Imposing walls, majestic buildings, a bustling souk… The streets of Jerusalem are the polar opposite of the trendy avenues of Tel Aviv, the haven of Israeli startupers. However, the three times holy city is also home to an agile tech ecosystem. It has no fewer than 600 start-ups, employing some 20,000 digital professionals. Between 2018 and 2022, nearly 4 billion dollars were poured into this scene, reveals the latest Made in JLM report. That is three times more than the previous five years.
The jewel in the Jerusalem crown is of course Mobileye. Founded in 1999 by Amnon Shashua, professor of computer science at the Hebrew University of Jerusalem, and entrepreneur Ziv Aviram, this start-up has become a global leader in advanced driver assistance systems and vehicle technologies autonomous. So much so that in 2017, it was bought for the record sum of $15 billion by Intel.
The latest baby from the creators of Mobileye also seems to have a bright future: their company, Orcam, which develops artificial vision devices for the visually impaired, joined the select club of unicorns in 2018, these start-ups valued more than once billion dollars. It now also has offices in New York, Cologne and London. Less philanthropic but popular around the world, the Facetune application – with its selfie-editing AI – has brought Lightricks into the city’s herd of unicorns.
Apple set up an R&D center
“The local tech scene can rely on the excellence of the Hebrew University of Jerusalem in computer science and that of the Bezalel school in art and design,” underlines Avi Hasson, CEO of the organization Start-Up Nation Central and former chief scientist of the country’s Ministry of Economy and Finance. Collaborations with Hadassah Hospital have also helped to flourish start-ups specializing in technologies focused on health and biology. Launched by Erel Margalit in 1993, the Jerusalem Venture Partners fund – 1.6 billion dollars – has also established itself as a key player in this ecosystem: it has invested in no less than 165 companies, in Israel and abroad . Although tech multinationals have little presence in Jerusalem, they are starting to take an interest: Apple has installed a new R&D center there and other Gafam plans to do so.
Jerusalem encapsulates the great challenge of start-up nation in 2023. Tech is the country’s economic engine: it represents 18% of its GDP and around half of its exports. In the current period of conflict, it plays the role of an airbag. The domestic market is, in fact, so small that the teeming ecosystem of start-ups that have grown up in Israel has long been geared towards foreign customers, notably the United States. The request is therefore not affected by the war against Hamas. The problem is that the sector is finding it increasingly difficult to find the human resources necessary to continue its crazy growth. You just have to look at tech in Jerusalem to understand where the challenge lies: certain categories of the population are very far from the world of start-ups.
While between them, ultra-Orthodox Jews and Israeli Arabs represent a good third of the Israeli population – and more than half in Jerusalem – they only account for 4% of employees in the tech sector. Among the ultraorthodox, this gap is above all linked to the way in which young men are trained. “They study Torah and Talmud, not English or mathematics,” explains Avi Hasson. Among Israeli Arabs, the problem is more geographical: few of them live in the “tech hubs” from the country. “And like the ultraorthodox, they do not do military service. However, this is where future entrepreneurs create a valuable network” specifies the expert. Bringing these two populations to tech is strategic so that the start-up nation continues to prosper. On the scale of Jerusalem, this opening will also be essential to reduce the strong economic disparities between residents.
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