How does a small, relatively young country, in a fragile geo-political situation and with significant internal social challenges, continue to be one of the world’s top creativity hubs? The country’s success in innovation is both undeniable and surprising. For the third decade in a row, it has more startups, venture capital, and new technology than much bigger and more privileged nations. The geographic and political challenges it faces have made innovation and entrepreneurship both necessary and difficult. Yet, by building a unique national infrastructure that links actors not only across value chains but also across personal networks, and by taking advantage of the unusual diversity in its population, Israel has created one of the most interesting innovation stories of our time. It truly is the Startup Nation. This working paper analyzes the evolution of the startup nation over the past decade, and looks at its foundations, the characteristics for success and some of the questions to be resolved if the country’s success is to continue.


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