Israel has gone from having an isolated economy, burdened with defense spending and dependent on exports, to becoming an economic power as well as a military one. The shequel, the national currency, recently reached the highest rate against the dollar in the last 25 years, after having appreciated 20% in 2021, and Tel Aviv, the country’s commercial capital, has just been proclaimed the most expensive city in the world in The Economist Intelligence Unit’s (EIU) annual index and all of this has been driven by investment in high technology.
Tel Aviv’s Innovation Ecosystem
Tel Aviv may be modest in size, but Israel’s high-tech capital is one of the world’s leading cities for innovation and technology. The beating heart of the “Startup nation” boasts one startup for every 154 residents, the highest proportion in the world.
The “Startup City” hosts 115 foreign investors in R&D centers and 2,750 startups they call this ecosystem home, in addition to a vast array of multinational companies that use the city as a base for innovation, giants like Google, Microsoft, giants like Google, Microsoft, Facebook, Amazon and Apple, along with Nike, Mastercard, Ford, Facebook , Amazon and Apple, along with Nike, Mastercard, Ford, booking.com, bosch, come to Tel Aviv looking for talent and an entrepreneurial spirit and benefit from the country’s spending on R&D.
The ecosystem saw a 25% increase in capital raised by startups in 2020, with more than $6.8 billion flowing into its startups last year, which doubled the number of unicorns in Tel Aviv, which is now home to more than 20 private companies worth more than $1 billion. With $200 or $300 million rounds being common, local success stories are numerous and include Monday.com, which raised $150 million from Zoom and Salesforce in June 2021 as part of its IPO and startup of mobility as a service Moovit, which was acquired by Intel for $900 million in May 2020.
Famous ecosystem events include Axis Tel Aviv, DLD, Fintech Week and CybertechGlobal which provide local ecosystem events include Axis Tel Aviv, DLD, Fintech Week and CybertechGlobal which provide entrepreneurs with the opportunity to network with key members of the international startup scene .
Being the most expensive city in the world brings impacts
The lowest income levels are found in the two minorities most disconnected from economic activity: Israeli Arabs (21% of the population) and ultra-Orthodox Jews (12%).
The high cost of living in Israel (with a price level 19% above the OECD average) is particularly high in Tel Aviv and the technology sector ends up driving workers from traditional sectors out of the inner city areas, the costs of buying or renting a house becomes more and more expensive and it will become more and more expensive due to transport, food, fuel etc.
Tel Aviv is proof that investments in innovation and technology can benefit the country as a whole and that if technology ecosystems and startups are united, they will bring progress and evolution. Here in Brazil we have other factors that influence well, but this is a conversation for another moment.
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