Israel mints tech unicorns. Can it keep them from leaving for New York?

Israel has produced more tech unicorns per citizen than any other nation on Earth, a staggering feat that places it ahead of the United States. The chief executive of the Tel Aviv Stock Exchange, Ittai Ben-Zeev, is focused on ensuring these tech leaders remain in their home country. His role involves convincing the likes of Wiz, Monday.com, and Fiverr, who have all gone public in New York or been acquired by US entities, to list on the Tel Aviv Stock Exchange (TASE) instead.

He is also reaching out to global investors to bolster trade and valuations. The primary advantage is the dominance of a few AI behemoths on US markets, which leaves Israeli startups lacking the attention of investors chasing trillion-dollar IPOs from companies such as SpaceX, Anthropic, and OpenAI. Ben-Zeev stated, "New York is no longer an option."

In October 2023, following the Oct. 7 attacks, 7% of the workforce was mobilized for military service. Since then, the TA-125 index has outperformed the S&P 500 by 50 percentage points and the Nasdaq Composite by 23, and the country is set to surpass 30 IPOs this year. Foreign ownership of Israeli shares has more than doubled from September 2023 to the start of the current year.

Ben-Zeev dismissed wartime nationalism as a factor for founders to list at home or for local investors to buy shares, saying, "Israelis will be patriotic about certain issues, but that's not the way they view the exchange." However, he noted that the Jewish diaspora has increased its investments. Notably, Bill Ackman, an Israeli-born investor with a wife who is also Israeli, acquired a 4.9% stake in the Tel Aviv Stock Exchange in 2024 after a 45-minute meeting with management.

He highlighted that his $23 million investment is now worth $230 million, attributing this success to AI's ability to enhance productivity and overcome Israel's economic limitations. The war has also allowed TASE to transition its trading schedule from Sunday to Thursday to Monday through Friday. This change, while challenging in a country that observes Shabbat, signals Israel's integration into the global market and its attraction to international indexes that have previously excluded it.

Anti-Israel sentiment and antisemitism are driving campaigns to divest from Israel in various US institutions, but Ben-Zeev believes that investors are ultimately driven by the desire to make a return. He envisions a future where Israeli companies will have access to global investment banks leading IPOs solely on TASE, rather than having to seek listings in Singapore, Toronto, or Australia.

Ben-Zeev remains cautious in the wake of the Oct. 7 attacks but remains optimistic about the future, emphasizing the importance of effective storytelling and PR to attract global investment.