Why do Israeli companies choose the EU?

EIT Hub Israel, co-ordinated by EIT Health InnoStars, has published a report on Israeli Tech Companies in Europe. The document provides a comprehensive overview of start-ups, employees, and tech relationships between Europe and Israel.

A first-of-its-kind map of Israeli tech companies that currently operate in Europe reveals that 912 Israeli start-ups operate in 28 countries in the EU and employ 24 223 European residents. The extensive report examined the companies’ activities in various countries, in addition to assessing their contribution to employment and surveying their executives’ expectations. The report was conducted by the EIT Hub Israel, together with the Israel-Europe R&D Directorate (ISERD) and CQ Global.

The data collection took place over several months by a team of analysts from the study’s editors, and was derived from data sources such as SNC, IVC, and other online information sources. The report was presented during an event honouring the 25^th anniversary of the establishment of business relations between the EU and Israel, with the participation of the ambassadors’ countries. An examination of the activity of Israeli companies in Europe demonstrates that more than a third of them come from the information and software technology sector, and the others from the Internet, telecommunications, biomedical and cleantech sectors.

The main higlights of the report

• 912 Israeli companies have a presence in the EU
• 24 223 employees in the EU are hired by Israeli companies
• 40% of the Israeli companies from IT sector
• the UK, Germany, France and Italy are leading the list in terms of employee’s number
• the UK, Germany, France, Spain and the Netherlands are leading the list in terms of number of companies

In Germany, for example, there are 240 start-up companies that provide employment to 3135 Germans, while in France there are 183 companies that employ 1985 people. These countries (including the UK) employ 55% of all Israeli start-up workers in Europe. Forty-nine percent of all companies conduct sales and marketing activities in Europe and 15% have research and development operations there. The authors of the study have conducted in-depth conversations with start-ups operating in Europe, which reveal that 37% of them anticipate growth in the coming year. Sixteen percent of companies were assisted by the EU during the establishment and expansion phases. The major factors in their decision to work in Europe included the attractive market for their products, proximity to customers, legislation, support programmes and partners from the EU.

Adi Barel, the Managing Director of EIT Hub Israel, points out that the report is a strategic step in mapping the potential of Israel-Europe relations in the fields of economics and innovation, and it sets the scene for further developments and collaborations. The economic potential inherent in the business relationship between Israeli technology companies and the European market. This report is part of a strategy to deepen ties between Israel and Europe and increase the basket of business opportunities in the fields of innovation.

The EIT Hub in Israel was established in summer of 2019 as a bridge between the EU and Israeli innovation ecosystems, with the aim to expand the EIT Community’s presence and volume of activities in the country, in particular in the area of business support.

Why do Israeli companies choose the EU?

The most common reasons for establishing branches in the EU were in terms of market potential and the desire for company growth. Many companies stated that they see the European market as having good potential for creating opportunities and increasing company sales. Furthermore, it was also discovered that the reasons were more practical, such as in cases of geographical proximity, mental and cultural convenience, or regulatory mechanisms that are more advanced and friendly in Europe. Grants were also mentioned several times as incentives that encouraged the establishment of the company’s operations in Europe.

“Co-operation between Europe and Israel is an important factor in building and developing the innovation ecosystem that links our two regions. Israel is a first-class centre for technological innovation and a hub for entrepreneurship, and the role played by EIT Health in maintaining this innovation partnership is an excellent opportunity to create value for our economies but, above all, for our citizens”, says Balazs Furjes, InnoStars Director.

To read the whole report, please click here.