Key takeaways
- Seventy percent of Israeli-founded unicorns were built in the US, suggesting that technical excellence alone is rarely enough to create a global category leader.
- Incorporation, headquarters and commercial presence are separate decisions, but globally ambitious founders should address all three much earlier.
- The strongest model combines Israeli technical talent and product velocity with US customer proximity, commercial leadership and access to capital.
Israel is exceptionally good at producing founders. America remains exceptionally good at turning their startups into global companies.
A striking (but hardly surprising) statistic shared by Yoram Wijngaarde of Dealroom.co captures this dynamic: 70% of unicorns founded by Israelis were built in the United States.
The pattern is not unique to Israel. Dealroom found that 42% of unicorns founded by European-origin entrepreneurs were built in the US. But the Israeli figure is significantly higher, reflecting both Israel’s unusually strong entrepreneurial talent and the limitations of its small domestic market.
Another data point reinforces the trend. According to IVC Data and Insights, 57.9% of the capital raised by Israeli tech companies in the first half of 2026 went to companies headquartered outside Israel, primarily in the US. That compares with 48.9% in 2016. The shift has not been linear, but foreign-headquartered companies have attracted more than half of the capital in five of the eight periods measured since 2019.
This is not simply a story about where a company is registered. It reflects a broader division of labour that has come to define Israeli technology: build the technology in Israel, but build the company in America.
Incorporation, headquarters and market presence are different decisions
The debate about where Israeli startups should be based often confuses three separate questions:
- Where should the parent company be incorporated?
- Where should the headquarters and management team be located?
- Where should product development and R&D take place?
These decisions are connected, but they are not interchangeable.
An Israeli startup can have a Delaware parent company, maintain most of its employees in Tel Aviv and still have no meaningful commercial presence in the US. Conversely, an Israeli-incorporated company can generate most of its revenue from American customers.
But as companies grow, legal structure, management location and commercial presence tend to converge. The companies attracting large US customers, investors and acquirers are increasingly likely to have a US parent company, senior leadership on the ground and a substantial American go-to-market operation.
The statistics suggest that this is particularly true for the companies that become unicorns.
Why incorporation is moving up the agenda
The question of incorporation received renewed attention after Israeli investor Oren Zeev argued in a LinkedIn post that globally ambitious Israeli founders should establish their companies in the US from the start.
His argument goes beyond appearances. A Delaware corporation offers a familiar and relatively predictable governance framework for American investors, employees and acquirers. It can simplify future financing rounds, employee equity plans, board matters and M&A discussions.
Zeev also highlighted the potential importance of Qualified Small Business Stock, or QSBS. Under certain conditions, the US tax provision can provide significant benefits to shareholders who become US taxpayers. Crucially, those benefits may depend on the shares having originally been issued by a qualifying US corporation. Flipping the company into a US structure later may not recreate the same result.
There can also be practical advantages when selling to the US government or operating in regulated industries where procurement, security and ownership requirements matter.
The counterargument is that US incorporation is not automatically right for every Israeli founder. As Bessemer Venture Partners’ Adam Fisher noted in the debate, QSBS primarily benefits US taxpayers, and Israeli founders who remain in Israel may face different tax considerations. A US parent company also brings additional compliance costs and complexity.
This is why founders should seek appropriate legal and tax advice before deciding. But they should make the decision based on the company they intend to build, not simply on the location of the founding team today. It’s also not entirely black or white. In a post from 2 years ago, Aleph’s Michael Eisenberg listed the various benefits of being an Israeli registered company:
I think entrepreneurs should prefer the friendliness of Israel’s legal system, especially given the influence some untoward actors are exerting on the American political system. Moreover, large international markets such as India and the GCC are opening up to Israeli innovation, and Israel’s direct trade deals with these partners could become an advantage for Israeli domiciled companies.
Lastly, the Israeli government is about to enable $1B in institutional investments in startups and venture capital in Israel. Personally, I am not in favor of this particular policy initiative. I think all of the incentives to Israeli institutional investors to participate in venture capital have failed in the past, and furthermore it has anti-Darwinian effects, which will cause the Israeli institutional investors to invest our hard earned pension money in less-than-stellar companies and funds.
The US is more than a source of customers
For most Israeli startups, America is the largest potential market. That alone would justify an early US focus. But the US also provides several other ingredients needed to create a category leader.
It is home to the deepest pools of venture and growth capital, the largest concentration of experienced technology executives and many of the world’s most valuable enterprise customers. It also has a more mature market for technology acquisitions and public listings.
This creates a compounding effect. Proximity to customers improves the product. Customer traction makes it easier to recruit senior executives. A credible American leadership team increases confidence among US investors. Those investors, in turn, can help the company attract more customers, talent and capital.
None of this happens simply because the corporate documents say “Delaware”.
A virtual office, a US phone number and a salesperson working remotely do not amount to a US operation. The companies that successfully cross the Atlantic usually have a founder spending meaningful time in the market, building relationships and remaining close to customers.
As I argued in The Israeli Startup’s US Playbook, the first US hire should usually be commercial. But that person cannot be expected to discover the market, define the positioning and create product-market fit alone. Founder-led sales must come first.
Build a beachhead before expanding
A common mistake is to describe the entire United States as the target market.
The US is not one homogeneous market. Winning financial institutions in New York requires a different network, proposition and sales process from selling entertainment software in Los Angeles or developer tools in San Francisco.
Israeli founders should identify a narrow initial beachhead: a specific customer profile, vertical or geography where the company can win several referenceable customers. Once it has established credibility and a repeatable motion, it can land and expand into adjacent segments.
This requires more than regular visits. Founders need to hear how American customers describe the problem, understand who owns the budget and experience the procurement process directly. They also need to build a rapid feedback loop between the commercial team in the US and the product team in Israel.
The strongest Israeli startups combine American customer proximity with Israeli product velocity. Weak execution on either side can undermine the model.
Israel remains a critical part of the equation
Building the company in the US does not mean abandoning Israel. As Oren Zeev mentioned in his post:
“It is important to note that even when the company is US-based, Israel still benefits from taxes, both on an ongoing basis and, of course, upon exit (e.g., the Wiz exit reportedly generated several billions in tax revenue for Israel). In fact, this is the reason Israel makes it very easy to change the incorporation to the US (????? ?????), at least early in the life of the company. But the problem is that this does NOT help the founders, as QSBS only applies to shareholders who originally received their shares in a US company.”
Israel remains one of the world’s strongest locations for technical talent, particularly in cybersecurity, AI, data infrastructure and defence-related technologies. Its culture encourages speed, directness and ambitious technical problem-solving. Dense professional networks also make it possible to recruit strong early teams quickly.
For many startups, the optimal structure is therefore not a complete relocation. It is a dual-centre model: headquarters, commercial leadership and go-to-market in the US, with core R&D and product development in Israel.
The risk is that the two centres become disconnected. If the US team views Israel as an outsourced engineering operation, or the Israeli team sees the US office as a remote sales outpost, the company will struggle. Both sides need shared leadership, incentives and accountability.
Some product, customer success and solutions engineering roles may also need to sit in the US, particularly when enterprise customers expect local technical support. The division should follow customer needs rather than become an ideological commitment to keeping every engineer in Israel.
What founders should decide early
The data does not mean that every Israeli startup should immediately relocate its founders or build an expensive American team. It does suggest that globally ambitious founders should address the US question earlier and more deliberately.
Before raising their first institutional round, they should have a view on:
- Whether the parent company should be incorporated in the US
- Which founder will lead the US commercial effort
- What customer segment will serve as the initial beachhead
- When market evidence justifies hiring locally
- Which functions should remain in Israel
- How customer insights will reach the product team
- Whether future fundraising, hiring or procurement could be constrained by the original structure
These choices become harder and more expensive to change as the company grows. Waiting until a US investor, customer or acquirer forces the issue can create avoidable legal, tax and operational friction.
The evidence points towards a model that has already produced many of Israel’s most valuable technology companies: Israeli founders, Israeli technical depth and American company-building.
Israel can remain the engine room. But for startups aspiring to become global category leaders, the bridge to America increasingly needs to be part of the original design.
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.
- Why Israeli Unicorns Are Built in America - September 2, 2026
- The Right Model for the Job - September 1, 2026
- Weekly Firgun Newsletter – August 28 2026 - August 28, 2026
Sources
- Israeli founders build 70% of their unicorns in the US
- IVC Data and Insights: The changing geography of Israeli tech funding
- Venture capitalist Oren Zeev’s sharp warning: Why Israeli startups must incorporate in the US
- The Israeli Startup’s US Playbook
- Europe is insanely entrepreneurial, but 42% of its unicorns were built in the US
