A higher proportion of startups founded in Tel Aviv have become billion-dollar companies than anywhere else in the world.

And the city has been outperforming the Bay Area (San Francisco), New York City and other leading global tech hubs, says a new report, despite a year blighted by domestic strife over judicial reforms, the October 7 massacre and war in Gaza.

Almost one in every 20 of the city’s startups (4.8 per cent) backed by venture capital has become a unicorn – a privately held company valued at over $1 billion – according to a report jointly published (on 22 May), by the city’s Tel Aviv Tech initiative and the innovation data platform Dealroom. 

Tel Aviv also tops the global chart for the number of unicorns per billion dollars of venture capital since 2019.

And it has the third highest proportion of venture capital-backed startups that have gone on to become decacorn, a company worth $10 billion or more, such as Wiz (cyber), Rapyd (fintech) or Navan (enterprise software).

“Tel Aviv remains a beacon of innovation and growth, even amid the brutal attacks of October 7th that shook the very foundation of the State of Israel, and the complexities of a global crisis,” said Ron Huldai, the city’s mayor.

“In 2023, our city reaffirmed its position as a world-leading incubator for tech entrepreneurship. Tel-Aviv ranks number one globally in the conversion rate from startup to unicorn. 

“We remain committed to fostering innovation and leveraging the city’s democratic values to promote social and economic stability for the state Israel.”

Despite concerns about politics and security, the city demonstrated remarkable resilience and retained its status as an international high-tech leader, said Tel Aviv Tech and Dealroom as they launched the report, entitled Tel Aviv: The worldʼs most productive startup ecosystem.

Amid the global recession Tel Aviv attracted $5.1 billion of venture capital investment in 2023 – a steep drop from $12.4 billion the previous year and a record $20.8 billion in 2021– but still ranking it as ninth in the world.

It was fifth globally for venture capital investment per million inhabitants, behind Bay Area, Boston, Stockholm and London.

Mish Mashkautsan, general partner at LocalGlobe, the UK-based venture capital firm, said: “The worldʼs investors will continue to look to Tel Aviv as an exceptional tech leader with good reason. As Dealroomʼs report shows, 19% of EMEAʼs (Europe, Middle East, and Africa) unicorns are from Tel Aviv, underlining how much the city punches above its weight in creating global winners in  cybersecurity, fintech and enterprise software.”

Yaron Kniajer, managing partner at Surround Ventures, with offices in Tel Aviv, New York, and Los Angeles, said: “The resilience and ongoing innovation within the Israeli tech ecosystem are inspiring. Historically, Israel has been a breeding ground for leading companies across a variety of industries, including cybersecurity, e-commerce, food-tech, and more.

“The current moment presents a compelling opportunity for new investors, including European players, to engage even more actively in the Israeli ecosystem, and become a part of the next wave of such companies.”

Success breeds success. The report says workers from Tel Aviv-based unicorns, starting with Waze, the navigation app which achieved that status in 2013, have gone on to found over 180 venture capital-backed companies.