In the year 2024, Israel Emerged as a Globally Recognized Pioneer in Real-World AI Advancements
Israel's AI startup activity is twice to four times more prevalent than in the United States or Europe, illustrating the remarkable density of its AI sector. AI startups account for 30% of Israel's tech landscape, securing up to 40% of funding rounds and 47% of total investments, as reported by Startup Nation Central or SNC.
The 2024 Stanford AI Index positioned Israel first globally in AI talent concentration and fifth in relative AI skill penetration rate between 2015 and 2023, outperforming the global average by 1.63 times in related professions. "Israel leads the global AI innovation race, driven by an exceptional ecosystem of startups, academia, and strategic backing from local and international players," states Avi Hasson, CEO of Startup Nation Central.
Hasson underscores the one-of-a-kind "vertical" focus of Israeli AI startups. These companies have developed sector-specific AI solutions, utilizing industry-specific data and expertise. "Israel's standout metric is its emphasis on applied AI solutions in areas such as cybersecurity, health tech, and agriculture, making it a trailblazer in practical AI applications... hosting over 2,000 startups shaping the future of AI applications," notes Arik Kol, Head of Nvidia Inception Startups Program at Nvidia Israel.
Nvidia maintains more than 4,000 employees in Israel, including a substantial AI research team, working collaboratively with Israeli universities to establish its second largest R&D center outside of the U.S. Fortune 500 companies like Nvidia are among over 400 multinational corporations that have established R&D operations in Israel. From 2014 to 2023, top global corporations acquired one Israeli AI startup for every four American AI acquisitions, underscoring Israel's global appeal.
"Israel's AI ecosystem stands as a global innovator with a unique blend of applied AI focus, cross-industry expertise, and a vibrant network of academia, startups, and multinational corporations," writes Kol from Nvidia. The AI research centers of Microsoft, Google, Amazon, and Meta focus on machine learning, natural language processing, cloud services integration, AI-driven communications, and AI-enhanced features, respectively.
These tech giants' R&D centers may grow out of the acquisition of an Israeli startup or serve as breeding grounds for new startups, as their founders transition from "horizontal AI" within Big Tech to a vertical focus. Israel's applied AI focus stems from its diverse expertise in various economic sectors. For instance, the massive digitization of healthcare data by Israeli healthcare providers over the last three decades has fostered healthcare-focused AI startups:
- Precision medicine startup Promise Bio recently emerged from stealth with a $8.3 million seed investment to continue developing its platform integrating epiproteomics and AI for predicting biomarkers for personalized therapies targeting immune-mediated diseases like autoimmune disorders.
- UMass Memorial Health, the largest not-for-profit health system in central Massachusetts, experienced a 49% increase in diabetic retinopathy screening adherence and a 75% reduction in average screening time in the hospital's primary care workflow after integrating AEYE-DS, the AI-based autonomous diagnostic screening system developed by AEYE Health.
- Ballad Health, the leading healthcare provider in the Appalachian Highlands, has deployed MedAware's AI-based medication safety monitoring platform within its Epic electronic medical record or EMR system, expecting to prevent thousands of adverse drug events.
Israeli startups also focus on cybersecurity (e.g., 7AI, an agentic security platform), climate tech (e.g., FireDome, wildfire detection and suppression), and fintech (e.g., Next Insurance, insurance for small businesses). These vertically focused startups rely on market-specific data to gain a competitive edge. In a recent event organized by UpWest, a Palo Alto-based VC investing in Israeli startups, Nadav Cohen observed: "Data can be a potent differentiator, especially if you possess industry-specific data that isn't public or being used by major companies to train their models." Cohen is co-founder & CTO of Imubit and Research Director of the Foundations of Deep Learning Lab at Tel Aviv University.
While the majority of Israeli AI startups focus on a specific industry, a few have gained prominence as leaders in "horizontal" AI solutions. Hailo, for example, excels in the AI chip market and has successfully developed AI processors tailored for high-performance AI models on edge devices. Another Israeli startup in the limelight is AI21, which develops an innovative "foundation model" that competes with OpenAI, Google, and other giants for enterprise attention.
The influence of Israeli AI startups extends beyond Israel, particularly in America and its Middle Eastern vicinity. For instance, Integrated Data Intelligence, an Abu Dhabi-based subsidiary of OurCrowd, a global investment platform and Israel's most active VC, has recently onboarded the first cohort of customers for DANNA, its proprietary investment AI copilot.
Jonathan Medved, the boss of OurCrowd, discusses the distinctive leadership part Israeli startups play in the international AI scene, due to the hefty price tag of contemporary AI tech: "Israel's tech edge comes from its military background, where young engineers absorb a mindset of achieving more with less... Faced with pressing dangers to their family and neighborhood, they learn to save money and act swiftly because the risks are so immense... Israeli startups have been uncovering notable optimization and cost savings, leading to substantial price decreases that will enable AI to grow and fulfill its potential."
Israel is also renowned for its success in various tech sectors beyond AI, with Israeli startups leading in fields such as cybersecurity, climate tech, and fintech. For instance, 7AI offers an agentic security platform in cybersecurity, FireDome focuses on wildfire detection and suppression in climate tech, and Next Insurance provides insurance for small businesses in fintech.
Furthermore, the health tech sector in Israel has seen significant advancements, with startups like Promise Bio utilizing epiproteomics and AI to predict biomarkers for personalized therapies in autoimmune disorders. Similarly, UMass Memorial Health and Ballad Health have implemented AI-based solutions to improve healthcare outcomes, such as increasing diabetic retinopathy screening adherence and preventing thousands of adverse drug events.
