Beyond Startup Nation: Number of Israelis Drawn to Entrepreneurship Growing, Survey Finds

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A WeWork co-working space in Tel Aviv.
A WeWork co-working space in Tel Aviv.Credit: Lauren Kallen / WeWork

Over 10 precent of all Israeli businesses were new ones in 2016, more than double the 2010 rate, a survey by Global Entrepreneurship Monitor found.

“We saw a welcome increase to 10.7 percent in business entrepreneurship in Israel in 2016,” said Ran Kaviti, head of the Economy and Industry Ministry’s agency for small and midsize enterprises. He said the poll also found a significant narrowing of the gap in the entrepreneurship rate between Arabs and Jews.

The survey, conducted by Kaviti’s agency and the Ira Foundation’s research center at Ben-Gurion University of the Negev, polled 2,433 respondents.

Israel ranked second in the world of the 65 states surveyed for policies encouraging new businesses, although that was down from No. 1 in 2015. Yet GEM ranked Israel just 27 overall, unchanged from 2015.

Although Israel’s startup culture has earned worldwide renown, entrepreneurship of other kinds has been less impressive. Of 190 countries in the World Bank’s Doing Business survey, which measures the difficulty of starting and operating a business, Israel was in 52nd place in 2015.

But the GEM study found that in the last decade Israelis have shown more interested in starting a business.

The early stage total entrepreneurial activity rate — the percentage of the working-age population that owns a small business that is less than three and a half years old or is about to start a small business — was just 5.4% in 2007. In 2016, it was 11.3%. More than a quarter of the Israelis polled said they were considering starting a business, up from 15.8% 10 years before.

Among ultra-Orthodox Jews, the TEA rate was 13.1%, about the same as the overall nonimmigrant Jewish population.

At 15.8%, the rate for Haredi men was slightly higher than for all nonimmigrant Jewish men (15.2%). Haredi women were also slightly more inclined to the entrepreneurial, at 11.1% compared to 10.8% for non-Haredi Jewish women.

The lower rate for female entrepreneurship in Israel defies a global trend; the worldwide TEA average in 2016 was 9.2% for women and 8.7% for men.

Among Israeli Arabs, the entrepreneurship gender gap was even wider; the TEA for women was just 4.3%, versus 8.9% for men.

While the TEA rate for Israeli Arabs overall was just 6.7%, just over half the rate of nonimmigrant Jews, the GEM survey found that Arabs were much more likely than Jewis to own an established business. The rate among Israeli Arabs in 2016 was 8.1%, versus 3.3% for nonimmigrant Jews.

The rate of established-business ownership among nonimmigrant Jewish men rose to 6.5% last year from 4.8% in 2015; among women the rate declined to 3% from 3.3%. The rate among immigrants from the former Soviet Union more than tripled in one year, to 3.6%.

In the area of high-tech, immigrants were far more likely than nonimmigrants to own or plan a business, at 16% versus 10%.

Additionally, the GEM survey found that Arab and Haredi women were more likely than their male counterparts to own or to consider starting a high-tech business, at 7.1% compared to 3.5% for Arabs and 9.1% to 8.3% for Haredim, respectively.

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