Retail tech in Israel is on the rise.

When we started Re:Tech in early 2017, there were around 200 retail tech startups in Israel. This number has more than doubled since then.

Why is that?

The retail industry worldwide is going through a massive transformation. This is not new to those working in the industry or even following the news. Traditional stores are being closed at a rapid paste while new stores are being opened by DTC brands, such as Warby Parker and Rent The Runway.

While 90% of the revenue is still coming from brick & mortar stores, it is clear that digital channels are key in the buying journey.

Today, retailers understand that in order to stay ahead of the curve, it is crucial to embrace the change- and not fight it.

But what’s their secret to doing that successfully?

Image Source: Internet of Business

The key to staying relevant

A new report released earlier this month by Re:Tech and Viola Ventures, sheds light on the world’s most powerful retailers’ ways of staying relevant.

The report, which provides a deep dive into the Israeli retail tech ecosystem, focuses on the hottest startups that are working on the next generation of disruptive solutions for the global retail industry.

To get a better understanding of how big retail tech in Israel actually is, let’s take a closer look at some numbers:

1. In Israel, a country of only 8 million people, there are currently more than 500 active retail tech startups.
2. Despite its relatively young economy, Israel owns the second place in the density of tech startups per capita in the world – 1 startup for every 1,400 people (Just for comparison, France has only 0.112 startups for every 1,400 people and Germany has only 0.056 startups for every 1,400 people).
3. According to Startup Nation Central, more than $6 billion was invested in Israel-based high-tech startups in 2018, a record total and a 3 times increase since 2013.
4. In 2018, 32 retail tech startups raised more than $420M – 20% more than in 2017
5. That is also almost 10% of the total amount invested in retail technologies worldwide.
6. There where 7 M&A deals involving retail technology startups in Israel in 2018, with some of the biggest retailers in the world making moves to acquire top tech to complement their strategy, we’re talking Nike, Alibaba and Flipkart for example.
7. 2019 is already looking bright BTW, with 3 M&A deals to date – not even 3 months into the year.
8. The average investment in retail tech in Israel in 2018 was $14.5M – that’s 20% higher than in 2017.
9. According to Tracxn, Tel Aviv is the 3rd city in the world after New York City and Silicon Valley for the total amount of investment in retail tech. 
10. Many international retailers, including Amazon, Alibaba and eBay have established R&D centers in Israel, showing interest in both Israeli technology and human talent.

Image Source: Israel 21C

The opportunity

While everyone seems to be talking about the changes taking place in the retail industry, there is a major focus on what isn’t working, rather than the solutions available to tackle these challenges – many of which are being developed right here, in Israel.

Since the inception of Re:Tech we’ve been fortunate to work with some of the leading retailers in the world, and see this change firsthand.

The comprehensive overview of the rising retail tech ecosystem in Re:Tech and Viola’s report shows this is only the beginning.

 

Alla Foht

Alla Foht

Alla is a Partner & CSO at Re:Tech, a one-stop shop for retailers looking to discover and implement next-gen tech solutions. Re:Tech works with clients such as ASOS, eBay and Farfetch to introduce and lead open innovation programs, aiming to create results that affect the bottom line.
Alla Foht