Israel Has Emerged as an R&D Alternative to Silicon Valley

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Startup founders are constantly looking for the best innovations and research to advance their businesses.

When it comes to finding bright talent and some of the best technologies, startup owners might have to start looking overseas for help. One country that stands out from the rest when it comes to research and development (R&D) is Israel. In fact, it ranks second only to Silicon Valley for startups, according to Rubicon Venture Capital.

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For startup founders curious about how moving their R&D efforts to Israel can be beneficial, here are four supportive points:

1. Tech talent. The pool of STEM talent in Israel is huge. According to R&D Innovation as a Growth Engine, there are 140 scientists, technicians, and engineers for every 10,000 employees in Israel, compared to 85 per 10,000 in the United States. 

This talent is fueled by an unmatched level of R&D investment. According to the Invest in Israel report, Israel invests the largest amount of funding in R&D in relation to gross domestic product and is highly engaged in scientific and technological inquiry.

The primary source of Israeli R&D funding is government and public organizations, according to the Israel Ministry of Foreign Affairs. More than 40 percent of funding is used for national, binational, government, and university research. The Israel Science Foundation is another important source of funding and offers grants for approximately 1,000 researchers, which is matched with university funding.

The amount of funding Israeli universities receive has contributed to a great amount of R&D success. Israeli universities are known for taking out a large number of patents and the country also publishes approximately one percent of the world’s scientific publications. 

In addition, as noted in this Israel Institute of Technology report, Israel’s significant defense-related R&D plays a major role and has great impact on Israel’s industrial sector, science and engineering, research community, and its overall workforce.

2. Entrepreneurial talent. Israel is flush with entrepreneurs, second in numbers only to Silicon Valley. The country is filled with people with courage, drive, creativity, boldness and tenacity who will move mountains to achieve their goals and dreams.  

Over the years Israel has also amassed a long list of experienced entrepreneurs who have "been there and done that'' all around the world. They bear the scars and trophies to show for it. Having a R&D center in Israel means tapping into this stellar talent and the benefits of a highly productive, innovative and collaborative work environment that simply "gets the job done."

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3. Ecosystem. The long list of companies with an R&D presence in Israel includes Intel, Google, SAP, HP, IBM, EMC, Apple, Huawei, Samsung, GE, Philips, Siemens, Alcatel-Lucent, Oracle, Microsoft, Motorola, XEROX, AT&T, Dell, AMD, Paypal, McAfee, Qualcomm, Polycom, Marvell, Cisco, Telefonica, Avaya, Deutsche Telekom, Avaya, SanDisK, Ebay, AOL, Autodesk, Yahoo, Sears, GM, LG and many more. 

These companies are also shifting their R&D efforts to Israel because of the talent and ingenuity available, and/or due to their acquisitions of Israeli startups. Having a R&D center in Israel means connecting to a global development ecosystem. This is helpful to forge development ties, to recruit from neighboring companies and, sometimes, to just get close to the giants in the hopes that some of their magic pixy dust will stick.

4. Costs. Israeli salary expectations, while not the lowest in the world, are lower than those of the U.S. For example, the average salary for a software engineer in Israel is approximately $68,000. The average salary for a software engineer in the United States is approximately $93,000. This presents an opportunity for startups to save money when hiring talent for their research and development efforts.

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