By Steven Scheer
JERUSALEM (Reuters) – Israel’s high-tech sector now accounts for 20% of the country’s economic output, the Israel Innovation Authority (IIA) said on Tuesday, as it urged the government to invest more to help technology grow faster.
In its 2024 report State of the High Tech Sector in Israel, the state-funded authority said that despite the eight-month war against the Palestinian Islamist group Hamas in Gaza, the technology sector continues to grow – albeit more slowly than in 2021 and 2022. – and remains Israel’s main growth engine. It accounts for 53% of total exports.
About 600 new startups were founded last year, while tech companies raised $8 billion in 2023, a 55% drop from 2022. In total, Israel has about 9,200 tech companies with a workforce of 400,000 people.
Dror Bin, the CEO of the IAA, said that while its budget has grown to help fund initiatives totaling $250 million to help startups having trouble raising money due to the war and a difficult global financing environment , the state must ‘double’ the use of technology. investments.
“Israel does not have many natural resources – we are not an oil and gas superpower,” Bin told Reuters. “We are a country on the edge of a desert, so we don’t have much water. The only natural resource we have is the gray cells in the brains of the people here and we need to ensure that this continues to flourish and grow. .”
Minister of Innovation, Science and Technology Gamliel agreed that innovation is Israel’s most important resource and that the government must “continue to support businesses and develop the necessary infrastructure.”
Bin expects a similar year in 2024 to last year due to concerns over funding rounds, but foreigners are still active investors as they know how to assess the risks of investing in Israel and want to invest while valuations remain attractive. He said he would like to see more Israelis invest.
Cyber and fintech remain the hottest sectors for investors, but climate tech accounted for one in six new startups, as entrepreneurs try to solve the challenges facing an ‘increasingly warmer’ planet and how to provide food, water and provide good healthcare in an aging world. population,” he said.
About 8% of tech workers were drafted into reserve duty in the military, while others were also pushed out of their comfort zones to volunteer, he noted.
As a result, they met new people and saw a wide range of civilian and defense needs.
“After the war,” Bin said, “we will see a baby boom of startups in Israel because of all these crazy things that have happened here since October 7.”
(Reporting by Steven Scheer; Editing by Hugh Lawson)
