The Technology Ecosystem Thrives in Jerusalem

The Technology Ecosystem Thrives in Jerusalem

10 years of development have turned the holy city into one of the biggest tech hubs in the Middle East

The last decade has seen a huge expansion of the tech industry in the historic city of Jerusalem. The tech and innovation sector has found an old-new place to establish roots and produce sky-rocketing results.

In the last 10 years, Jerusalem has acquired a tech component to add to its tremendous historic, cultural, and religious importance in the country, the Middle East, and the world.

According to Start-Up Nation Central, an “independent nonprofit that builds bridges to Israeli innovation,” the number of Jerusalem-based technology companies has tripled since 2012.

Today there are more than 600 tech companies and 20,000 workers in Jerusalem’s tech scene. This compares to 2012 when there were 200 tech companies and 12,000 workers in the sector. According to the latest comprehensive study conducted by the Startup Nation Central, in 2020, Jerusalem tech firms had 22 capital exits. Around $400 million was invested in Jerusalem’s tech firms in 2020, compared to $233.5 million in 2019 and only $57 million in 2012.

Israel’s largest-ever acquisition deal was the 2017 sale of the Jerusalem-based Mobileye, which develops self-driving cars and advanced driver-assistance systems, to Intel for $15.3 billion. Other unicorns − privately held startup companies valued at over $1 billion − such as OrCam and Lightricks, have also emerged from the city.

Inbal Gottesman, senior manager Jerusalem Ecosystem at Start-Up Nation Central, told The Media Line that 10 years ago there were not a lot of investors in the city, and not a lot of startups either. “The city was lacking in these respects, and it was really hard for a startup to establish itself and to fund itself in Jerusalem,” she said.

The turning point came about eight years ago when startup accelerators were established and, with them, new companies, all of which started attracting money, Gottesman explained.

It all came from a combination of initiatives from the government, local academia, the community, and nonprofits, she said.

The government works “through the Jerusalem Development Authority [JDA], which is an independent body that invests in Jerusalem because it is in the capital of Israel,” Gottesman said.

“They [the JDA] created something called Jnext, their tech arm, which started creating all kinds of financial incentives such as grants and benefits for companies to open in Jerusalem,” she said.

On the other hand, Gottesman continued, “academia started seeding innovation within academia.”

It started with Siftech at the Hebrew University, the first accelerator in the city, in 2012, and then more accelerators began to open, she added.

Then, a nonprofit organization called Made in JLM opened, Gottesman said. “It started making connections among entrepreneurs, and it later became a real business connector and it really helped a lot of tech companies to come.”

Around two years into all this, Gottesman concluded, “Start-Up Nation Central decided to enter as an active player and led a lot of initiatives around connectivity.”

The tech ecosystem in Jerusalem continued to develop and, as part of various initiatives, a lot of effort was invested on human capital. This included training in different high-tech capacities so local and multinational companies would look for talent in the city as they do in the Tel Aviv area.

“Once you have tech companies in the city, it creates jobs, money is invested. That trickles down into offices rented, into people getting salaries, into lunch being bought in the local restaurants, and it makes a huge difference for the city’s economy,” Gottesman said.

Rafi Fischer, public and media relations director for OrCam Technologies, which provides an alternative for visually impaired, blind, and dyslexic people, also shared his point of view with The Media Line. OrCam was founded in 2010 by Prof. Amnon Shashua and Ziv Aviram, the same men who founded Mobileye in 1999.

In a recent valuation, OrCam was valued at $1 billion, becoming another one of Israel’s Jerusalem-based unicorns, he said.

Fischer described the tech ecosystem in the city as vibrant and described how he has witnessed its growth.

“We are located in Har Hotzvim [aka the Campus of Science-Rich Industries industrial park], which is the biggest tech area in Jerusalem, and in my years here I’ve seen so many new companies being created here and also multinationals coming to the city such as Intel and Cisco,” he said.

Fischer believes that successful companies like Mobileye and OrCam set a pretty good precedent in the city. “It gives a sort of assurance to a company that is looking for a place to be established,” he said.

He added that the tech growth is also due to the municipality’s desire to make it easier for companies to establish themselves in Jerusalem.

As an incentive to establish tech companies and startups, city hall offers many assistance options and financial benefits such as grants, a reduced tax rate, allocation of locations, assistance in dealing with public bodies, and close accompaniment.

This together with the opportunity to belong to a unique tech community such as Jerusalem’s, which in addition to its particular specialties in Life Sciences and Artificial Intelligence, has rare and valuable features.

Fischer pointed to the diversity of human capital in the area as one of them. “Here in Jerusalem, we have a bigger mix of people who bring different ideas and different outlooks, and I think it brings the flavor and the culture to the tech companies,” he said.

Gottesman said another advantage is “the sense of community and a shared purpose,” adding, “People here in the ecosystem are really invested in one another. Most of the tech companies don’t compete for resources and also support each other’s missions.”

The strong connection with academia and the innovation coming out of it is another special characteristic, she said. “All that science created in institutions such as the Hebrew University, Hadasit [Medical Research Services and Development, the technology transfer company of Hadassah Medical Center] and Shaare Zedek [Medical Center], for example, actually goes into innovative solutions.

“Lightricks is a good example of this; the four founders met and came up with the idea in the halls of the Hebrew University,” Gottesman added.

The idea for OrCam, Fischer said, was also born in a lab at the Hebrew University.

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