VIII. Case Study: Israel

Israel has demonstrated that with the Internet, geography is irrelevant. It ranks 3rd in the world in the number of NASDAQ listed companies. Also, the number of start-up companies per capita is the highest outside Silicon Valley. Currently there are 1500 startups. Before 1992, Israel had no access to Venture Capital (VC). Now there are 130 VC firms that raised last year $1.6 billion most from the US. Polaris is the most famous VC firm. In 1993 it struggled to raise 20 million, its latest goal was to raised 300 million but it stopped accepting when it reached 500 million.

Israel is a leader in voice over data communications. They are focusing on Internet business like security, encryption. Their culture is superb at innovation but not so good in strategic management. 90% of startups are incorporated in Delaware because Israel’s rules are too antiquated for high-tech era. A potential problem is the gap between the rich and poor, it is the fastest growing in the western world. This gap will widen 15 to 1 between Israel and its Arab neighbors. In number of patents, it ranks 3^rd in the world, lead by 1^st the US and 2^nd by Japan. In terms of skilled labor, engineers as percentage of the national workforce, it ranks 1^st in the world.