Israel Innovation Authority 2018-19 Report


Israel Innovation Authority’s 2018-19 Innovation Report presents the trends, changes and innovation characteristics in Israel as well as the challenges faced by the industry and the suggested solutions for coping with them.

Israel Innovation Authority 2018-19 Report

Israel’s most significant challenge in 2019:
Investment in future technologies

Minister of Economy and Industry, Eli Cohen: “In the financial world, characterized by technological innovation, the State of Israel is a key player. This is evident in the number of startup companies in Israel and the number of leading multinational corporations operating in Israel. In order for the Israeli high-tech to really live up to its potential the main challenge is to work towards increasing the number of people employed in technological sectors among the general population and in the periphery in particular. Moreover, following the sharp increase in the number of multinational corporations operating in Israel and contributing to the ecosystem, we must incentivize startups to continue growing locally, by providing resources, incentives and personnel that allow them to develop valuable technologies and maintain entrepreneurship in Israel.”

Israel Innovation Authority CEO, Aharon Aharon: “We must acknowledge the fact that the race for leadership in artificial-intelligence-based technology has begun. The State of Israel must close the gap with other countries who already make enormous investments in artificial intelligence infrastructures. Artificial intelligence and the changes it brings will be the key to economic growth worldwide. In order for Israel to continue to lead in the global technological race, it is necessary to allocate resources and a national artificial intelligence strategy shared by the government, academia, and the industry.

Dr. Ami Appelbaum, Chairman of the Israel Innovation Authority and Chief Scientist at the Ministry of Economy and Industry: “In order to guarantee the impressive achievements of the high-tech industry and the future prosperity of the Israeli economy, the State of Israel must change from a Startup Nation to a Smart-Up Nation – an astute technological market. A leader in the development of future technologies as well as their assimilation in all walks of life.”

The 2018-19 Innovation Report reviews trends, changes and innovation characteristics in Israel; it presents the challenges of the economy in the field of innovation and provides solutions for coping with them.
The report highlights a number of significant issues of crucial importance

  1. The years 2017-2018 were excellent years for the Israeli high-tech industry manifested in several aspects:
    • Rapid increase in raising capital – especially at the stages of growth. 
    • Development of new fields (artificial intelligence, digital health, FinTech and smart transportation marked the fastest growth), and the growth in financial parameters, most prominently, high tech export.
    • A trend of diverting funding from the early stage to growth stage – a global trend that reflects a change in investors’ preferences. 
  2. Global changes – including the Trump tax reform, the China-US trade war and the tightening of regulations on tech companies in Europe. These changes cast a shadow of uncertainty on the Israeli high-tech industry.
  3. Importance of Artificial Intelligence to the Israeli industry – the global competition for leading the technologies of the future, and artificial intelligence in particular – is increasing. Leadership in artificial intelligence will also be a lever for the expansion of Israel’s innovation ecosystem into other areas – such as personalized medicine.
  4. Personalized medicine – The approach of personalized medicine is becoming more and more established in the global biopharma industry, where the combination between innovation in biology and genetics and between developments in artificial intelligence and Big Data is changing the whole process of drug development. This trend blurs the boundaries between the “classical” biopharma industry and the information technology industry, generating an opportunity for the long-awaited breakthrough of the local biopharma industry. The Israeli industry is in an excellent position to be leading this field as it enjoys the great advantages of unique clinical and genomic data and advanced basic science. Artificial intelligence leadership is essential for realizing the opportunity to develop this field.
  5. Innovation in all sectors of the economy (from Startup Nation to Smart-Up Nation) in order to insure that the high tech success will be translated into an all-encompassing financial growth it is not sufficient to develop innovative technologies – they should be implemented in all sectors of the economy and in all areas of life. For this purpose, Israel has to turn into a technological and intelligent economy that leads both in the development of technologies and in their implementation. It is necessary to close the gap between the high-tech industry in Israel and the day-to-day life in Israel, so that all the citizens of the country benefit from the investment in innovation.
    For this purpose, it is necessary to promote regulation that encourages innovation, and to increase the interfaces between the high-tech industry and the other sectors in the economy. Cooperation between The Innovation Authority and the other arms of the government is critical for achieving these objectives – and it is indeed at the heart of the Authority’s activity in the past year and its future plans.
  6. Technological innovation in the periphery – the high-tech industry in Israel is mostly concentrated in the center of the country, while the peripheral regions specialize in industrial production and agriculture.Approximately 75% of all jobs in Israel’s high-tech industries are in the center of the country. There is a productivity gap between the peripheral regions and the center of the country: periphery wages are 30% lower than the average wages in the center of the country.The strategy of The Innovation Authority in dealing with these challenges includes four main objectives: Promoting technological innovation in the manufacturing, agricultural and food industries of the periphery; encouraging local technological entrepreneurship in the periphery with relevance to regional anchors; connecting between the human capital supply in the periphery and leading high-tech companies; and strengthening the high-tech ecosystem in Haifa, Jerusalem and Be’er Sheva. 

Expansion and a taste of the Innovation Authority’s operations throughout 2018