This past couple of weeks I was lucky to be surrounded by the Israeli tech ecosystem leaders. Whether it was at the excellent Jefferies Tech Trek in Tel Aviv, which brought together leading US and Israeli investors and founders or Mind the Tech by Calcalist and Bank Leumi in London. The two events were different in scale, but what they both had in common is a strong endorsement of Israeli entrepreneurs: they have grit, they are resilient and they think outside of the box. Not just in cyber, but also in AI, health, food tech, etc.
This bullishness and belief that Israeli tech delivers #NOMATTERWHAT, has been put to the test with the ongoing war with Hamas. It was further tarnished when Prime Minister Benjamin Netanyahu told the Accountant General’s Conference that Israel may need to become “Athens and super-Sparta” and “adapt to an autarkic economy” amid rising diplomatic isolation in Europe.
His ‘Sparta speech‘ sparked considerable debate. He has since retracted some of his comments and explained that he meant only military isolation, not economic. However, a closer look at Israel’s vibrant tech ecosystem and economic realities reveals that the “Sparta” comparison is not only historically flawed but fundamentally misrepresents the nation’s innovative spirit and global integration.
The Flawed “Sparta” Analogy: Isolation Leads to Decline, Not Strength
Historians caution that the parallels between ancient Sparta and modern Israel are not straightforward. Sparta was renowned for its rigid military culture, austere lifestyle, and deliberate isolation from the outside world. Spartans banned gold and silver coins, using heavy iron currency that was worthless outside their city-state, which limited their trade and contact. This closed system, while producing formidable soldiers, ultimately bred brittleness and contributed to its decline, with its dominance fading by the 4th century B.C..
Modern Israel, by contrast, is deeply integrated into the global economy. As Dr. Lee Mordechai, a historian at the Hebrew University of Jerusalem, noted, such isolation would be “impractical today,” as even the most isolated states depend on foreign trade. Israel imports far more goods than it exports, relying heavily on external sources for crude oil (nearly 100% in 2022), about half its food supply (80-90% of wheat), and critical manufacturing inputs like metals, cement, and machinery. An autarkic policy would exacerbate these vulnerabilities, as overland alternatives for imports are limited and sea routes are crucial.
The immediate reaction to Netanyahu’s “super-Sparta” speech underscored its disconnect from economic reality: stocks on the Tel Aviv Stock Exchange dipped, and the shekel fell against the American dollar. Israeli business leaders and union heads vehemently rejected the vision, with the Israel Business Forum declaring, “We are not Sparta,” and warning of a “political, economic, and social abyss”. Opposition Leader Yair Lapid attributed Israel’s growing isolation directly to Netanyahu’s policies, stating, “You caused this”.
Furthermore, Israel actively participates in virtually every pillar of the global economy, including the OECD, WTO, WIPO, IMF, World Bank, and ITU. Abandoning these memberships for autarky would be “strategic self-immolation disguised as independence”. The example of North Korea, which shares similar starting conditions with South Korea but has an economy worth only 1.7% of its counterpart due to self-imposed isolation, serves as a stark warning against a closed system.
The “Startup Nation” is punching above its weight
Instead of a closed, militaristic state, Israel has long seen itself as “Athens rather than Sparta,” aspiring to be a “light unto the nations” through innovation. This vision has been realized in a thriving “Startup Nation” that has made the desert bloom, developed desalination technology, and created a globally admired startup ecosystem, turning scarcity into innovation.
Israel’s high-tech sector is the country’s economic engine, accounting for approximately 20% of its GDP and an impressive 64% of total Israeli exports. It is recognized as the 3rd largest high-tech hub in the world by capital raised, second only to Silicon Valley and New York, and boasts the greatest density of startups per capita globally.
Robust Investment and M&A Activity: Despite recent geopolitical challenges, Israel’s tech ecosystem continues to attract significant global investment. In the first half of 2025 (H1’25), Israeli tech companies raised $9.5 billion across 367 rounds, marking the strongest first-half performance since 2022 and a 58% increase in capital raised compared to the previous half-year. This includes 32 rounds exceeding $50 million, with a notable $2 billion Series B round for Safe Superintelligence (SSI).
Merger and acquisition (M&A) activity also reached a record $39.2 billion in H1’25, primarily driven by Google’s $32 billion announced acquisition of Wiz. Other significant deals include Palo Alto Networks’ $25 billion acquisition of CyberArk, Advent’s $2.5 billion acquisition of Sapiens, and Thoma Bravo’s $2.0 billion acquisition of Verint. Crucially, global multinational companies and investors are driving this landscape, with foreign funds accounting for 75% of all capital invested in Israeli high-tech and over 50% of the total deal count in 2024. This indicates that Israeli tech companies, with the vast majority of their revenues coming from outside Israel, are less impacted by domestic volatility.
Key Sectors Driving Innovation:
- Cybersecurity: This sector remains dominant, attracting around $4 billion in capital raising in 2024 and leading M&A activity with approximately $5 billion in total transaction value. Israel’s strength in cybersecurity is fueled by alumni of elite military cyber defense programs like Unit 8200 and top academic institutions, creating a talent flywheel effect. Companies like Check Point Software, Varonis, Cellebrite, and Radware are at the forefront of AI-powered, cloud-delivered security solutions.
- Artificial Intelligence (AI): Israel ranks third globally for Generative AI development, boasting over 2,000 AI-related companies across a vast array of sectors. Nvidia’s $500+ million investment in a new Israeli AI research data lab in January 2025 further highlights this strength. Israeli AI excels in Applied AI, with companies like AI21 Labs developing foundational models and enterprises leveraging AI for solutions across industries.
- Fintech: Companies such as eToro, Lemonade, Pagaya, and Tipalti are making significant strides in financial services, leveraging AI and cloud-native solutions to reshape the industry. eToro’s $713 million IPO in May 2025, with Jefferies as lead bookrunner, was the first Fintech IPO since December 2021.
- Defense-tech: Driven by necessity and a strong military background, Israel’s defense-tech sector is rapidly evolving. The number of defense-related startups doubled in the past year, attracting $165 million in funding in 2024. Companies like Elbit Systems deliver advanced defense solutions globally, and Israeli technology is internationally recognized for combining “battle-tested military proficiency with wide-ranging applicability”.
A “Trillion-Dollar” Future: The long-term potential of Israel’s tech ecosystem is recognised by global investors. Bill Ackman, founder of Pershing Square Capital Management, is notably optimistic, predicting that “we will see a trillion-dollar company coming out of Israel”. He’s seen 280% return from his investment in the Tel Aviv Stock Exchange and expressing his desire to invest another $1 billion in Israel, including potentially taking an Israeli company public through his SPARC entity.
Integration, Not Isolation, is Israel’s Strength
Netanyahu’s “Super-Sparta” slogan is a misdirection, not a viable strategy. Israel’s unparalleled human capital, fostered by institutions like Unit 8200 and a culture of innovation, has created an “innovation flywheel” that drives its economic prosperity. For a nation that “exports algorithms” rather than relying on heavy industry, economic isolation would be catastrophic, as it would “sever these electronic lifelines” and force the abandonment of its comparative advantage in high-value services.
The strength of Israel lies in its global integration, its dynamic tech ecosystem, and its enduring capacity for innovation. To mistake slogans for strategy, and to pursue autarky in an interconnected world, would be to fundamentally undermine the “Startup Nation” ethos that has made Israel a global leader in technology.
What we need know is to find who are friends are and build stronger bridges for startups in the USA, UK, Germany. Zoom might not cut it anymore. My advice for founders is to get on a plane, meet with customers, investors and partners, in person. Soon, you will hopefully be able to host them in Israel, but for now go to them.
He is a former General Partner at Google Ventures (GV) in Europe, former head of Google for Entrepreneurs in Europe, and founding head of Campus London, Google's first startup hub. Eze writes on Israeli tech, venture capital, artificial intelligence, and founder strategy.
He is also the founder of Techbikers, a nonprofit that brings together the startup ecosystem on cycling challenges in support of Room to Read.
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