How Ancient Jerusalem Became A Hub Of Innovation And Tech

Known as a cradle of many religions, a historical center, and a home to more than 2000 active archeological sites, the city of Jerusalem has long been a center of discussion worldwide. 

But even with religion, culture, and history at its core, Israel’s groundbreaking tech and innovation ecosystem in Jerusalem has found its place. Many startups have made their headquarters in the famous Jerusalem stone buildings over the past decade.

To date, Jerusalem is home to some 400 startups with its strongest companies in sectors like biotech and life sciences, medical and healthtech, machine learning, AI, and software, according to Inbal Gottesman, senior manager Jerusalem Ecosystem at Start-Up Nation Central (SNC), a non-profit organization that tracks the country’s high-tech industry. Jerusalem also has 22 active multinationals in the city, 24 venture capitalist (VC) firms, 11 academic institutions, 27 innovation hubs (accelerators, incubators), and just over 20 tech communities.

A decade ago, there were just 200 tech companies in the sector, according to SNC. “There were only seven active VCs in the city and a huge funding shortage,” she tells NoCamels, “Back in 2012, Jerusalem also suffered from a shortage of office space, a problem that no longer exists, thanks to the massive momentum of developments (such as the Hujitech building, the planned employment and hi-tech park owned by the Hebrew University in Jerusalem,) as well as creative solutions led by the JDA (Jerusalem Development Authority) which turned the old university dorms into tech offices.”

While Tel Aviv and Herzliya are widely known as the financial and tech centers of Israel, in the country dubbed the “Startup Nation,” the ancient city of Jerusalem is quickly working its way up to become a major tech and innovation center in Israel.

“Jerusalem has a thriving tech ecosystem with companies like Mobileye, as well as major tech hubs at Har Hotzvim and Malcha, startups like Sufresca, based on Hebrew University research, and our incubator LABS/02. We also hold the largest business event in the country’s history in Jerusalem, the OurCrowd Global Investor Summit, which will return again in February 2023,” Jon Medved, OurCrowd CEO tells NoCamels.

On Yom Yerushalayim (Jerusalem Day), celebrated on Sunday, May 29, NoCamels explores how Jerusalem has evolved into a capital of innovation.

Elie Wurtman, the co-founder and managing partner at early-stage VC PICO Venture Partners, has greatly contributed to the success of the high-tech landscape in Israel, and specifically in Jerusalem. So what does he think about the evolving innovation in the city?

“Everyone thinks that Tel Aviv is the capital of innovation,” he tells NoCamels, “But I’m going to share with you a secret that if you want to know where the best entrepreneurs in Israel come from, the people who built the biggest companies, the people responsible for more than kind of 50 percent of the output of startup nation. They grew up in Jerusalem. They may have built their companies in Tel Aviv, or in Herzliya or Boston, but the idea that some of the best entrepreneurs come from Jerusalem is a well-known fact,” he adds, noting that the former CEO of Waze, Noam Bardin, grew up in Jerusalem as well as one of the founders of Israeli cybersecurity firm Check Point Software Technologies, Gil Shwed, and four of the founders of ironSource, a unicorn that builds tools for app developers. There’s also a founder of Mellanox that was born in Jerusalem. The Israeli chipmaker leased a 300-square-meter space in Jerusalem’s tech park for its sixth R&D center in the country, Calcalist reported.

He says most people don’t even realize that Jerusalem has been instrumental to Israel’s tech industry since the 1990s.

“First of all, I’ve been an entrepreneur in Jerusalem since 1993, building startups there. Jerusalem in the 90s was the epicenter of startups. People don’t know that today. They think Tel Aviv has kind of been there forever. Tel Aviv only emerges in the early 2000s after the Second Intifada. A lot of young people had left Jerusalem. I called it the nuclear winter. So you have basically a decade from 2001 until 2011 or 12 where nothing was happening there and the center of startups was in Tel Aviv. It was in Herzliya. And yet, there were a few things happening at around the same time, which I thought were very exciting.”

In the interview, Wurtman noted that from 2006 he had been commuting to Herzliya for his position as a partner at Benchmark Capital, but realized that his next chapter was going to be “reinvigorating the entrepreneurial community in Jerusalem.” According to Wurtman, the active crowdfunding platform OurCrowd was just starting and Jon Medved, its founder and CEO was beginning to establish his office in Jerusalem and becoming a major funder of the Israeli high-tech ecosystem. Also, Siftech, an accelerator led by the Hebrew University’s Student Union was the first accelerator to be established in the city in 2012 and many accelerators followed its trajectory. Today, Siftech is considered the “nerve center for Jerusalem’s emerging startup scene.”

Later, he says, unicorns like Lightricks and OrCam — companies worth over $1 billion — would be developed, as well as a “small company established by a Hebrew University professor. That company, of course, was Mobileye.”

To date, the largest acquisition ever of an Israeli company belongs to Mobileye, a company that develops advanced assistive driving systems for self-driving cars, and was sold to Intel in 2017 for a staggering $15.3 billion. Mobileye was founded by Prof. Amnon Shashua and Ziv Aviram, both of whom also founded OrCam.

“Mobileye was established in 1999 and we have people who have continued to work there for 20 years,” Aviram tells NoCamels, “The loyalty of employees in Jerusalem is unparalleled, truly unlike any other high-tech hub,” he says, citing human capital as an essential component that contributes to the attraction – and success – of the growing high-tech ecosystem in Jerusalem.

Wurtman made his own effort to revitalize the high-tech industry when he established his firm, PICO, in the Talpiot neighborhood, the southeastern region of Jerusalem which in 2015 was known more for its industrial zone and urban grit than it was for its appeal to startups and tech companies.

“One of the other things about Talpiot from a vision perspective, it’s one of the ugliest parts of Jerusalem. Most of Jerusalem needs to be preserved for historic reasons, but I just felt like if we were successful at building a vision [in Talpiot,] then it could actually be realized that you could transform Talpiot in the same way you could transform other industrial areas next to cities — people don’t remember but Herzliya Pituach used to be famous for its car garages before it was all offices and restaurants.”

Another reason Wurtman chose to build PICO headquarters in the Talpiot neighborhood was that it was a “meeting place” for all walks of life in the city.

“In Jerusalem, we like to think of hospitals and universities as meeting places for the different societies that live in the city. But everyone – Arabs, Jews, religious, secular – comes to Talpiot because it’s a commercial area. Everyone comes there to do their shopping, everyone comes there to get something fixed. Everyone comes there to get their car repaired. And the idea was that we could plug into the real energy of Jerusalem.”

So what is the real energy of Jerusalem? Wurtman says it’s the “diversity of the city. It’s multiculturalism. It’s the international meeting point for all faiths. Tourists come through there. But I say that if we – I’m sitting right now at my office in Tel Aviv – if we go downstairs and stay on Rothschild Boulevard, you’re going to meet the same person, right?,” he tells NoCamels in a Zoom call, “In Jerusalem, it’s colorful when I look outside. The PICO offices in Jerusalem are all glass walls to bring the city inside. You look outside, you see ultra-Orthodox Haredim, you see Arabs, you see, religious Jews, secular Jews, hippies, artists. It’s just colorful, and the energy for the creative industries is super important. It’s one of the ingredients that I think inspires people and drives creativity.

“The Jerusalem ecosystem is first and foremost a community-centered ecosystem,” says Gottesman, “The ecosystem thrives not only because of the talent but also very much due to the spirit of collaboration and partnership, between the startups, the VCs, the hubs, and accelerators, academia, and government.”

Jerusalem also holds an amazing advantage when it comes to biotech, life science, and medical innovation, thanks to its world-renowned institutions such as the Hebrew University of Jerusalem, Hadassah Hospital, and Sharee Tzedek Hospital. When you combine that collaborative spirit with the talent and access coming out of academia, amazing companies like Mobileye, OrCam, Lightricks, and BrainQ are born.

“Jerusalem is a gorgeous place to work from, with a vibrant ecosystem, especially for life science companies like us, with good government incentive programs and proximity to great academic centers,” Yotam Drechsler, CEO & co-founder of BrainQ Technologies, tells NoCamels. BrainQ has developed an AI-powered device that delivers electromagnetic stimulation to the upper extremity of individuals with impaired motor abilities.

“Many of the creative people with big goals to build big things come from Jerusalem,” Wurtman adds.

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