Israel is pushing for 100 unicorns, or privately held enterprises worth a billion dollars or more.
Dan Perry and Jonathan “Yoni” Frenkel are looking into the Israeli high-tech unicorns phenomena in a remarkable article published in Tech Crunch. On the surface, they say, Israel has nearly as many unicorns as the European Union. “But the EU is 50 times bigger than Israel in population. Yet, Israel could even progress to having many more unicorns than the EU.”
While Tech Crunch is trying to explain the phenomena they also look at the dark future of Israeli high-tech.
According to Tech Crunch, Europe, in comparison, has a far higher population but just 125 unicorns. It is a triumph so profound that it begs to be explained.
Being a unicorn these days in Israeli is getting to be less and less of a special thing. Europe’s business culture is significantly more risk-averse than Israel’s, owing to the latter’s previous success.
In much of the EU, there are easier ways to make a solid livelihood, whereas in Israel, with its less-developed legacy economy, tech entrepreneurship has historically been a more enticing path.
This country model is based on a scrappy society of immigrants, including 1 million out of 9 million population, from post-arms-race Soviet Union, gathering in place which had never seen true peace. It’s an origin narrative that breeds an adventurous spirit, invention, and business for a living. Technology-driven by the security sector and military as a result of the conflicts gives another layer to this story.
In 2020, the COVID gave the country another twist. Due to an early bet on vaccines and the fact that its outside tech industry (accounting for approximately a tenth of the workforce) was well adapted for remote work, Israel was able to emerge from the pandemic somewhat stronger. During this time, Israel attracted major venture capital money.
This is taking place at the correct time. Israeli startups in sectors such as cyber, fintech, and SaaS, are showing significant promise in verticals such as agritech, food, space, and technology.
Unfortunately, although Israel has 135 scientists and engineers for every 10,000 workers “better than any other developed country.” However, it is insufficient to meet the demands of the booming tech sector.
According to 2020 High-Tech Human Capital, 60 percent of tech enterprises are having difficulty hiring personnel. Various recent investigations have discovered chronic engineer shortages of 14,000 engineers.
Because of the labor shortage, Israeli engineers are significantly more expensive than their colleagues in most other countries. This encourages companies to outsource work to Romania, Ukraine, and India.
In addition, previous governments, led by Benjamin Netanyahu, put more effort into religion education rather than high-skilled education. As a result, international test scores for Israeli children in math, science, and reading are falling compared to those of other countries, owing mostly to severe governmental dysfunction.
This links to the larger issue of the astonishing growth of the ultra-Orthodox sector, where half of the men study religion full-time (and the majority of the other half work in a gigantic religious services bureaucracy), and women are dedicated to raising more than seven children on average.
The Israeli Arab population, a historically poor and under-funded community with high crime rates, is another sector that does not engage proportionally in the high-tech industry.
One apparent way would be to encourage ultra-Orthodox Jews and Israeli Arabs to assimilate into larger Israel and provide them with all the resources they need.
Complacency comes at a heavy price. Nothing is worse than doing nothing and hoping for the best. It would squander a huge gift bestowed upon the Jewish homeland by the inexplicable destiny.