Tel Aviv moves up to 4th place in annual ranking of global tech ecosystems
In a year of political unrest and ongoing war, city climbs 1 spot in annual Startup Genome survey ranking; Silicon Valley retains top spot followed by a tied New York and London
Sharon Wrobel is a tech reporter for The Times of Israel.
Tel Aviv moved up one spot to fourth place in an annual survey ranking the world’s most attractive ecosystems for startups and innovation by US research firm Startup Genome.
The study ranks the top 40 tech startup hubs across more than 300 ecosystems worldwide, collating data on 4.5 million startups. According to Startup Genome’s model, the higher the ranking of the ecosystem, the better the shot an early-stage startup has at building global success.
Tel Aviv rose from fifth place last time and now shares the fourth spot with Los Angeles. California’s Silicon Valley maintained its first-place position in this year’s report, followed by New York City and London, which were tied once again in second place. Tokyo entered the top 10 for the first time, moving up five places to number 10, and Seoul moved up three spots and is now ranked at number 9.
The top five global ecosystems are worth a collective $4.4 trillion – based on exits and startup valuations – or 54% of the total of the top 40 hubs. The remaining 35 ecosystems are collectively worth $4 trillion. The Tel Aviv tech ecosystem was valued at $235 billion, compared to a global average of $29.4 billion.
For the annual ranking, the research firm measured five success factors: performance, which takes into account the number and growth of exits and how many startups succeed; access to and quality of funding; market reach, or the ability to tap global markets; how easy it is to recruit top talent; and knowledge, a measure of publication impact and patents.
Israeli startups have been grappling with dwindling financial runways amid a fundraising drought following political unrest during the first nine months of 2023 and the outbreak of war with the Hamas terror group on October 7. During the ongoing fighting, the Israeli army mobilized hundreds of thousands of reserve soldiers, some of whom remain in uniform.
The absence of personnel in the tech sector, the growth engine of the Israeli economy, has damaged startups’ day-to-day operations, as well as their ability to attract foreign investors and raise funding.
Tel Aviv Mayor Ron Huldai called the city’s achievement in the ranking a “testament to our resilience amidst challenging security circumstances.”
“Surpassing obstacles, we stand shoulder to shoulder with global tech hubs like New York and London,” Huldai said. “Tel Aviv remains committed to fostering an environment where creativity thrives, diversity is celebrated, and startups flourish.”
“We will continue to provide tools, assistance, and support to our burgeoning startup and high-tech community, cementing Tel Aviv’s position as a welcoming home for tech companies in Israel,” he added.
Venture capital funding raised by Israeli startups in 2023 plunged 58 percent year-on-year and amounted to $7.3 billion, returning to levels last seen in 2018, and after peak years in 2020 to 2022.
“Entrepreneurs from Tel Aviv are confronted with unprecedented challenges, yet continue to build impeccable technologies and fast-growing businesses that successfully penetrate global markets,” said founder & president of Startup Genome Marc Penzel.
In the 2024 Global Startup Ecosystem report, published annually since 2012, it was noted while the number of large exit deals of more than $50 million was down in 2023 compared to 2022, Tel Aviv led all top five ecosystems other than Silicon Valley in the second of 2023, with seven such transactions. The largest exit was Oddity, the online consumer tech that debuted on the Nasdaq stock exchange, valued at over $2 billion. However, this was Tel Aviv’s only $1 billion exit in 2023, compared to seven in 2021.
The acquisition of Tel Aviv-based AI workload management startup Run:ai by US gaming and computer graphics giant Nvidia announced in April was cited as a “positive signal” in the report.
Tel Aviv startups are also bolstered by a “strong” network of venture capital funds, the report said. In January, VC firm Cardumen Capital, which invests in early-stage software and hardware startups, raised $120 million for its second fund. In July 2023, VC TLV Partners announced its fifth fund worth $250 million and in August, early-stage VC fund Symbol closed its inaugural fund raising a total of $50 million.
