Tel Aviv slipped to seventh place in the Startup Genome’s Global Startup Ecosystem Report (GSER) for 2021. The report is an annual one on global startup ecosystems and subsector trends published since 2012. Last year, Tel Aviv and Jerusalem ranked together in sixth place in the report. In 2019, Tel Aviv also ranked in sixth place.
This year’s report, like last year’s, reflects the impact of COVID-19 on the global startup economy, but ecosystems have continued to thrive despite new varients in the ongoing pandemic. Ninety-one ecosystems created unicorns in 2020 and although US companies dominated, China, Canada, India, Germany, Israel, the UK, and France produced between 7 and 10 unicorns in the first half of 2021, according to Crunchbase, the report says.
The global survey conducted by Startup Genome maps the global startup industry in 140 cities worldwide. Last year, the Tel Aviv-Jerusalem ecosystem tied with the city of Los Angeles, while this year Los Angeles took 6th place and Tel Aviv moved down to 7th.
Meanwhile, the top five global startup ecosystem “maintained their reign at the top” with California’s Silicon Valley ranking first, followed by New York City and London tieing for second place. Beijing and Boston followed in 4th and 5th place. The top 10 list concluded with Shanghai, Tokyo, and Seattle.
The report once again ranked the top 30 global start-up ecosystems plus runner-ups, as well as 100 emerging ecosystems.
Though it dropped to 7th place, Tel Aviv continued strong among the top 30 global startup ecosystems, placing in the top tier among success factors such as performance, funding, experience, connectedness, and market reach.
The report calls Tel Aviv “one of the leading cities in the world for innovation and technology.” In a more in-depth look at the “beating heart of the Startup Nation,” Tel Aviv is said to boast one startup for every 154 residents, the world’s highest ratio. The high-tech capital of Israel is home to “creative and experienced talent, a mix of local and international investors, and 2,750 startups.”
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The city also hosts 115 foreign R&D centers and a “vast range” of multinational companies using the city as a base for innovation. Giants like Google, Microsoft, Amazon, Facebook, Apple, Ford, Nike, and many more have offices in Tel Aviv and benefit from the country’s high expenditure on R&D, the second-highest rate of R&D spend per capita on the world.
Tel Aviv has recently experienced a recent surge in VC money, only improving the conditions for growing companies and the ecosystem saw a 25 percent increase in capital raised in 2020 with over $6.8 billion flowing into startups last year. This doubled the number of unicorns in Tel Aviv. It is now home to more than 20 private companies worth more than $1 billion, according to the report.
Local success stories include Monday.com, which raised $150 million from Zoom and Salesforce in June 2021 as part of its IPO, and mobility-as-a-service startup Moovit, which was acquired by Intel for a cool $900 million in May 2020.
“Tel Aviv has shown tremendous growth and maturity with many startups evolving into scaleups, unicorns, and public companies, said Yifat Oron, senior managing director, and head of the Tel Aviv Office at Blackstone, a US alternative investment management company.
AI, big data, and cybersecurity
Te Aviv took the number one spot among the Middle East and North Africa (MENA) Top Performers identified within a specific region, although the big news was that three UAE ecosystems had ranked in the Top 10. AI and big data is the leading subsector in MENA with $3 billion invested in early-stage rounds and $8 billion in exit value between January 2018 and June 2020, the report said.
Tel Aviv is 7th in the world by number of AI startups, the report says, with 714 companies and a total of $3 billion invested in 2020. According to the report, a new AI plan calls for $1.6 billion to further grow the subsector over the next five years. It has already unlocked initial funding of $168.2 million
The report highlighted ZenCity, an AI solution for governments, which raised $30 million in June 2021 and Israeli digital adoption platform WalkMe, which raised $286.75 million in an initial public offering (IPO.)
The Startup Genome Report said 2020 was a record-breaking year for Tel Aviv-based cybersecurity companies, which raised $2.9 billion in total. In the first quarter of 2021 alone, the subsector raised $1.5 billion across 17 deals. The report highlighted Israeli enterprise networking and security firm Cato Networks, which raised a total of $332 million, cloud networks infrastructure company Wiz, which raised a total of $350 million and cloud-native security company Aqua Security, which raised a total of $265 million.