Investing in Israel: The Startup Nation That Refuses to Slow Down
I recently returned from Israel, and despite the ongoing war, one thing is impossible to miss: the country is booming. Tower cranes dominate the skylines of Tel Aviv, Jerusalem, Netanya, and Ashdod. If Israel had a national bird today, it would be the crane. The sheer pace of construction signals an economy that refuses to sit still.
A Tech Powerhouse Per Capita
Roughly 11–14% of Israel’s salaried workforce is employed in high-tech, one of the highest proportions in the world. While it may not always be ranked number one globally, it consistently sits near the very top. Tech is not just another sector here—it’s the backbone of the economy, driving over 20% of GDP and more than 50% of exports. Around 400,000 Israelis work in tech across more than 9,200 firms, from early-stage startups to multinational giants.
Nasdaq Presence: Small Country, Big Footprint
Israel’s reputation as the Startup Nation is well-earned. Despite a population of under 10 million, Israel ranks third worldwide—behind only the U.S. and China—in the number of companies listed on the NASDAQ. Over 130 Israeli firms trade there today, giving global investors exposure to everything from cybersecurity to biotech to fintech.
Entrepreneurial Culture and Tax Incentives
Israel fosters entrepreneurship with a unique mix of necessity, innovation, and policy. It consistently spends more than 4% of GDP on research and development—the highest share in the world. The government also incentivizes new immigrants and returning citizens by granting them a 10-year exemption on foreign income tax. This combination of culture and policy keeps Israel at the forefront of global innovation.
Resilience Amid Conflict
Even during wartime, Israel’s tech ecosystem continues to expand. In mid-2024, the government launched a $100 million support fund (with private sector matching) to ensure startups stay afloat during the disruption. The cranes in the sky are more than steel—they’re symbols of resilience.
How to Invest
Naturally, the question arises: How do investors take part in Israel’s growth story?
The answer is exchange-traded funds (ETFs). While no Israel-focused ETFs trade on Canadian exchanges, several are listed in the United States and accessible through Canadian brokers. The main ones include:
- EIS (iShares MSCI Israel ETF)
- ISRA (VanEck Israel ETF)
- IZRL (ARK Israel Innovative Tech ETF)
- ITEQ (Amplify BlueStar Israel Technology ETF)
Here’s how they’ve performed (in USD, as of recent fund reports):
| ETF | 1-Year Return | 3-Year (Annualized) | 5-Year (Annualized) |
|---|---|---|---|
| EIS | +57.0% | +18.4% | +14.3% |
| ISRA | +37.6% | +8.7% | +8.5% |
| IZRL | +36.0% | +13.3% | +2.4% |
| ITEQ | +16.3% | +4.8% | –0.1% |
Source: BlackRock, VanEck, Amplify, ARK; data through mid-2025.
The numbers speak for themselves: while volatile, Israel’s equity market has delivered strong results, particularly in the past year.
Bottom Line
Israel remains a paradox: a country under constant geopolitical strain, yet relentlessly building, innovating, and exporting ideas to the world. Its tech sector, entrepreneurial spirit, and capital markets footprint make it a unique—if volatile—investment opportunity.
For most investors, Israel is best treated as a small but exciting slice of a diversified portfolio. Talk to your financial advisor about whether U.S.-listed Israel ETFs make sense for you.
