approximately one-third of all unicorn startups are controlled by Israelis

Israel Startup Nation is also Unicorn Nation. People are stunned! How, within only a decade, Israeli startups became world leaders in cyber. How is it that Israel was one of the first countries to understand the magnitude and significance of the cyber revolution? And how does it now dominate unicorns, with as many as the entire European Union.

A new book called “Cybermania: How Israel Became a Global Powerhouse in an Arena That Shapes the Future of Mankind,” published in Hebrew (soon in English), comes a long way in answering these questions.

The book is written by Prof. Eviatar Matania a member of Tel Aviv University’s Blavatnik Interdisciplinary Cyber Research Center, and head of TAU’s International MA Program in Cyber-Politics, and MA in Security Studie and Amir Rapaport, founder of Israel Defense magazine and “Cybertech” conferences. They reveal in their book that 40% of all private cyber investments worldwide are made in Israel.

“The book tells the story of the previous decade’s cyber revolution, during which cyber became a significant part of our lives, and of Israel’s transformation into a cyber-powerhouse during that decade,” says lead writer Prof. Matania, who is also an adjunct professor at Oxford University’s Blavatnik School of Government.

“It’s a unique phenomenon. Israel leads in various indices in the world of technology and security, but always in relative terms, i.e. per capita or by relative size. For example, Israel is strong in academic publications per capita, or in the percentage of national expenditure on research and development, where it is a world leader along with South Korea. But when looking at absolute numbers, it is clear that other countries like the US and China overshadow us by a considerable margin in absolute investment in research and development” he explains.

In the high-tech world, on the other hand,” Prof. Matania added, “Israel is a global powerhouse in absolute numbers: 40% of all private investments in the world in cyber reach Israel, and every third Unicorn company is Israeli. Today, cyber accounts for 15% of Israeli hi-tech exports, which is about half of the total exports of the State of Israel, and it will only grow. These are amazing numbers, but they do not show the whole picture. After all, there are metrics that cannot be measured, such as defense capabilities. Within a decade, Israel has become a very significant player in the new cyber-security and cyber-economy arena.”

The book is based, in part, on Prof. Matania’s personal experience as the founder and leader of the National Cyber Bureau and later as director general of the National Cyber Directorate in the Prime Minister’s Office, reporting directly to the Prime Minister, from 2012 to 2018.

“The tipping point of Israel’s journey to become a cyber-power was a visit by then Prime Minister Benjamin Netanyahu to Unit 8200 in 2010,” says Prof. Matania. “Netanyahu was astonished by what he heard from the soldiers. He understood that the new world of cyber posed an extraordinary risk to Israel, as the country would be vulnerable to attacks from anywhere in the world. It should be understood that regarding cyber, everyone is everyone’s neighbor – Israel is a neighbor not only of Syria and Egypt but also of Russia and China. At the same time, Netanyahu was able to see the cyber opportunity for a small country like Israel, which specializes in both technology and security, to take the initiative.”

At the conclusion of his tour, Netanyahu sat down with his Military Secretary, Major General Yohanan Locker, and ordered him to design a three-vertice cyber system, with security at the center and academics and industry as its two pillars. Locker approached Major General (Res.) Prof. Yitzhak Ben-Israel, who was then the chairman of the National Council for Research and Development and is now the dean of Tel Aviv University’s Cyber Center.

He assigned Ben-Israel with managing Israel’s national cyber enterprise, which was tasked with the responsibility of developing a comprehensive national cyber strategy. This was the world’s first of its sort. Netanyahu established a concrete objective for the project: Israel would become one of the world’s top five cyber powers – but the eventual outcome was much better.

“The national cyber system that I headed was the first of its kind in the world,” says Prof. Matania. “This is a body that reports directly to the Prime Minister, like the ISA (Shin Bet), for example. There was an in-depth government understanding that in order to build a world-leading national ecosystem, it was not enough to wait for the free market to do its thing. Large budgets were invested in academia and industry and in building dedicated cyber defense capabilities. For example, six cyber research centers have been established at universities, including at Tel Aviv University, and the Chief Scientist has directed investments in startups in the general direction of cyber activities.

Additionally, government projects invested in defense initiatives where soldiers who had been honorably discharged from military service founded more and more startup companies. That’s how Israel got the jump on the whole world. The British were the second in the world, by the way, and that was only because the then British Ambassador to Israel, Matthew Gould, studied the structure and the Israeli strategy – and then returned to London and was appointed Chief of Cyber in the UK Cabinet Office.”

Prof. Matania asserts that Israel’s cyber skills – in the business sector, the government, and the defense establishment – also contribute to the country’s political achievements. “When Israel forms a cyber-defense alliance with Cyprus and Greece, it does not require Cyprus or Greece to enhance its cyber defenses – but we receive compensation in other areas in exchange for protection. Israel has become identified with cyberspace, to the point where we rely on it in the international arena today.”