In this article we summarize findings on the effects of the conflict between Israel and Hamas on the tech companies that operate in Israel. We also list some new Israeli startups that have made it into the spotlight of Wired magazine.
Image source: prnewswire.com
The Israeli startup world, latest reports
The January-February 2024 number of Wired - Europe's Hottest Startups magazine shows various interesting examples of some of the most promising startups in Europe and regions nearby. While all major cities mentioned in Wired have very attractive examples of successful young companies, in this article I will focus on Tel Aviv, Israel. It is known that in the past the Israeli entrepreneurial structure has resisted the continuous conflicts quite well; actually, we could say that it's exactly this series of adversities that has strengthen the Israeli entrepreneurial spirit. With the on-going conflict against Hamas, let us investigate its effects on the Israeli entrepreneurial power.
In the recent number of Wired - Europe's Hottest Startups, they describe how everyone working in Israeli tech companies is affected by the current war, where many workers and employers are attending funerals, and many employees are being called up to serve as reservists in the military. But this does not mean that the tech companies should halt their work. After all, the tech economy represents 18% of Israel's GDP (cit. Jon Medved, CEO of OurCrowd).
According to Wired, Tel Aviv ranks fifth for the number of unicorns (startups valued at or above $1 Billion, a term first coined by venture capitalist Aileen Lee in 2013). In 2023, Israel ranked 4th in Europe's VC Heat List for VC funding, with leading industries like Software ($1.4B), Commercial products and Services ($0.4B), HC Devices & Supplies ($0.2B), HC Services & Systems ($0.2B), IT Hardware ($0.2B), etc. Israel was ranked behind the UK, France, Germany.
Some of the startups that made it to the spotlight in the recent number of Wired are:
Dazz, a startup that aims to detect and fix security vulnerabilities, with an easy-to-use interface.
Cyabra, a five-year-old startup which uses Machine Learning to distinguish between real social media accounts, and bots, trolls etc.
AiVF, which uses Artificial Intelligence to increase the success rates of fertilizing eggs in a lab, with AI "judging" which embryo is most likely to become a baby.
Classiq, a quantum computing startup, which has created a platform to help users simplify the process of building quantum software with applications in industry. For more information about Classiq refer also to this other article on my blog My Israeli Quantum Expedition: A Chat with Classiq and an Overview of the Israeli Startup World (atqupolis.com).
Multinational Corporations (MNCs) in Israel
According to The Times of Israel, the country is home to 430 Multinational Corporations with 86'000 workers. According to poll findings from Ernst & Young, who surveyed 60 managers of MNCs in Israel, 60% said the war had minimal impacts on their business in Israel, 30% said the impact was limited, and 10% said the impact was severe. According to the same article, Intel Corp, Nvidia, Google, Microsoft, Hewlett-Packard, Applied Materials, IBM, Philips, Apple, employ 37% of workers, or over 31,000, mainly in areas of R&D, but also manufacturing, and logistics. Since many of these employees have been called in the army reserves, the war has indeed affected the tech sector, a growth engine for the Israeli economy. You can find the article of The Times of Israel in the following link: Majority of multinational companies operating in Israel see limited impact from war | The Times of Israel.
According to the report by Ernst & Young, most of employees working for these companies are employed in the North of the country. However, many of them also work in central Israel and in the South. As reported on pc.co.il, an important reason for this is the location of the manufacturing plants of Intel in Kiryat Gat, a city located in the south-west of Jerusalem.
Intel manufacturing plant in Kiryat Gat. Image source: The Times of Israel.
The Israeli spirit in times of crises
Actually, the word "crises" doesn't really do justice to the current grave situation in Israel and in Gaza. Many Israeli tech employees have been called on reserve duty to participate in the fights against Hamas. When the war is over, they will have to re-adjust to the normal life back in Israel, dealing with the trauma that war always brings. According to pc.co.il, the President of Israel, Isaac Herzog, after being presented to the aforementioned report, and taking into consideration the difficulties that workers and employers are facing at this time, said that:
"Great crises also bring with them great opportunities, and at the heart of Israeliness is our ability, as individuals and as a society, to hope, to dream, to continue to nurture hopes and dreams and to put them into practice – especially when reality is challenging. This is the secret of our strength as a society. I call it 'renewal capacity,' which world leaders have often been surprised to see. This is our secret weapon, which brings us to surprising breakthroughs in war and, God willing, in peace."
He continued:
"We are resilient, innovative and renewable. It's our DNA. The same ability to renew, the same qualities of resilience, resourcefulness, energy, determination and endless vitality – are the reason why so many international corporations have established R&D centers, factories and subsidiaries here. These are the same qualities that enabled the Israeli branches of multinational companies to develop groundbreaking technologies here, to bring from our small and beautiful piece of country tidings of innovation, which have influenced the entire world, and will continue to influence. These are the same qualities that characterize the spirit of the Israeli initiative, the engineers, the scientists – to think outside the box, and also to create ways that make the impossible possible."
The findings of this report are also summarized in Albanian language on this link:
Since 1948, the year of the Israeli independence, the country has had to deal with various enemy armies surrounding its borders and attacking its territory. In spite of the conflicts, Israel has managed to thrive as a country of technological innovations, in medicine, engineering, physics, agriculture etc. In the DNA of the country, one finds the grit, determination and chutzpah, a Yiddish word for audacity, fearlessness. In his book Thou Shalt Innovate - How Israeli Ingenuity Repairs the World, Avi Jorisch describes how Israel has regularly been attacked with missiles from Hamas since 2001. This led to the creation of the Iron Dome in record time by Israeli engineers and scientists, used to detect and intercept missiles of all kinds within a 43 mile range, with a success rate of 90%. The book also includes a list of other inventions in the field of medicine, pharmaceuticals, IT, etc. The author gives a very important message regarding innovation: In order to innovate, countries will need to invest in a culture of lifelong learning and high-functioning school systems. For thousands of years, Jews have been called "the people of the book". This part of Israel's culture has been absolutely essential to the country's success.
You can read more about the list of inventions mentioned in the book in this article: My Israeli Quantum Expedition: A Chat with Classiq and an Overview of the Israeli Startup World (atqupolis.com).
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