The Israeli high tech startup phenomenon
Yossi Dashti, BGU

According to the Israel Ministry of Industry, Trade, and Labor there were over 4,000 technology startup companies in Israel in 2003 (MOIT, 2004). The influence of high-tech startups on the Israeli Gross National Product is enormous and according to recent studies by the Global Entrepreneurship Monitor (Lerner and Avrahami, 1999; Minniti and Bygrave 2004) Israel was ranked the highest for capital investment as a percent of Gross Domestic Product (GDP) during the years 1999 to 2002, ahead of the United States and Canada.

The establishment of the Israeli high tech industry is rooted in the necessity to provide sophisticated technology to meet Israel's defense needs. In the last two decades several factors facilitated the emergence of the Israeli high tech startup including an increased demand for military applications, privatization of the defense industry, the massive influx of engineers and scientists from the former Soviet Union to Israel, governmental initiatives such as the office of the chief scientist, global technological changes, and the surface of venture capitalists in Israel. Venture capitalists are attracted to the strong base of high tech research and development in Israel (Ventureone, 2005). During the years 1995 to 2004, the volume of merger and acquisition deals which involved Israeli high tech companies reached 30 billion dollars (Israel Venture Capital Research Center, 2005).

Copyright © 2005 by Yossi Dashti, Ben Gurion University of the Negev, Beer-Sheva, Israel
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