Israel’s AI sector outpaces global rivals, defying adversity

Israel’s number of active AI companies has jumped from 779 in 2014 to 2,170 in 2023, according to the study.

By Noah Michaeli, TPS

Israel’s AI sector is experiencing significant growth despite the ongoing war, positioning the country as a global leader in AI innovation, according to a report released on Tuesday.

“Israel stands at the forefront of global AI innovation, propelled by an extraordinary ecosystem of startups, academia, and multinational support,” said Avi Hasson, CEO of Startup Nation Central (SNC), which released the report.

SNC is a Tel Aviv-based non-profit that promotes Israeli startups and innovation.

According to the report’s findings, Israeli AI startups have demonstrated 173% growth since 2014, far outpacing the 12% increase in non-AI startups.

While AI accounts for only 30% of Israel’s startups, they receive 47% of total company funding and representing 40% of the funding rounds in Israel.

“Since 2018, Israel’s AI investment share has typically been 3-4 times higher than Europe and the U.S.,” the report said.

Although recent investments in U.S. AI companies have slightly narrowed the gap, the report also noted that key multinational tech giants, including NVIDIA, Microsoft, Google, Amazon, Meta, and Apple, have strengthened the country’s startup ecosystem with significant investments in Israel.

This strategic backing from global tech players supports Israel’s growing influence in AI, particularly in the areas of cybersecurity, healthcare, and agrifood.

One of the most unique features of Israel’s AI ecosystem is its ability to attract early-stage funding, the report said.

The report found that Israeli AI startups outperform their non-AI counterparts by at least 10% in securing initial capital.

Furthermore, just 32% of AI startups remain unfunded within their first two years, compared to 50% of non-AI startups.

As a result, Israel’s number of active AI companies has jumped from 779 in 2014 to 2,170 in 2023, according to the study.

By the end of 2023, “for every four American AI companies acquired by these MNCs, one Israeli AI company was also acquired,” the report noted.

In healthcare, specifically, the report states that Israeli AI-driven startups are making strides in medical imaging, drug discovery, and clinical trials.

In robotics, AI is revolutionizing industries such as agriculture, with Israeli AI robotics companies attracting 78% of total investment in the sector.

Similarly, in climate tech, AI is being used to address climate challenges like weather modeling, sustainable agriculture, and wildfire prevention, the report said.