Tel Aviv is second best tech hub for start-ups, according to new report

Global data platform DealRoom released a report on Wednesday rating Tel Aviv second after London as a tech hub for start-up companies, citing $393 billion in combined value of the Israeli city’s technology start-ups in 2022. 

DealRoom found that Tel Aviv-based start-ups raised $6.9 billion in venture capital funding in 2022, less than the $8.8 billion of 2021, but almost double the amount raised in 2020. In terms of venture capital investments, Tel Aviv ranks third, after London and Paris, and ahead of Berlin. 

Adam Valkin, managing director at U.S. venture capital firm General Catalyst, said Tel Aviv is now a top-priority city for many major venture firms.

“Tel Aviv has been transformed from an important city to a top-priority city for many major venture firms. We search for the most compelling founders around the globe, and an increasing share of them hail from Tel Aviv. The secret sauce is the highly energetic and collaborative ecosystem of repeat founders, angel investors, venture firms and marquee tech companies,” he said. 

One of the strengths of the Tel Aviv start-up ecosystem is cybersecurity, which made up 20% of total venture capital investments in 2022, with the city placing third in the world for cybersecurity investments, only behind London and Beijing. 

Cybersecurity start-ups in Tel Aviv raised $1.7 billion in 2022, including Talon Cyber Security, which raised $100 million for its security solutions for hybrid teams, and cloud and network security company Perimeter 81, which raised $100 million.

“Tel Aviv is able to attract a much higher proportion of early-stage funding from international investors than the EMEA average and notably higher than London, Paris and Berlin,” the report stated, referring to Europe, the Middle East and Africa. “Overall, this performance has helped make Tel Aviv one of the most resilient tech hubs in EMEA – more resilient than London and Stockholm and sitting just behind Paris.”

In addition, Tel Aviv has the fifth largest number of so-called unicorns in the world, with 95 such companies as of 2022. A unicorn is a start-up that has a valuation of at least $1 billion without being listed on the stock market. 

“The countryʼs unique combination of entrepreneurial DNA, record number of repeat founders and world-class technical talent to draw on makes Israel resilient,” said Davor Hebel, managing partner at Eight Roads Ventures.

“Israel has moved from being a ‘startup nation’ to being a ‘scale-up nation,’ and whereas Tel Aviv’s leading startups would have once been expected to exit via a sale to strategic buyers, now their goal is to build large multi-billion dollar publicly traded companies.”