Israel, the “startup nation”, has for decades been at the forefront of the startup revolution and sacrosanct to the Silicon Valley mantra, leveraged its geo-political and societal imperatives to drive immense success in getting prolific at building and exit-ing technology startups in a variety of fields (vertical - industry-specific technologies and horizontal - foundational or platform technologies). Fintech startups in Israel have surged in the past few years utilizing the same imperatives and advantages. Yet, they have been challenged to find ways to scale their technologies for large-scale use in the US market. Israeli Fintech leaders are keenly aware of the need for supporting platforms in the US. “Technology for financial institutions has to be extremely robust and that’s where Israel excels,” says Liat Aaronson, a partner in Marker, a Herzliya- and New York-based venture capital and growth equity firm. “We’re far from the market and that makes it hard to do validation and proof of concept”.
Israel’s economy is export-oriented with stable growth and currency, highly skilled technology workforce, emphasizing teamwork and cross-platform innovation. Startup Nation: 1500 new startups per year, 7000+ startups at any time. More than 270 multinational technology companies have established Israel R&D facilities. Israel’s funding ecosystem is second only to Silicon Valley; Israeli hi-tech companies raised a record $6.4 billion in 623 financial deals in 2018, marking a sixth consecutive year of record growth in capital raising. To date, Israeli high-tech startups and companies raised $1.55 billion in 128 deals in Q1 2019, a 28% increase in capital amounts & 15% increase in the number of deals compared to 2018 Q1. Last six months yielded 58 exits totaling $6.22billion, including two billion dollar deals.
Israel being an export economy; i.e., almost everything it builds needs to find a market elsewhere. The US is a uniquely attractive market for Israeli technology due to a variety of reasons:geo-political alliance, economies of scale, socio-economic necessities, availability of talent and uniquely conservative corporate innovation culture. Traditionally, international startups clamor to Silicon Valley/San Francisco, New York/Boston and a sprinkling of cities like Austin/ TX, Chicago or Seattle. While there are built-in advantages to these choices, some of them have become prohibitively expensive and others have constraints ranging from a monolithic industry focus or lack of diverse talent to lack of modern infrastructure to sustain the local economies such ecosystems nurture.