Israel’s technology sector continues to grow, despite significant layoffs over the past year and amid the country’s judicial reform controversy, according to a report released this week.
Amsterdam-based data firm Dealroom.co and Tel Aviv Tech, an initiative of the Tel Aviv mayor’s office, released a report on Tuesday about the tech ecosystem in Tel Aviv and the surrounding areas. According to the report, Tel Aviv ranked third in the Europe-Middle East-Africa (EMEA) region for venture capital investment in 2022 with $6.9 billion. This was behind London with $20.5 billion and Paris with $11.1 billion. Dubai came in ninth with $1.9 billion.
Tel Aviv’s tech ecosystem has grown significantly over the past five years, according to the report. In 2022, the total value of companies in the sector reached $393 billion, up from $113 billion in 2018.
Thus, Tel Aviv is one of the most valuable technology ecosystems in the world. In the EMEA region, the $393 billion figure was second only to London with $649 billion. Compared to Asian cities, Tel Aviv is behind Beijing’s whopping $1.9 trillion and other Chinese cities, but ahead of Singapore with $340 billion.
Compared to North American cities, Tel Aviv is behind the $6.9 trillion value of the Bay Area tech ecosystem and $1.1 trillion New York, as well as other cities, but ahead of San Diego and Toronto with $297 billion and $279 billion, respectively rather, per the report.
There are a variety of startups in Tel Aviv, but 19.2% of venture capital investment in the city went to cybersecurity in 2022, followed by health at 10.7%. Fintech was a distant third, taking 5.6% of investment.
Why it’s important: The promising news comes at a critical time for Israel’s high-tech sector and the economy as a whole. Prime Minister Benjamin Netanyahu returned to office in late December and embarked on controversial judicial reform legislation. The proposal is very popular in the tech and startup community, and some companies have actually moved assets out of Israel.
There was some relief in the sector when Netanyahu put judicial reform plans on hold earlier this week amid widespread protests. Some analysts have also said that Israel could face a credit rating downgrade due to the resulting political instability.
Like other tech sectors around the world, Israeli tech has seen massive layoffs in 2022. Israeli tech news website CTech has documented thousands of layoffs in the sector from last year and continuing into 2023.