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The Ancient City of Jerusalem Is Seeing Rebirth as a Tech Hub The number of startups and investors are exploding due to generous government support and a "cultural renaissance."

By Zach Cutler Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Noam Chen

Its 3,000-year-old hills and cobblestone streets, once walked by kings and prophets, today overflow with young and energetic entrepreneurs, programmers and technologists. The ancient city of Jerusalem, founded according to the Bible by none other than King David himself -- and considered centrally important to the three major Abrahamic religions -- has been at the forefront of religion and history for millennia.

What is fascinating about Jerusalem today is not just its extraordinary past but its tremendous promise for the future. It is unique in the world, with many viewing it as a sort of bridge between mankind's history and destiny.

Jerusalem Mayor Nir Barkat told me in a recent interview that his city is undergoing a rebirth, and that entrepreneurship is at its center.

"Jerusalem is going through a cultural renaissance, which is attracting talented young people and entrepreneurs," Barkat says. "The future of Jerusalem is very much in tune with startups and what they need."

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Uri Adoni, partner at Jerusalem Venture Partners, the first and leading venture capital firm in the city, says there were only a couple dozen startups in the city three years ago. Today, according to startup networking group Made in Jerusalem, there are over 400.

Last year, Jerusalem startups received $227 million in venture capital, whereas in 2012 they only received $58 million, according to the Jerusalem Development Authority.

NovellusDx is a cutting-edge bio-medical company in Jerusalem that aims to create a paradigm shift in the way cancer is diagnosed and treated, through a personalized diagnostics approach. CEO Haim Gil-Ad told me in an interview, "Jerusalem is the best brand in the world. When I say we are in Jerusalem, I always get a positive reaction."

Gil-Ad says people never forget the city once they visit, and that he even takes important guests on a one-hour walking tour of the old city to create a unique memory.

It seems the wellspring has just begun to be tapped. Jerusalem's 400 startups amount to only 10 percent of total Israeli startups. By 2020, the city aims to be home to 25 percent of the country's startups. Perhaps a new nickname is in order: Silicon Holy.

Generous government support

To attract companies from other parts of Israel, including the mega tech hub of Tel Aviv, and abroad, Jerusalem is offering some sweet incentives to entrepreneurs, including relocation grants for high-tech and biomed companies, highly reduced income tax rates, student employment grants, accelerator program grants and salary grants.

"There are great government incentives. When you [have] a bootstrapped operation and every dollar counts, it makes a difference," says Ze'ev Farbman, CEO of Lightricks, a mobile photo editing company based in Jerusalem.

The maker of popular apps Facetune and Enlight, which collectively have over 5 million users, enjoys being headquartered in the ancient city.

"In the last two to three years, I feel a real renaissance in the city," Farbman says, adding the company is able to find great local talent and it is a nice and quiet place where the team can focus on work.

Mayor Barkat says that Jerusalem has a huge competitive advantage in health life sciences, high-tech and culture, and that these have contributed to a sizzling startup scene.

"We have just unveiled the 2020 Jerusalem plan, in which we want to triple the growth of these sectors within five years," he says.

He says his government is making significant investments in infrastructure to have the best public transportation, 4 million square meters of office space, the lowest tax rates -- 9 percent -- for high-tech companies in the country and perhaps the world, and an increase in the number of students from 40 to 60,000.

"The city supports us," Gil-Ad says, adding that the mayor in an unusually hands-on approach has even come out to meet some of the company's investors and guests to show support.

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A talented and diverse talent pool

With nearly a million residents, including hundreds of thousands of religious and secular Jews and Arabs, Jerusalem has a diverse population.

"Jerusalem Venture Partners hosted a startup week with 150 entrepreneurs recently, separated into several groups," Adoni says. "We watched ultra orthodox and secular Jews, new Russian immigrants and Arabs all work together on startup ideas. I felt like this type of collaboration could be a microcosm for the city. Everyone was working together to create something new. It was an inspiring thing to see."

As part of its scale up as a startup hub, the city, according to its 2020 plan, will make a dedicated effort to connect the ultra-orthodox Jewish and Arab communities to the local startup networks.

Major institutions feeding talent to the city include Hebrew University, Jerusalem College of Technology and Bezalel Academy of Arts and Design.

"We've been lucky enough to recruit from Jerusalem's unique talent pool of college-educated, native English speakers who seem to be more dedicated and settled than their similar aged peers in Tel Aviv," says Ari Nahmani, CEO of Kahena, a Jerusalem-based digital marketing agency that focuses on SEO, online advertising, and analytics.

In comparing benefits over nearby Tel Aviv, Nahmani adds, "Our staff love being able to walk to work and avoid the dreadful rush-hour commute."

Historical uniqueness

Barkat connects the startup success of the city with a wider vision of its current place in history. He says that for the first time in 2,000 years, all religions have free access to their holy sites in the city, and that there is an openness and embrace of diversity that Jerusalem has not seen in millennia. He believes these factors have directly contributed to Jerusalem's rise as a tech hub.

"Jerusalem has a huge, positive future," Barkat says. "We maintain freedom and openness and it inspires entrepreneurs and creates good in the world."

From trying to cure disease, transform education, spread fun, to better connect mankind, Jerusalem's startups are indeed doing good things.

After millennia of conflict and exile and slumber, the aging stones and trees of an ancient city are bearing witness to a tremendous rebirth, one filled with creativity and innovation.

Despite political and security challenges, the mayor of this spiritual epicenter remains optimistic about his city's future.

"Three thousand years ago, Jerusalem was founded by King David as a center for everyone. Our diversity is a feature. The world is uniting in the city of Jerusalem," he says. "When Jerusalem does good things, its good for the region and the world.''

Related: Israel's High-Tech Boom Is Double-Edged Sword

Zach Cutler

Founder & CEO, Cutler PR

Zach Cutler is an entrepreneur and founder and CEO of Cutler PR, a tech PR agency in New York and Tel Aviv. An avid tech enthusiast and angel investor, Cutler specializes in crafting social and traditional PR campaigns to help tech startups thrive.

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