The Office of the Chief Scientist (OCS) at the Israeli Ministry of Economy has introduced its first annual Innovation Report. This report presents an overview of the Israeli hi-tech industry while describing the trends, challenges and opportunities in different sectors of the industry. The report was written in cooperation with several authorities, including the ministry’s Employment Department, Digital Israel, the Program for Returning to Industry and Academia in Israel and others. It illuminates, in one place for the first time, different aspects of the country’s innovation ecosystem – from the state of human resources to the European framework program (Horizon 2020), from the life sciences program to a review of the growth and potential in the phenomenon of crowdfunding.
According to the Chief Scientist in the Israeli Ministry of Economy, Avi Hasson: “This first innovation report summarizes current trends in Israel’s hi-tech industry. With it, we begin an annual tradition of presenting an overall picture of the state of the industry in this country. I believe such a picture is necessary to analyze the trends developing before our eyes and to identify the main challenges we must face and the new opportunities at hand. It is incorrect to look at the hi-tech industry as monolithic – the “startup sector” and the more mature industry operate differently and require different tools if we are to move the market forward. Though 2014 was a hallmark year for Israeli startups, we are far from reaching the industry’s full potential.”
The report identifies four significant measures that should be taken to meet these challenges: eating new sources of funding for industry; Turning more hi-tech companies into major companies ; Implementing and developing technologies in traditional industries and in the public sector ; Smarter and more efficient government involvement.
Additional highlights from the report:
Launching the Hi-tech Index – the first Israel Hi-tech Index examines the current state of the industry and offers a positive picture of the Israeli hi-tech market, reflecting an impressive boost in startups and a market recuperating from the crisis of the last few years. The index, however, tells the story of two separate but related “industries”: the startup industry, which has been blossoming over the past few years, and the more mature industry which has been treading in place in the same period.
The lack of expected growth in the mature industry is also expressed through the fact that not enough major hi-tech companies are emerging in Israel.
The “startup industry” is flourishing with $3.4 billion in capital funding and $7 billion in exits in 2014.
Israeli hi-tech is becoming more dependent on foreign funding – only 20% of funding comes from Israeli venture capital funds.
The industry in general suffers from a significant lack of personnel – in particular engineers and technicians.
Over the past few years, we have witnessed alternative modes of funding: corporate venture capital funds, micro-funds, crowdsourced funding and increased involvement of institutional financial bodies.