials, IBM, J&J, EMC, and Toshiba.

In addition, Israel is home to the innovation hubs of numerous international corporations. These include Tata, Kodak, Citibank, and many others.

How, then, does Israel manage to maintain its technological edge in so many fields? Is there something special about it that attracts companies from all over the world?

Israel's innovation ecosystem is one of the most successful in the world thanks to the country's distinctive culture and economy, significant government support, and "global-first" market attitude. In 2016, Israeli startups reached a new high of $4.8 billion in funding, while high-tech and startup companies were sold for a total of $10.02 billion through acquisitions and initial public offerings. The percentage of GDP spent on research and development in Israel is the second highest in the world, and the country is also home to the highest concentration of engineers per capita.

Further characteristics of the Israeli environment are:

Highly innovative - Israel is world renowned as being the “start-up nation” and is the world leader for the number of start-ups per capita—with 2,000 startups founded in the past decade, another 3,000 small and medium-sized startups and high-tech companies, 30 growth companies, 50 large technology companies, and 300 multinational corporations R&D centers. Disk-on-key technology, IP telephony, ZIP compression, the ingestible pill-sized camera, and many more are just a few of the many market-first technologies that have come out of Israel.

Strong R&D capabilities: Israel has strong research and development capabilities, ranking second in the world in terms of R&D spending per person. While the OECD average is 2% of GDP, Israel invests 4.1%.

Educated and skilled workforce: Israel has one of the greatest ratios of college graduates to the general population and one of the highest ratios of scholarly works published per head of population. Israel is one of the world's most educated societies thanks to its excellent educational system.

Young people acquire a strong feeling of responsibility and a goal-oriented mindset through mandatory military duty, which provides them with advanced technical training. Furthermore, Israel has had a number of waves of academics immigrating there from all over the world. One of the most obvious reasons top executives choose to do business in Israel is because of its inventive, competent, and ambitious workforce. Israel has one of the world's most educated, entrepreneurial, and culturally diverse labor forces, which results in technology, innovations, and research products that are widely used in a variety of fields and industries.

Government Support: In the early 1990s, the Israeli government established the Technology Incubator program. We now have over twenty-five privately run incubators spread out over the country. There is a two-year period during which the government will cover up to 85% of the expenditures associated with early-stage projects in the incubators. Taking care of start-ups from the very beginning helps keep investment losses to a minimum. To date, more than 1100 projects have graduated from incubators, with over 45% successfully garnering additional financing from various investors.

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Furthermore, the Israel Innovation Authority offers numerous assistance initiatives, spending roughly $400 million annually on this. The R&D Fund is the primary initiative, with grants covering up to 40% of the approved R&D program's total cost.

Investment Support: Benefits include a lower corporate tax rate and investment subsidies made available to international enterprises according to the Investment Law. Employment grants for R&D facilities and major corporations are another form of government assistance. In this program, the company receives a grant equal to 25% of the salary costs for each new employee for a period of 4 years.

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VC Industry: There is a vibrant venture capital market that supports Israel's booming startup industry. A total of 70 VC firms are now operating in Israel, with 14 of those firms being foreign VCs having local branches. By far surpassing any other country in VC volume per capita, Israel's venture capital availability is a sign of the breadth of its innovative businesses and of the highly efficient financial sector underlying them.

A Flexible, Creative Economy: It is commonly agreed that a company's ability to alter and adapt is one of the most important criteria in determining its success. In reality, this quality is ranked highly by the International Institute for Management Development's (IMD) global competitiveness index. In today's competitive global market, success for businesses requires a high degree of adaptability and response to the ever-shifting conditions in which they operate. Israel's constant high performance on the flexibility index and widespread acceptability as an innovation hub can be attributed to the country's adeptness at quickly translating market needs into organizational action.

Image Courtesy: Envoy Excellency Magazine