Israeli startups in the artificial intelligence (AI) sector are surging ahead of their non-AI counterparts in the race to attract funding, says a new report, and are positioning the Startup Nation as a global AI leader.
AI firms now account for 30 percent of the nation’s 7,000-plus startups but are bringing in 47% of all investment.
“Israel stands at the forefront of global AI innovation, propelled by an extraordinary ecosystem of startups, academia, and multinational support,” said Avi Hasson, CEO of Startup Nation Central, the nonprofit that fosters innovation in Israeli tech and published the report, “Israel’s World-Class AI Powerhouse: Leading Through Applied Innovation.”
According to the report, Israel is rapidly establishing itself as a global leader in AI innovation especially in healthcare, climate tech and robotics, as well as cybersecurity and agrifood (agriculture and food production, processing, and distribution).
Global tech giants, including NVIDIA, Microsoft, Google, Amazon, Meta and Apple are investing heavily in the country’s AI ecosystem and Israel is home to more than 400 multinational research centers.
The report says the number of AI startups in Israel has almost tripled since 2014, up from 783 to 2,170. Cumulatively, they attracted $3.9 billion in funding in 2023.
In the same period, the number of non-AI companies rose by just under 12% to 5,507, raising $4.4 billion last year.
The report highlights a widening gap between AI-driven startups – which show greater resilience and growth — and other tech companies.
But it also shows that, overall, the number of new companies and the levels of funding have declined sharply since their 2021 peak.
The success of AI startups, relative to non-AI startups, is being fueled by robust early-stage funding, the report says. Investors recognize their potential and are more likely to provide more funding.
The share of investment in AI startups in Israel, compared to non-AI startups, is typically three or four times higher than in Europe or the US.
“We’re at the beginning of the AI and accelerated computing era,” said Arik Kol, head of the Inception Startups Program in Israel run by NVIDIA, a world leader in AI and accelerated computing.
“With the potential to transform trillions of dollars’ worth of industries, now is the time for the Israeli ecosystem to accelerate its efforts and establish itself as a world leader in AI,” he said.
Israeli AI is transforming healthcare through applications in medical imaging, electronic health records, and drug discovery. In robotics it at the forefront of the transition from single-purpose to general-purpose robots.
And in climate tech, AI is helping tackle challenges in weather modeling, geospatial monitoring, sustainable agriculture, wildfire prevention, and renewable energy optimization.