Startup Nation, Born to Global

The Path to a Startup Powerhouse, Lessons from Israel

Why Israel?

Israel is a small nation with a population of approximately 9.3 million—about one-fifth the size of South Korea. The Jewish people, after centuries of diaspora, finally settled in their ancestral homeland in 1948, establishing the state of Israel. However, the country has a long and complex history of conflict with neighboring Arab nations, and the Palestinian issue remains unresolved. News reports frequently depict missile exchanges between Gaza and Israel’s Iron Dome defense system.

In 2017, a single Israeli unicorn startup made global headlines when Intel acquired Mobileye for over $15 billion. Founded in 1999 by Hebrew University professor Amnon Shashua, Mobileye developed camera-based Advanced Driver Assistance Systems (ADAS), pioneering autonomous driving technologies.

Israel is renowned for its thriving startup ecosystem, boasting over 7,000 startups—the highest number per capita in the world. The country ranks third globally in the number of companies listed on the NASDAQ, following the U.S. and China. Additionally, more than 400 multinational corporations, including Google and Intel, have R&D centers in Israel.

How did this tiny nation become a global leader in technology, innovation, and entrepreneurship? Understanding the history of Israel’s startup ecosystem and technology commercialization may provide valuable insights into South Korea’s path forward.

A Brief History of Israel’s Startup and Technology Commercialization Ecosystem

Founded in 1948, Israel has had to overcome harsh environmental conditions. Aside from some fertile land in the north, much of the country is arid, desert terrain with limited natural resources and severe water shortages. In this challenging landscape, human capital became Israel’s most valuable asset.

With a small domestic market and a lack of large corporations, Israel had to look outward from the beginning. It leveraged its geographical proximity to Europe for trade and collaboration, while later forging strong ties with Silicon Valley as the U.S. tech boom took off. Crucially, Israel also benefited from the global Jewish network, which played a pivotal role in academia, industry, and finance, fostering connections and investments worldwide.

Israel’s startup ecosystem was initially modeled after the U.S..

In 1977, Israel established the BIRD (Israel-U.S. Binational Industrial Research and Development) Foundation, providing 20-50% R&D funding to foster joint ventures in fields such as biotechnology and cybersecurity.
The Israel Collaboration Network (ICON) later strengthened investment links between Silicon Valley and Israeli startups, enhancing foreign capital inflows.

A major turning point came in 1991 when one million highly skilled Jewish immigrants arrived from the former Soviet Union following its collapse. Recognizing an opportunity, the Israeli government integrated these talents into the technology sector, fueling economic growth, innovation, and job creation.

To further accelerate early-stage tech startups, Israel launched the Yozma Fund (1993-1998), introducing a government-matching investment model that encouraged private venture capital to take the lead.

Today, Israel actively collaborates on bilateral R&D initiatives with countries like South Korea, the U.S., Canada, Singapore, and India, while participating in EU programs such as EUREKA and the EU Framework Program (FP) for multilateral research partnerships.

Why is Israel So Strong in Technology Commercialization?

A key feature of Israel’s startup ecosystem is its deep-tech commercialization model, built on a strong foundation of academic institutions, research labs, and the military.

In Israel, university professors and Ph.D. researchers frequently launch spin-off startups, translating academic research into commercial success.

Leading Technology Transfer Offices (TTOs) include:

YEDA (Weizmann Institute of Science)
T3 (Technion Technology Transfer)
Yissum (Hebrew University of Jerusalem)

These institutions generate approximately $3 billion annually in technology licensing revenue, with 40% of profits distributed to researchers.

Israel’s Weizmann Institute of Science, founded in 1934, is one of the world’s top five research institutions alongside Germany’s Max Planck Institute and France’s Pasteur Institute. Since 1959, its technology commercialization unit, YEDA, has played a pioneering role in monetizing scientific discoveries.

A unique aspect of Weizmann’s model is that its students do not pay tuition—instead, they receive salaries, allowing them to focus solely on research. This ensures both creativity and academic integrity, fostering groundbreaking innovation.

At Technion – Israel Institute of Technology, the T3 office handles patents, clinical trials, and commercialization strategies, while two dedicated investment programs support startups:

Technion R&D Foundation (TRDF) – Funds early-stage startups (Seed to Series A) in military and genetic engineering.
Technion Investment Opportunity Fund (TIOF) – Invests in Series A to Series B startups in deep-tech fields.

Unlike many countries where public R&D investment dominates, Israel’s approach is more entrepreneurial and market-driven.

Israel’s R&D expenditure as a percentage of GDP is 5.4%, the highest in the world.
South Korea ranks second at 4.8%, but public R&D spending in Korea is 20.7%, compared to Israel’s 9.6%.
Israel’s tech commercialization success rate exceeds 30%, while South Korea’s remains below 10%.

While South Korea has 80 university-affiliated technology holding companies, most were established after the mid-2000s, meaning they lack the long history and scale of Israel’s tech commercialization system. To enhance South Korea’s startup ecosystem, greater expertise and experience in technology transfer are needed.

What Can South Korea Learn?

According to CB Insights' 2023 ‘The Complete List of Unicorn Companies’, Israel ranks 7th globally with 25 unicorns, while South Korea ranks 10th.

Israel has:

127 accelerators and incubators (as of January 2023).
205 venture capital firms, including 70 foreign VC branches (as of 2021).
522 venture capital funds (as of December 2022).

By comparison, South Korea has 372 accelerators, but its startup ecosystem is still in a relatively early stage (having developed mainly after 2010).

Now, South Korea must transition from quantitative expansion to qualitative growth. This requires:

Scaling deep-tech startups with global potential – More active acceleration programs for high-tech innovation.
Attracting global talent – Israel’s Innovation Visa program (since 2018) provides incentives for foreign high-tech experts. South Korea needs similar strategic policies.
Strengthening the commercialization ecosystem – Building a sustainable cycle of technology commercialization and research-driven entrepreneurship.

Most importantly, South Korean startups should target global markets from the start, leveraging international networks to attract foreign investment. Encouraging a professional CEO model—where technical founders focus on R&D while experienced executives manage business operations—can increase successful exits (M&A, IPOs, etc.).

For example, 23.5% of professor-led startups in the U.S. successfully exit, creating significant economic impact. South Korea must increase the number of successful technology exits to strengthen its startup ecosystem.

South Korea has already established itself as a leader in ICT and cutting-edge technology. Now, by embracing bold strategies and global ambition, it can cultivate a world-class deep-tech startup ecosystem—becoming a true Startup Nation. 🚀

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