Israel is being tapped as the place to watch for the future of hot fintechs, according to a recent report by Sifted. While this may come as a surprise given the domination of the U.S, Europe, and Asia in the sector, Israel is already nicknamed ‘Startup Nation.’ The country currently has the biggest number of start-ups per capita in the world for a population of around 8.5 million.
Speaking on this Amir Mizroch, former EMEA tech editor at The Wall Street Journal (and now a consultant for Israeli tech firms) said, “Israel is a fintech powerhouse already; it punches way above its weight [for its size].” To date the country proudly lists around 500 fintechs, including 12 fintech unicorns according to a 2019 report by Startup Nation Central.
Among its success stories are the recently listed insurtech Lemonade, trading ape Toro, and payments group Melio, which recently raised $144 million. Startup Nation Central’s report further shared that Israel fintechs raised around $1.8 billion in funding last year, which equates to 5% of sector’s global investment.
A key reason for Israel’s success in the fintech space is its adeptness in the areas of fraud and data analytics. As a result, fintech companies are able to pivot from this world-class expertise to create unique bonds between security and finance to solve problems that may escape competitors from other nations.
Despite excelling in the data and fraud prevention areas, Israeli fintechs are also branching out to the consumer space, according to Mizroch. “What’s new in Israeli fintech is start-ups are starting to target the consumer market. Instead of just targeting banks, governments, big marketplaces... I would say the next trend is B2B2c,” he said.
Supporting Israel’s growth in fintech is Rakefet Russak-Aminoach, the former chief executive of the country’s largest bank. Russak-Aminoach is determined for Israel’s fintech sector to grow as strong as the country’s leading cybersecurity efforts. To back this, she co-launched Team8 Fintech, a fintech VC accelerator in Tel Aviv. The VC accelerator will actively spin out five fintech start-ups and will emphasize local talent while being open to diversity.
Time will tell if Israel’s strong startup environment, alongside developments such as Team8 Fintech, will continue to shape Israel into a global fintech leader.