2022 | StartupBlink View the Global Startup Map p. 62 To maintain its position and increase its standing, Israel needs to make sure ecosystems other than Tel Aviv continue to grow, while leveraging Tel Aviv’s position as a leading global startup hub to attract more investment. Improving Israel’s business score with regulatory reform should be a priority for policy makers. Startup Ecosystem Overview Israel is known as the startup nation for a good reason. It is a small country which still manages to leave a substantial mark on the global startup ecosystem. There are several lessons that can be learned from the success story of the Israeli ecosystem. First, Israel demonstrates that countries can turn a difficult geo-political situation into an advantage. Adverse situations make innovation a necessary strategic advantage for survival. Many innovations were born out of existential necessity in Israel. Second, recent decades in Israel showcase how startups can transform a low productivity, developing economy into a high efficiency, developed economy. The Israeli startup ecosystem is a cash cow, generating tax revenue for the country both from exits and high salaries. Instead of universities or corporations, the Israeli army became one of the world’s top startup accelerators by accident. It should be noted, however, that the Israeli public sector has done a commendable job of letting startups run loose early, without limitations and restrictions, in contrast to many other countries whose ecosystems are riddled with bureaucracy and regulation. Overall, Israeli cities have had negative momentum this year. Tel Aviv, the country’s undisputed major hub, has dropped by one spot to rank at 9th globally, with Paris (10th) and Seattle (11th) slowly closing the gap to threaten Tel Aviv's position next year. Other Israeli cities have seen a bigger decline, further increasing the gap between them and Tel Aviv. This has resulted in Tel Aviv in consolidating its position as the only global, high-impact ecosystem in the country. Tel Aviv is ranked 5th globally in the Fintech industry, and is also doing well in other industries like Marketing & Sales (6th), Software & Data (6th), and Transportation (9th). The 2nd highest ranked city in the country, Jerusalem lost 32 positions to rank 86th, still in the global top 100. This has resulted in Dubai displacing Jerusalem at 2nd place in the Middle East. Among cities in the top 100-1000 range, Haifa has slipped 25 ranks to the 144th position globally. Yokneam and Beer Sheva have decreased by 24 and 73 spots to rank at 308th and 311th respectively. The good news for Yokneam comes at a national level where the ecosystem has increased 1 spot, switching places with Beer Sheva and taking 4th place. There is also good news for 3rd tier Israeli ecosystems - Caesarea-Or Akiva has improved by a massive 181 places, now ranking at 340th, and Modiin-MaccabimReut increased by 116 places to 511th. Yavne has made an impressive debut with a rank of 585th. Ashkelon and Bet Shemesh are two other seed ecosystems that have made a debut this year, and Israel now has 13 cities in the top 1000, an increase of two from last year.