The AI INDEX REPORT for 2024, recently published by Stanford University presents comprehensive research measuring global trends in AI. The report revealed that Israel is ranked number 1 in the world in AI talent concentration, which can certainly explain its increasingly growing number of AI startups and the recent decision of Ilya Sutskever (OpenAi founder and former chief scientist) to build his new AI company and R&D center in Israel. In addition to its unmatched talent pool, Israel has unique local catalysts that have positioned it to stand at the forefront the AI revolution.
******************************
The global AI revolution is advancing at an unprecedented rate and fundamentally disrupting entire industries along the way. This rapid shift is creating countless opportunities for dramatic improvement in all areas of life and a pressing need to future-proof ourselves.
With the help of AI, doctors will diagnose diseases, lawyers will manage lawsuits, and even military leaders will weigh how to navigate the landscapes of conflict across the globe. Goldman Sachs is also predicting a $7 trillion increase in global GDP thanks to generative AI.
Put simply, all facets of life will be affected by AI, and those who fail to integrate it into their core activities – whatever they may be – will struggle to remain relevant.
As of today, there are 2300 AI companies operating in Israel that make up 25% of the entire Israeli hi-tech industry, and this share is growing at an eye-popping rate: Over the last five years in Israel, AI-powered startups have gone from representing one-third of new companies to over 50% of the Israeli startup landscape.
Considering the above, Israel is not only progressing quickly when it comes to AI, but the nation is poised to dominate this space for the foreseeable future.
Here’s why:
Multinational tech giants are betting big on Israel
Given the global demand for Israeli tech and talent, many international tech giants have established R&D centers in Israel over the past decade. According to our data, the number of these centers has risen significantly, from 50 in 2000 to 370 in 2023.
As of today, 100 of them – including Microsoft, Google, Nvidia, and AWS – are highly engaged in AI activities. Since around half of Israeli developers spend part of their careers at these global centers, they gain substantial AI expertise. Many of these developers leverage the knowledge and experience required to establish their own startups. Additionally, these tech giants run local programs in Israel that support emerging startups and strengthen local founders by providing professional tools and extensive international exposure.
Israel's defense challenges are driving groundbreaking innovations
Another unique local catalyst that accelerates AI innovations is the Israeli defense industry. Since the start, Israel has faced a numerical disadvantage due to its size, which has compelled it to innovate continually to maintain military superiority over its adversaries. This need for survival has fostered the growth of the Israeli cybersecurity industry, which has become one of the world’s leaders.
This year, Israel has confronted various defense challenges that have required the rapid development of efficient solutions to unprecedented needs. As a result, we are witnessing a significant surge in AI-powered defense-tech innovations that are leading to a natural increase in dual-use solutions emerging from these conflicts.
Israel's universities are serving as incubators for AI startups
The Israeli academy also plays a Vitale role in the growth of AI companies, serving as fertile incubators of innovation on a global scale. According to PitchBook, Israeli universities consistently rank at the top of the list for producing alumni who found the most VC-backed startups, surpassing many larger and more established institutions.
A recent study published by Prof. Stribulev from Stanford University revealed that five out of the seven non-American universities whose graduates have the highest chances of founding a unicorn in the U.S. are Israeli. For instance, entrepreneurs who studied at Reichman University in Israel have 11.3 times the chance of achieving unicorn status. To date, 22 unicorns have emerged from the relatively young campus.
AI companies are attracting global capital
The constant emergence and growth of exceptional AI companies have captured the attention of investors, and the ability of AI companies to attract capital is increasingly robust. Rise Israel’s recent study in collaboration with Google revealed that 50% of the investments in 2023 were directed towards AI ventures. According to the study, while only 55% of “regular” high-tech companies managed to raise capital, over 70% of AI companies succeeded in securing investments.
Ultimately, the global AI revolution represents a fundamental transformation in how societies and individuals operate, solve problems, and envision the future. Israel’s unique combination of exceptional talent, pioneering academia, and global partnerships will be invaluable in shaping a future where AI enhances human potential and addresses some of the world's most pressing challenges.
