New York City is now home to a record-breaking 30 Israeli-founded unicorns, according to the United States – Israel Business Alliance (USIBA). These privately held companies are valued at $1 billion or more and all 30 have their global or US headquarters in New York City, making it the city with the most Israeli-founded tech unicorns outside of Tel Aviv.
The number of Israeli-founded unicorns in New York has steadily increased, with just five having their global or US headquarters in the state in 2019, nine in 2020, and 21 in 2021. This year, the number of Israeli-founded unicorns in New York rose to 30, a 15% increase from 2022 when 26 Israeli-founded unicorns called New York their global or US home.
USIBA president, Aaron Kaplowitz, noted that "New York remains a financial and international hub that offers Israeli entrepreneurs a concentration of resources to build global companies." He added that the growing number of Israeli-founded unicorns in New York has convinced many early-stage Israeli founders that the Empire State is the ideal gateway to the United States.
Kaplowitz emphasized that “When we talk about Israeli-founded unicorns, we’re talking about economic dynamos that contribute to local innovation ecosystems, create jobs and drive revenue.” The combined total valuation for all 30 unicorns is $67.5 billion, putting the average current value for Israeli-founded unicorns in New York at $2.25 billion. The three companies with the highest valuations are Wiz ($10 billion), Fireblocks ($8 billion) and Melio ($4 billion).
Liquidity Group, a company that offers rapid due diligence to provide funding to late-stage tech companies, is the newest addition to the club. The NOHO-based company raised at a $1.4 billion valuation in February and is the only Israeli-founded unicorn in the US to cross the billion-dollar threshold so far in 2023. The other most recent additions are Vesttoo ($1 billion), Perimeter 81 ($1 billion) and Optibus ($1.3 billion).
USIBA anticipates that Israeli unicorn growth will remain slow in 2023, with companies focusing on optimizing operational efficiencies. New York trails California as the state with the most Israeli-founded unicorn headquarters, with Massachusetts in third place, boasting 10 Israeli-founded unicorns.
It is worth noting that the valuations and direct jobs created figures are estimates based on publicly available information and conversations with executives and industry analysts, and they do not necessarily reflect the most current values.
Will start-ups flee to NYC?
Industry experts predict that Israel's start-up ecosystem may face a "brain drain" if the country's government pushes through with its controversial judicial overhaul. The proposed changes, which have drawn criticism from hundreds of experts and economists, will likely weaken the country's judiciary and erode investor confidence, making it less attractive for start-ups to remain in Israel.
With the United States already home to the largest concentration of Israeli-founded unicorns outside of Tel Aviv, it's possible that more start-ups could choose to move their operations to New York, where they believe they can access a larger pool of resources and investors.
Last month Tel Aviv-Yafo mayor Ron Huldai took time to address the threat posed to Tel Aviv’s start-up ecosystem by the judicial overhaul.
“We must not forget precisely in the current period, when democracy in Israel is in crisis, that the hi-tech industry flourished mainly thanks to values such as freedom, liberality and equal rights. A threat to these values is imminent. A disaster for the Israeli economy in general and the hi-tech industry in particular, when the consequences of the destructive legislation can already be seen; the fall of the shekel, Tel Aviv technology companies transferring workers to other countries, [and] the cessation of investments in Israel,” he said.
“The legislation must be stopped immediately so that the hi-tech industry and [both] Tel Aviv’s and the nation’s economies are not even more harmed,” Huldai concluded. “We in Tel Aviv-Yafo will continue to be committed to the democratic values that underlie our existence, while strengthening the local hi-tech industry."