Study: Only 4 percent of Israeli start-ups succeed

The study, which examined over 10,000 Israeli start-ups founded between 1999 and 2014, found that 46% had closed and were no longer active.

By
January 28, 2015 18:54
1 minute read.
computer

Computer keyboard [illustrative].. (photo credit: ING IMAGE/ASAP)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

Only 4 percent of Israeli start-ups ultimately succeed, according to a study conducted by IVC Research Center and REVERSEXIT.

The study examined more than 10,000 Israeli start-ups founded between 1999 and 2014.

Be the first to know - Join our Facebook page.


It found that 46% had closed and were no longer active.

About 14% of those had been acquired, but only half of them (303) were acquired at a profit and thus considered successful.

Among the 5,400 companies that remain active, just 2.5% are considered “successful” by the study’s authors, who put the bar rather high in defining success: annual revenues of $100 million, or employing over 100 people. The number rose to 6% if the threshold was lowered to $50m. and companies that run on sales.

“According to most entrepreneurs, success is the realization of a business idea, a dream or technological innovation and its concrete implementation into a real business,” IVC Research Center CEO Koby Simana said. “Among younger entrepreneurs, we also found the wish to ‘hit it big time,’ that is, to build a start-up and sell it for a significant profit, although this view did not represent the majority.”

Investors, on the other hand, were looking for profit, while the state was looking for jobs, exports and tax revenues.

JPOST VIDEOS THAT MIGHT INTEREST YOU:


Among the companies that were successfully sold, it took an average of 5.3 years to get bought out. Venture-capital funding added another six months to that, compared to companies that received no financing at all. Failed companies, on the other hand, shut down on average within 3.2 years of their establishment.

“Most start-up companies manage to go through the development stage and the selection of technology,” said Yehuda Regev, founder and CEO of REVERSEXIT, which offer start-ups a platform to help them succeed. “Some push through to the product development stage. Most, however, fail when it comes to market reach.”

They tend to fall in the phase between development and generating positive cash flow, he said, getting stuck in a “valley of death” where they burn cash without getting to consumers.

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS