Israeli high-tech has always been a bubble, differentiated from the rest of the country by its high salaries and handsome terms. The gap between Israel's high-tech industry and the rest of the country has grown over the past few years. The country's 230,000 or so high-tech employees have succeeded where the rest of the country has failed - in creating a global competitive advantage.
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Most of the money invested in local high-tech is from foreign tech giants, such as Apple, Google, Microsoft, IBM, Intel, Broadcomm and others. These multinationals buy local companies for massive sums and employ large R&D teams in Israel. Local venture capital is shrinking, high-tech companies don't try to raise money from Israel's stock exchange and local institutional investors don't understand technology. It's only the foreigners who keep investing in Israel's tech scene - and they’ve been proved correct repeatedly. They're here for the right reasons - because it gives them a competitive advantage and boosts their profits, which in turn boosts the strength of Israel's high-tech sector.
This is what makes the local representatives of these global behemoths – Apple Israel's R&D centers head Aharon Aharon, Google Israel's new business development head Eyal Miller, Facebook's growth manager Ran Makavy and EMC's VP-business development Gil Goren – the most influential people in Israel's tech scene. These are the people who are likely to determine the industry's next big exit, following in the footsteps of Google's $1 billion acquisition of Waze earlier this year.
Another party with outsize influence over Israel's high-tech scene is the European Union, under the leadership of Catherine Ashton. Its decision to impose sanctions on entities connected to Israeli interests in the West Bank, East Jerusalem and the Golan Heights and to predicate all future agreements on an Israeli declaration of non-sovereignty beyond the 1967 borders, throws European investments in high-tech into question. Israel is the only non-European country eligible to participate in the Horizon 2020 R&D project, which had been expected to bring in 900 million euros for R&D.
Inbal Orpaz and Barak Ravid contributed to this report.