CBS: 2011-2018, 5,313 startups opened - 45% of them closed before 2018 ended

The Central Bureau of Statistics published for the second time a report that maps start-ups in Israel according to their fields of activity, survivorship, salary data and number of jobs. Realize the dream and succeed in high-tech. Reality, of course, is less glamorous. The vast majority of startups fail and do not return investors' money. In 2011-2018, 5,313 startups were opened in Israel - 45% of them closed before 2018 ended In the previous report published by the CBS, which presented the 2011-2016 data, the overall closure rate was 37%.
For a long time now, the industry is worried that this year there has been a sharp decline in the number of restorative start-ups. The press released sporadic data, but analysts at the information companies have warned that this may be a gap in data collection - since the databases are usually updated only a few months after the end of the year.
The CBS now reports that the number of active startups over the past two years has been declining. After an average 4% increase in the startup balance sheet (the word "balance sheet" refers to openings minus closures). For the first time, a negative balance, which means that more startups have been closed than new startups.
Twice as much as the usual wage in the economy. The CBS also refuses, claiming that there may be bias in the data due to data collection gaps. It is possible that CBS data is available to decide the question. A fall in the number of new startups is in line with the global trend we know from fundraising - more money is being directed to at least startups, so fewer startups can get started.
Israel is renowned worldwide for the startup nation, a nation of innovation and technological leadership. The local start-up market is buzzing and attracting many venture capital investments from around the world. However, CBS data illustrates the disconnection of the activity-centric periphery. The vast majority of startups - 73% - are concentrated in Tel Aviv and surrounding areas.
In 2018, approximately 225 start-ups were opened in Tel Aviv alone and 135 in the central region. This compares with less than 50 startups in every other region of Israel.
Geographic concentration improves the bargaining power of employees and their ability to identify among the most rewarding and interesting options for them. And accordingly - in the Tel Aviv District, the average monthly salary per employee post is the highest, NIS 22.1 thousand. 1.3 times the size of Jerusalem's district, where the average monthly salary per employee post is the lowest - NIS 16.7 thousand. Where is the survival rate of Israeli technology companies? CBS looks at some of the established startups that have become "mature companies", a nickname it gives to former startups that have completed the product, service, or process development phase and have begun the manufacturing process. Even if they continue to raise venture capital.
According to the CBS, approximately 16% of startups become mature companies. Of the total companies opened since 2003, by field of activity. In the field of security (technologies for civilian and military security, not cyber) - 33% of the companies opened became mature. Employees employ 100 or more employees, and in the chip industry, the survival rate is also high - 25%, with 5% of companies employing more than 100 employee jobs and above, with the lowest survivorship being mobile applications - only 9% of Israeli startups have matured.
Mature companies account for 62% of all local high-tech employee jobs (only Israeli companies, not including foreign development centers).
A company ceases to be a startup and is classified as mature, according to the CBS when it has been active for more than 10 years, employs more than 80 employee jobs or has an income exceeding NIS 20 million (about $ 6 million). Because CBS looks at actual annual revenues, while startups tend to report their income to investors and the media according to a future forecast of recurring revenue - a figure calculated by last month multiplied by 12. So it's not such a narrow definition. Companies that are less than three years old are classified as a startup even if they meet the other criteria.
The CBS also refers to startups that received support from the Innovation Authority in the form of a research and insurance grant. In 2018, total grants totaled NIS 590 million, about 11% less than in 2017. NIS 117 million of grants were given to companies engaged in the field of activity. Medical technology: The highest percentage of companies receiving a grant from the Innovation Authority, out of the total number of active companies in the same field, was in security (18%) and in agricultural technology (17%), while the lowest percentage of supported companies was in applications (4%), Internet (4%) and e-commerce and advertising (2%).