From start-up nation to scale-up nation: A blueprint for Israel’s $1 trillion economy – opinion

Israel's aspiration for a trillion-dollar economy is hindered by institutional issues, not a lack of innovation. The country excels at creating startups but struggles to finance, retain, and scale them into large, durable Israeli companies. Foreign capital, while present, often leads to intellectual property and taxable profits migrating abroad, with the share of new startups incorporating in Israel falling from 80% in 2022 to 55% in 2025. Despite substantial domestic savings, much of this capital is invested abroad, and existing programs like Yozma 2.0 are insufficient in scale.

• Unnecessary friction in company registration and high regulatory demands, described by the OECD as among the most stringent, make it costly to operate and fail in Israel.
• The financial system is dated, with five banks controlling 98% of sector assets, and a thin public market, limiting growth capital for mature firms.
• The article suggests reforms including streamlining company registration, reducing fees, adopting small-company audit exemptions, and implementing "silence-is-consent" rules for business licensing.
• Financial reforms should include tiered bank licensing, independent clearing infrastructure, and incentivizing local investment houses to deploy capital into Israeli companies, alongside making the corporate bond market more accessible.

The goal is to make Israel a place where companies can remain, scale, and compound, rather than celebrating exits that transfer ownership and decision-making abroad.