Israel is Swiftly Becoming the World’s Leading AI Hub as Investments Continue to Surge in 2022

Israeli startups embrace AI across multiple industries with great success – meanwhile investment in these companies exceeded $25 billion in 2021 alone.

In recent years, Israel has established itself as a leading tech nation, raising capital and growing more unicorns than any other country (per 100,000 citizens). As a matter of fact, it’s precisely Israel that’s ahead of most other countries, both in terms of the number of successful AI startups, as well as the overall investment these businesses have been able to attract. All that despite the country’s small size by comparison.

2014-2019

The numbers speak for themselves. According to The Times of Israel, Israel had around 500 registered AI companies that managed to raise over $500 million in funding in 2014. Over the next 4 years, these figures grew dramatically to the point that Israel counted as many as 1150 AI businesses in 2018. Together these companies raised an impressive $2.25 billion in funding. If we also include Israeli high-tech and deep-tech companies, the investment figures climb to a whopping $6 billion. Quite impressive for a nation of 9 million citizens that’s roughly the size of New Jersey.

In 2018, among the AI go-getters from Israel were those that worked on cybersecurity (Israel’s forte traditionally: around 20% of total funding,), healthcare (around 15% of total funding), followed by law, computer vision, and autonomous vehicles among other areas. What’s more, according to Start-Up Nation Finder, of the roughly 6,800 tech startups in Israel that year, almost a quarter were involved in AI in one form or another – a baffling figure compared to the much humbler stats coming from other nations.

2020-today

Today, Israel is showing no signs of stopping or even slowing down – at least so far – regardless of the Pandemic. Israel continues to thrive. According to the IVC-Meitar report, Israeli tech startups raised $10,3 billion in 2020, followed by $25,6 billion through 773 investment rounds last year. The latter figure is a 400% increase from 3 years ago and a 150% increase from 2020, mainly due to “the large number of deals over $100 million.”

Predictably, cybersecurity topped the list again with $6.5 billion in investment for all 4 quarters. The last quarter of 2021 was the strongest, having raised $8 billion across multiple industries. It’s important to note that 65% of that funding is foreign, with the US dominating both seed-stage and series A rounds. This comes as no surprise knowing the entrepreneurial spirit of the American businessman, combined with the fact that post-money valuation of the Israeli startups in 2021 rose a staggering 650% from the previous year alone.

According to Mike Rimon from Meitar Law Offices, “2021 was the year of the Big Bang” for Israeli IPOs in the US. In addition to that, 13 Israeli companies went for the SPAC option (Special Purpose Acquisition Companies), which is another way for a private company to go public on the NYSE or Nasdaq. They successfully raised just under $3 billion in total.

Israeli tech startups up close

Among noteworthy tech startups from Israel today are Melio, a B2B payment platform, and Papaya Global, a workforce management platform, that managed to raise $250 million each in their series D rounds in the fall of last year. Both companies are now valued at around $4 billion each.

Claroty, an Israeli cybersecurity company, managed to raise a record $400 million in funding last December. This is considered to be the biggest investment deal to date within the global cybersecurity sector. SoftBank led the round, a Tokyo-based conglomerate that focuses on investing in emerging technologies. SoftBank also gave $200 million in funding to Wiliot, an Israeli IoT company backed by Amazon Web Services that utilizes Machine Learning (ML) for cloud intelligence.

Another 3 AI startups from Israel received over $350 million each in funding through several investment rounds. One of them is Oosto (formerly AnyVision), a platform with 3 flagship products that provides Fortune 500 brands with face-recognition and video-surveillance technology ($352 million). Verbit is another example, an AI company that helps businesses with audio, video, and text transcription and captioning ($550 million). And there’s Gong.io, a conversation intelligence platform for B2B sales that uses ML and Natural Language Processing (NLP) to train and assist sales teams ($583 million). They’re also active in bringing publicity to ML training data.

CES top picks

A few AI startups from Israel also made an appearance at the highly regarded Consumer Electronics Show (CES) in Las Vegas earlier this year – BioBeat, OrCam, and Cecilia among others. BioBeat, a health-AI company, is focused on generating clinical data. One of its products that’s popular among doctors in Israel – and now spreading overseas – is an AI-powered patch that takes the patient’s measurements. From blood pressure to oxidation rate, there are 14 vital signs in total.

OrCam is an extraordinary company that helps visually impaired and legally blind individuals to walk in public and identify various places and items. One of the company’s groundbreaking products is MyEye Pro, an AI-powered navigation device that transforms text into speech for the wearer and whispers to them when a familiar face is recognized.

On a less serious note, Cecilia is the first AI-driven interactive bartender named after a speakeasy legend, Mary Louise Cecilia Guinan. The eight-foot-tall virtual mixologist uses cutting-edge voice-recognition technology to interact with the customer and offer them suggestions based on their needs, or even their mood. The robolady says: “I’m chattier than most robots you’ll meet. I talk, I listen, and I’m goddamn hilarious.” She can serve up to 120 cocktails per hour.

Takeaway

As we’ve seen, Israel is setting a fine example for other countries to follow. For the past decade, Israeli startups have raised tens of billions of dollars – some of it for the tech sphere in general and some for the AI field in particular. Last year alone, the figures exceeded $25B. This year the numbers promise to reach a new peak, thanks to geo-political changes, Israel promises to be fertile ground for successful products.

It will be interesting to see whether new Israeli tech startups will continue to emerge over the next few years. Given the current pace, what’s even more interesting is how the current high-innovation trend will evolve – both in terms of the AI products offered to the public and the amount of capital invested in these solutions.