Tel Aviv has ascended to the fourth position in the latest global ranking of tech ecosystems, as reported by US research firm Startup Genome. Despite facing a year marked by political unrest and ongoing conflict, the city managed to climb one spot in the annual survey, highlighting its resilience and innovation capacity. The survey, which ranks the top 40 tech startup hubs from over 300 ecosystems worldwide, collates data on 4.5 million startups, making it one of the most comprehensive assessments of its kind.
The Startup Genome model evaluates tech ecosystems based on five critical success factors: performance, funding access and quality, market reach, talent recruitment ease, and knowledge production, which includes publication impact and patents. These factors collectively provide a measure of an ecosystem’s potential for nurturing successful startups.
Tel Aviv’s move from fifth to fourth place, now tied with Los Angeles, is a significant achievement. California’s Silicon Valley retained the top position, with New York City and London tied for second. Notably, Tokyo made its first entry into the top 10, climbing five places to rank tenth, while Seoul moved up three spots to ninth.
The collective value of the top five global tech ecosystems, measured by exits and startup valuations, stands at $4.4 trillion, accounting for 54% of the total value of the top 40 hubs. Tel Aviv’s tech ecosystem alone was valued at $235 billion, substantially higher than the global average of $29.4 billion.
In 2023, venture capital funding for Israeli startups plummeted by 58% year-on-year to $7.3 billion, reverting to levels seen in 2018. This decline followed peak funding years from 2020 to 2022. Despite this, Tel Aviv’s tech sector showed remarkable resilience, continuing to attract significant investment and producing high-value exits.
Tel Aviv Mayor Ron Huldai attributed the city’s success in the rankings to its resilience amidst challenging security circumstances. He emphasized the city’s commitment to fostering a nurturing environment for startups, celebrating diversity, and supporting innovation. Huldai’s remarks reflect Tel Aviv’s strategic focus on providing tools, assistance, and support to its burgeoning tech community, cementing its position as a key player in the global tech landscape.
Marc Penzel, founder and president of Startup Genome, acknowledged the formidable challenges faced by Tel Aviv’s entrepreneurs. Despite these hurdles, they have built technologies and businesses that penetrate global markets successfully. This tenacity is evident in the 2024 Global Startup Ecosystem report, which noted that while the number of large exit deals (over $50 million) decreased in 2023, Tel Aviv still led all top five ecosystems, except Silicon Valley, in the second half of 2023 with seven significant transactions.
One of the most notable exits was Oddity, an online consumer tech company that debuted on the Nasdaq stock exchange with a valuation exceeding $2 billion. However, this was Tel Aviv’s only $1 billion exit in 2023, compared to seven in 2021, indicating a shift in the scale of exits but not in the city’s innovative capacity.
The acquisition of Tel Aviv-based AI workload management startup Runby Nvidia in April was highlighted as a positive signal for the ecosystem. This acquisition underscores the strategic interest of global tech giants in Tel Aviv’s innovative companies.
Moreover, Tel Aviv’s startups benefit from a robust network of venture capital funds. In January 2023, Cardumen Capital raised $120 million for its second fund, focusing on early-stage software and hardware startups. In July 2023, TLV Partners announced a fifth fund worth $250 million, and in August, Symbol, an early-stage VC fund, closed its inaugural fund with a total of $50 million. These investments reflect ongoing confidence in Tel Aviv’s tech ecosystem and its potential for generating high returns.
Tel Aviv’s rise in the global tech ecosystem rankings is not just a testament to its innovation but also to its ability to adapt and thrive amidst adversity. The city’s focus on fostering a conducive environment for startups, combined with strong support from venture capital, positions it well for continued growth and success in the global tech landscape.
The 2024 Global Startup Ecosystem report highlights the importance of ecosystems like Tel Aviv in driving innovation and economic growth. As the world continues to grapple with geopolitical and economic uncertainties, the resilience and adaptability of tech hubs like Tel Aviv will be crucial in shaping the future of global innovation. This report serves as a reminder of the dynamic and interconnected nature of the global tech ecosystem, where cities like Tel Aviv play a pivotal role in pushing the boundaries of technology and entrepreneurship.
In summary, Tel Aviv’s advancement in the Startup Genome ranking is a reflection of its robust tech ecosystem, strategic focus on innovation, and ability to attract significant venture capital investment. As the city continues to navigate the challenges posed by political and security issues, its commitment to fostering a supportive environment for startups will be key to maintaining its position as a leading global tech hub.
