Tel Aviv Ranks Second Globally as Start-up Hotbed - Levi Shapiro

A worldwide study released today by Startup Genome and Telefonica Digital of more than 50,000 entrepreneurs ranks Tel Aviv as the world #2 region for start-up activity. Some key findings:

- Access to Capital: Israeli start-ups have as much proportional funding, across all investment stages, as Silicon Valley.

- Role of Angels: Israeli Angels play a more prominent role in initial funding. Silicon Valley entrepreneurs are more likely to rely on friends and family.

- Show me the Money: Israeli start-ups have a much higher proportion (27%) of users paying for their services, particularly transaction fees. They are much less likely to adopt advertising or licensing fees as revenue models.

- Tackling Smaller Markets: Israeli founders are older (36.16 years) and more technical than their Valley counterparts. However, they think smaller. Silicon Valley founders are one third more likely to address a $10B+ market.

The top twenty start-up ecosystems in the world are the following:

1. Silicon Valley
2. Tel Aviv
3. Los Angeles
4. Seattle
5. New York City
6. Boston
7. London
8. Toronto
9. Vancouver
10. Chicago
11. Paris
12. Sydney
13. Sao Paulo
14. Moscow
15. Berlin
16. Waterloo (Canada)
17. Singapore
18. Melbourne
19. Bangalore
20. Santiago

Bjoern Lasse Herrmann, CEO of the Startup Genome calls this "the first data-driven, comparative study…to give actionable insights to entrepreneurs, investors, corporate development departments and policy makers."

The benefit to Israel's economy is substantial. With 5.3% of GDP allocated toward R&D (the highest in the OECD), foreign direct investment is a key pillar in Israel's GDP, which is higher than the UK and nearly equivalent with France. In 2012, companies like Qualcomm, Intel, Cisco, Facebook and others spent more than $7 billion to acquire Israeli tech companies, compared to around $2 billion in venture funds raised.

The full report can be downloaded from http://www.blog.digital.telefonica.com/tag/startupecosystem

Levi Shapiro is a Partner at TMT Strategic Advisors, a research and strategy firm focusing on the technology, media and telecom sectors. He can be reached at levi@tmtstrat.com or via twitter: @levshapiro

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