Chief scientist says startups boom but fail to grow into mature companies

Report offers insight by presenting both accomplishments and areas of concern in high-tech sector.

April 15, 2015 22:58
1 minute read.

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


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 analysis 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


Though Israel’s startup scene is thriving, very few of the small companies are developing and maturing to large ones, according to the first annual Innovation Report, released by the Economy Ministry’s Chief Scientist’s Office on Monday.

“We cannot approach the hi-tech industry as a single unit,” Chief Scientist Avi Hasson said. “The young industry and the mature industry behave differently and require different tools to continue driving the economy forward.

Despite a record year in Israel’s startup industry, we are far from successful at reaching the industry’s full potential.”

According to the report, which is intended to offer an annual snapshot of Israel’s hi-tech scene by presenting both accomplishments and areas of concern, Israel’s startup industry produced $7 billion in exits and raised $3.4b. in capital in 2014.

That disparity indicates startups’ preferences for selling to larger companies instead of attempting to develop into large companies in their own right.

A “hi-tech index” compiled for the report accentuated how startups and mature companies respond to economic circumstances. The former are far more vulnerable to impacts from global economic and financial conditions.

Though companies such as Outbrain and ironSource offered counter examples, such cases were few. Incentives for growing companies, therefore, had to be increased, the report concluded.

Israel is also highly dependent on foreign investment, the report found. Just a fifth of the funding came from local venture capital. Alternative funding sources such as crowd-funding and greater investment from institutional investors are beginning to offer plausible supplements.

Another development that could help push Israel’s economy forward would be branching out from hi-tech and focusing on innovations in traditional manufacturing.

Government intervention should be more focused and efficient, with its various policies consolidated. The industry as a whole faces a shortage of engineers, the report said

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

BENJAMIN NETANYAHU – the elections were all about him
May 19, 2019
Think About It: Netanyahu has just a week left to form a government