How Israel Became A High-Tech Hub

[JStone]

Tiny Israel, a country embroiled in conflicts for decades, has managed to transform itself from a stretch of farmland into a high-tech wonder

When a grey-haired grandmother clutching a smartphone mounted the stage at Montreal's Start-up Festival this summer, young Israeli entrepreneur Guy Rosen knew he had pocketed a very special award.

His company, Tel Aviv-based Onavo, offers an application that shrinks mobile phone data to help users save money - and appeals to any age. That made Onavo the winner of the Grandmother's Award for best start-up, judged by tech-agnostic ladies in the later stages of life.

Standing in his office in Tel Aviv, Mr Rosen recalls the moment: "They went on stage and said: 'We love Onavo and we understand what it does... it is such an easy app to understand' - we just save money, that's it, period, they loved us."

Guy Rosen is one of Israel's many young, enthusiastic entrepreneurs who, fresh out of the army, decided to set up a tech firm.

Israel currently has almost 4,000 active technology start-ups - more than any other country outside the United States, according to Israel Venture Capital Research Centre.

In 2010 alone the flow of venture capital amounted to $884m (£558m).

The result: high-tech exports from Israel are valued at about $18.4bn a year, making up more than 45% of Israel's exports, according to the Central Bureau of Statistics.

Israel is a world leader in terms of research and development spending as a percentage of the economy; it's top in both the number of start-ups and engineers as a proportion of the population; and it's first in per capita venture capital investment.

Not bad for a country of some eight million people - fewer than, say, Moscow or New York.

Serial entrepreneur Yossi Vardi says there is a whole blend of factors responsible for turning Israel into a start-up miracle. He himself has invested in more than 80 Israeli high-tech firms - among them the first web messaging service ICQ. He sold many of them to technology giants such as AOL, Microsoft, Yahoo and Cisco.

Continued: BBC News - How Israel turned itself into a high-tech hub