Sanal Sudevan@ Chennai
Union Commerce and Industries Minister Piyush Goyal, during his recent visit to Israel, lauded the country’s startup ecosystem and said India is looking to collaborate with Israeli startups in cybersecurity and medical devices to strengthen innovation. He added that technology and innovation partnerships will be a key component of the proposed India–Israel trade agreement.
Often called the Startup Nation, Israel — a country roughly the size of Mizoram — began building its strong startup and investment culture as early as the 1990s, immediately after the collapse of the Soviet Union.
Israel has emerged as a global leader in deep tech, especially in solutions that blend hardware and software. Cybersecurity alone attracts nearly 50% of total startup funding, with over 500 companies in the sector. Overall, Israel today has more than 6,000–7,000 active startups.
How Israel built its startup culture
Salman Waris, founder and managing partner at TechLegis, said Israel focused early on nurturing talent that migrated from the Soviet Union.
“Under the Soviet Union, Jews — including many scientists and engineers — were not allowed to migrate. When the Union collapsed in 1991, tech talent moved to Israel. To retain them, the Israeli government rolled out multiple schemes and funded innovation,” he said.
The cornerstone of this strategy was the Yozma Programme, launched in 1993, which injected $100 million into venture capital funds, primarily targeting innovation-led startups founded by engineers with military technology backgrounds.
These founders focused on developing new technologies to solve defence and communication challenges. Many exited early by selling their companies — often for intellectual property — mainly to the US, where building similar technology was costlier. This helped channel capital and expertise back into Israel’s ecosystem, despite limited entrepreneurial experience locally.
By the 2000s, the startup ecosystem had crossed $10 billion, nurtured by a mix of policy support, culture, and grit. Today, it includes over 220 venture capital funds, nine universities, 22 incubators, and 16 technology transfer offices.
A booming startup economy
In Q3 2025, Israeli tech recorded $31 billion in mergers & acquisitions, taking the year’s total to $71 billion. Private capital investments hit $2.4 billion in Q3, with $11.9 billion raised in the first three quarters — a 13% year-on-year rise.
According to the Global Startup Ecosystem Index 2025, Israel ranks third globally for the fifth consecutive year, behind the US and UK. However, activity remains concentrated mainly in Tel Aviv, which is ranked ninth globally among startup cities.
Israel has recorded a 20.58% growth rate in its startup ecosystem but faces growing competition from Singapore, placed fourth with 44.91% growth.
India, meanwhile, features three cities in the global top 20 — Bengaluru (8), Delhi (11), and Mumbai (18).
Structural strengths behind Israel’s lead
Waris highlights Israel’s targeted and merit-driven talent development:
“Children who show early intelligence are identified in school and trained differently. Their ideas are supported with funds and mentoring.”
Israel leads the world in R&D spending at 5.4% of GDP. The Israel Innovation Authority funds nearly 50% of early-stage deep tech projects. The nation is No. 1 globally in per-capita startups — one per 1,400 people — and R&D patents. Israel ranks among the top three globally across 11 major tech industries, with cybersecurity its strongest sub-sector — even ahead of the US. Tel Aviv remains strong in software and data, Jerusalem in pharmaceuticals, while Haifa and Yokneam are prominent in agritech.
Beyond cyber, Israel is focusing on AI, agritech, watertech, healthtech, fintech, clean energy, mobility, semiconductors, foodtech (such as Aleph Farms’ lab-grown meat), and desertification solutions, with over 200 firms working in climate-resilient agriculture and water management. Around 80% of Israel’s tech output is export-oriented, driven by intellectual property. India wants to replicate the model — but gaps remain Despite having over one lakh startups, India’s R&D spending is just 0.7% of GDP, a fraction of Israel’s.
Boost research-to-startup pipelines
“India is producing service companies rather than innovation. That stems from the culture and mindset.” He recommends tripling R&D spending to 2% of GDP by 2030, creating a ₹50,000 crore deep-tech fund, and granting 50% subsidies for deep-tech projects and tax incentives for patents. He also suggests startup visas for 10,000 global founders annually.
Karmendra Kohli, co-founder & CEO, SecurEyes, adds: Israeli founders take risks early and think global from day one. India must strengthen research-to-startup pipelines in universities and foster partnerships between ISRO, DRDO and startups to pursue bold, high-impact ideas.” While India has rolled out schemes like PLI and ELI, Waris believes outcomes must improve. “We may have over one lakh startups, but how many build for the world? Traditional export sectors like brass, jute, and textiles have declined. Policies must translate into high-quality innovation.”
