Artificial intelligence (AI) in Israel
Recently, Israel has been showcased as a promising location for the emerging artificial intelligence (AI) sector. The country has long been a center for technological innovation, and entrepreneurship. It consistently tops international rankings on investment in R&D and unicorn creation. Additionally, it possesses many advantages owing to its vibrant tech ecosystem, academic excellence, and technology-centered industrial policy. Still, according to some figures and international rankings, Israel’s competitive positioning has slightly eroded in recent years, jeopardizing its ability to become a global AI leader. Geopolitical instability and slowing capital markets likely played a role in this, but data also points to a failure of government to set a national strategy and channel appropriate resources. As the local market for AI products grows, Israeli firms aim higher, edging to satisfy the increasing global appetite for AI technology. If forecasts hold true, and AI becomes a new global growth engine, securing a strong foothold now would undoubtedly reap great rewards for the local economy.
Leveraging a mature technology ecosystem
Like other leading tech clusters in the startup nation, AI companies in Israel benefit from a robust ecosystem consisting of leading computer science university departments, and a highly educated workforce. Other advantages, such as large R&D centers run by multinational companies, benefit the local AI economy by training experts, and incubating new ventures. Evidently, a 2023 study found that the country ranked first worldwide in AI talent concentration, far surpassing Singapore which came in second. On the other hand, the same study showed that the development of AI skills in the workforce are slowing relative to other countries. In terms of scientific research, Israeli academic institutes, such as the Technion and Tel Aviv University rank high in overall AI scientific publications. Nonetheless, a review of recent trends in research revealed that the publication rate in Israel has slowed in multiple fields of AI research since 2021.
AI businesses are more resilient to the market downturn
AI companies have long been a feature of the Israeli tech scene, active in industries ranging from health-tech and enterprise software, to agri-tech. By 2023, Israel was ranked fourth worldwide in cumulative AI private investment and was home to some 850 AI firms. The country also hosted several AI unicorns valued at over one billion U.S. dollars. These included three startups that have raised over 300 million U.S. dollars: Hailo, AI21 Labs, and Lightricks. Since 2021, the rate of new company creation has slowed along with a cooling of venture capital markets. On the upside, AI companies seem to be more resilient in comparison to other tech verticals. Even so, greater international competition, and a misalignment of government priorities, is wearing down Israel’s traditional advantages in this new technology frontier.
Leveraging a mature technology ecosystem
Like other leading tech clusters in the startup nation, AI companies in Israel benefit from a robust ecosystem consisting of leading computer science university departments, and a highly educated workforce. Other advantages, such as large R&D centers run by multinational companies, benefit the local AI economy by training experts, and incubating new ventures. Evidently, a 2023 study found that the country ranked first worldwide in AI talent concentration, far surpassing Singapore which came in second. On the other hand, the same study showed that the development of AI skills in the workforce are slowing relative to other countries. In terms of scientific research, Israeli academic institutes, such as the Technion and Tel Aviv University rank high in overall AI scientific publications. Nonetheless, a review of recent trends in research revealed that the publication rate in Israel has slowed in multiple fields of AI research since 2021.
AI businesses are more resilient to the market downturn
AI companies have long been a feature of the Israeli tech scene, active in industries ranging from health-tech and enterprise software, to agri-tech. By 2023, Israel was ranked fourth worldwide in cumulative AI private investment and was home to some 850 AI firms. The country also hosted several AI unicorns valued at over one billion U.S. dollars. These included three startups that have raised over 300 million U.S. dollars: Hailo, AI21 Labs, and Lightricks. Since 2021, the rate of new company creation has slowed along with a cooling of venture capital markets. On the upside, AI companies seem to be more resilient in comparison to other tech verticals. Even so, greater international competition, and a misalignment of government priorities, is wearing down Israel’s traditional advantages in this new technology frontier.
