Number of Jerusalem-Based Tech Companies Grows 102% Since 2012

According to Start Up Nation Central's "Finder", the Jerusalem technology ecosystem includes 405 companies, 22 exits and total investments worth $1.6 billion of which $233.5 million are from the past year

Wendy Singer, executive director of Startup Nation Central. Photo provided by the organization

Alongside its rich history and culture, Jerusalem has evolved in recent years and became a magnet for entrepreneurial activity and cutting-edge innovation. This has become even more prevalent in the role the Jerusalem ecosystem is playing in the global fight against Covid-19, particularity in the fields of Bio-Tech and Life Science/medical innovation. On the eve of this year's celebrations, marking 53 years since the city's reunification, Start-Up Nation Central, in partnership with the Jerusalem Development Authority, the Ministry for Jerusalem and the Jerusalem Institute for Policy Research, share insights and data about the unique technological ecosystem which came about in the capital of Israel.

The Jerusalem Ecosystem is Prospering – In Numbers

According to Start Up Nation Central's Finder, the Israeli innovation tracking platform, there are currently 405 active companies in the Jerusalem Ecosystem, a 102% growth since 2012. In 2019 alone, $233.5M were invested in Jerusalem-based companies and start-ups, a 21% increase from the year prior. The city prides itself on 22 tech exists and total investments worth $1.6B. Israel’s largest tech exit in history was Intel’s acquisition of the Jerusalem-based company Mobileye for $15B, and this year another Jerusalem company, Lightricks, had a one-billion-dollar valuation, officially becoming a "unicorn”. 86% of the companies offer B2B products; most companies are considered "small-medium" with 92% of them having under 50 employees; 54% of the companies have already released products.

"Jerusalem's tech sector has not only grown dramatically in the past eight years but can serve as a model for an emerging global tech hub," says Wendy Singer, Executive Director at Start-Up Nation Central. “Producing some of Israel's standout unicorns has been Jerusalem's calling card.  This proves there are ecosystems developed outside of Israel’s Center that can prosper, and function - and be part of the economic growth in Israel's periphery," Wendy says.

The Jerusalem Ecosystem's Strengths

There are several factors that help prosper a culture of innovation and success in Jerusalem. First, is the city's diverse population – secular and religious, Jews and non-Jews, men and women, Israeli-born and new immigrants.  Diversity and inclusion are two values highly cherished by technology companies around the world, understanding that when you have a more diverse team, you get more diverse ideas. It should come as no surprise that diverse companies perform better. Drawing on the city’s diverse demographic makeup, there has been a movement to train and integrate the Israeli Arab and Ultra-Orthodox communities into the tech sector, thereby creating an innovative model being studied by foundations and governments in other countries.

Second, is the presence of world-ranked academic institutions like the Hebrew University for Life Sciences and Computer Sciences, and Bezalel Academy for Arts and Design or Hadassah College. There is a strong leaning in the city towards the Life-Sciences, of which Jerusalem’s students constitute over a quarter of all students in Israel studying this field. The nexus point between technology, design, and science, results in great creativity and human capital, attracting the eyes of global audiences.

Last, is the coalition of government, NGOs and academic players who have committed themselves to supporting and strengthening the tech sector, including Start-Up Nation Central. The city's tech ecosystem keeps growing and making connections with the support of such entities, helping companies to make great connections, hosting events, and promoting innovation and collaboration, as well as innovation hubs, entrepreneurship programs and accelerators.

Out of the 405 companies, two fields of expertise are more prominent than others – Life Sciences and Artificial Intelligence. 

The Jerusalem-based Life Sciences and Bio-Tech companies are groundbreaking on an international level, especially in light of Covid-19. Startup Genome Ecosystem Report for 2019 ranks Jerusalem 8th in the world in number of companies in this field (together with Tel Aviv). In fact, 33% of high-tech companies in Jerusalem are within the Life-Sciences category, a total of 130 companies (around 44 of which are in Digital Health, 41 in Medical Devices and 38 in Pharma). A few companies in the local ecosystem had solutions at hand even before the virus’ outbreak. Many others joined the worldwide effort and are developing solutions, based on their innovative technology. One example is Pepticom which uses Artificial Intelligence to discover peptide-based drugs. Since the outbreak of the virus, they have identified peptides with a likelihood to suppress the Covid-19 virus to cells. Another company is BioFence, which produces an antimicrobial shielding for the food industry. The shielding was found to be effective on SARS-CoV-2 virus and is now in production, being sold to institutions. 

The ecosystem's reaction to Covid-19 perfectly embodies the strength and abilities of the Jerusalem tech sector – as the local ecosystem (medical centers, universities, and Startups alike) mobilized itself towards developing solutions for the various aspects of the pandemic:

1. Shaare Zedek Hospital sampled more than 2500 Covid-19 patients and thus established Biobank - the country's largest Covid-19 database, allowing researchers to characterize the disease, identify complications, find novel diagnostic methods, vaccines and even contribute to testing new treatments. More than 65 corona studies have already been performed at the hospital.

2. Several companies in the local ecosystem had solutions already at hand even before the virus's outbreak, and many others joined the global effort in converting their technologies to better suit the current crisis like EyeControl which developed a ventilator tubing that prevents the development of respiratory bacteria, or uLabs which uses ultrasound technology to identify and detect Covid-19.

3. Current research at universities is also very significant – the Hebrew University focused on the virus characteristics, possible early detection techniques, and more. By the end of April 2020, Yissum (The Hebrew University Technology Transfer Company) has made 33 pandemic related technologies available for licensing.

"During Covid-19 the sheer amount of Corona Tech solutions coming out of Jerusalem further embedded the global standing of the city's Bio-Tech sector" Singer adds. "If you layer the strength of the city's Life Sciences ecosystem over Israeli's relentless problem-solving gene, it's not hard to imagine that technologies born here are going to be picked up elsewhere".

Artificial Intelligence is one another prominent growing sector in Jerusalem. Over the past five-years, the number of companies developing AI technologies has grown from 30 companies to 80, a staggering 166% increase. In 2019, over 60% of the revealed investments in the city were in companies developing products or technologies using Artificial Intelligence and Machine Learning. Lightricks integrates AI, Machine Learning, Image Processing and Computer-Graphic technologies for mobile products and solutions, recently becoming a " unicorn". BrainQ uses AI to identify patterns of impaired neural networks (such as caused by stroke) and is currently running clinical-trials in human,. OrCam has developed wearable assistive technology for visually or hearing impaired people, using AI and Machine Learning in facial recognition (among other uses). It has earned a ‘unicorn’ status after securing a 30.4 million US$ investment in 2018, with a valuation of over one billion dollars.