The entire population of Israel may only number seven million—smaller than New York City—but this Middle Eastern state spends more of its GDP on research and development than any other nation. And it shows. In April, 2011, Israeli software start-ups PicApp and PicScout sold for a combined $30 million (all currency in U.S. dollars) to Indian and American buyers, respectively. A month later, cellular company Provigent was snapped up by U.S. chip maker Broadcom for $313 million, while Google paid $70 million for app developer Snaptu. In September, eBay bought e-commerce site The Gifts Project for a reported $20 million. All are start-ups. All have offices in or near Tel Aviv. In the first three quarters of 2011 alone, 422 Israeli start-ups raised $1.57 billion in venture capital, and an estimated 250 multinationals maintain R&D operations there. What makes Silicon Wadi—as the coastal region between Tel Aviv and Jerusalem is known—so special? Some say that a service requirement in the country’s famously high-tech military has given many young Israelis a technological sophistication that bolsters creativity and inventiveness. What we do know is that while Tel Aviv is small, it’s one giant innovation engine.
“In Israel, personal relationships aren’t all that relevant to business. Israelis will do business with you within five seconds of meeting you. In fact, there’s virtually no small talk at meetings. Nothing. Zero. They’re very direct.” —Dr. Neal Naimer, CEO of Woojer, a Tel Aviv-based start-up.