Tel Aviv, Jerusalem among world’s top tech cities

Compass report ranks TA fifth best global start-up ecosystem; nation’s capital also recognized in the top 50

Mayor of Jerusalem, Nir Barkat (left), with Michael Bloomberg, former mayor of New York, at a MadeinJLM event on May 21, 2014 (Courtesy)
Mayor of Jerusalem, Nir Barkat (left), with Michael Bloomberg, former mayor of New York, at a MadeinJLM event on May 21, 2014 (Courtesy)

Tel Aviv is the fifth best place to establish and run a start-up, according to a new report by tech company Compass. Jerusalem is also recognized as one of the world’s top start-up ecosystems as well.

The report — 2015 Global Startup Ecosystem Ranking — focused on the top 20 start-up cities, with in-depth reports on their education systems, resources, salaries, talent and more.

Although not in the top 20, Jerusalem came in as a strong runner-up, part of the 30 other world cities that have “hot” tech ecosystems as well. The report includes Jerusalem as one of the 18 best runner-up tech cities in the European list, alongside cities such as Copenhagen, Dublin, Milan, Barcelona and others.

Silicon Valley, New York, Los Angeles and Boston were the top four, making Tel Aviv the best ecosystem outside the United States and placing better than several other “hot” US cities such as Seattle and Austin, the report showed.

San Francisco-based Startup Compass Inc. was formed in 2011 to develop a guide to best practices and offer benchmarking tools to help struggling start-ups. According to the company, Compass was able to develop significant practices and methods that “suggest significant improvements in focus, iteration speed, time to pivot and effective outreach to mentors and service providers.”

Tel Aviv ranked better than Jerusalem mainly because it had a huge head start as a tech ecosystem, believes Eyal Haimovsky, head of the Jerusalem Development Authority. But “little sister” Jerusalem is growing up fast. If just two years ago, according to JDA statistics, barely a dozen new start-ups opened up shop in the city, more than 100 in 2014. Last year, 57 start-ups in the city raised a total of $227 million, with several – such as video communication tech firm Glide – have gone on to make headlines worldwide.

Besides companies, Jerusalem is also home to two of the biggest – and most innovative – start-up funding platforms in the world. Jerusalem Venture Partners (JVP) manages a portfolio of companies worth nearly a billion dollars, and is among the top 10 venture capital firms in the world. Jerusalem is also home to OurCrowd, the largest and most successful crowdfunding platform in the world.

Among the city’s most important start-up assets is MadeinJLM, an organization that works with and promotes the start-up community in Jerusalem.

“The city was recently named the number one emerging tech hub in the world by Entrepreneur Magazine, recognizing us as an important place for tech development,” said Hanan Brand, chairman and founder of the group. The story was picked up by Time Magazine as well, which echoed Entrepreneur’s enthusiasm for the holy city.

According to the magazines, Jerusalem “has become a flourishing center for biomed, cleantech, Internet/mobile start-ups, accelerators, investors and supporting service providers,” with top research centers such as Hebrew University supplying the brainpower to match the enthusiasm and creativity of entrepreneurs.

“Everyone knows Tel Aviv as the center of Israeli tech, and we certainly join in giving a ‘firgun’ to our brothers there,” said Brand. “But Jerusalem has its own ecosystem – more connected, more like a misphacha [family],” that fits right in with the more “spiritual” nature of Jerusalem.

The JDA operates a program called Jnext, which works not just with start-ups, but also with large multinationals such as Intel, Cisco, Medinol and Mobileye, all of which have substantial operations in the city. Among the JDA’s tasks is to foster an environment that will attract more multinationals to set up shop in the city, and its efforts have been paying off. Recently, cybersecurity giant Kaspersky Lab announced that it would set up a research center in Jerusalem, its first outside its home country of Russia.

“The recognition of Jerusalem as a leading start-up ecosystem is the result of the hard work of several organizations, including the JDA, the Jerusalem Municipality, the Jerusalem Affairs Ministry, and of course the start-up community itself,” said JDA’s Haimovsky. “We will continue working hard, and we expect that in the next Compass report, Jerusalem, like Tel Aviv, will be in the top 20 ecosystems as well.”

“The results of creativity and technological innovation of the community of developers in Jerusalem speak for themselves,” said Jerusalem Mayor Nir Barkat in response to the report. “Jerusalem is home to start-ups that lead in their field in the world, as others — young and established — make their way to the city to enjoy the unique fruits of collaboration we offer between access to investors and funds, municipal authorities and other partners.

Barkat started his career in the hi-tech industry by founding a software company called BRM in 1988, which specialized in antivirus software.

“That we appear on a world map of the top ecosystems is not enough,” added Barkat. “Our goal is that within a few years, at least quarter of the start-ups in Israel will be established here, taking advantage of the city’s great advantages for new tech companies.”

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