How to open a startup in Israel
Israel has long been recognized as the “Startup Nation” a global hub of innovation, entrepreneurship, and technological advancement. Entrepreneurs from around the world are drawn to Israel’s strong ecosystem that combines world-class universities, a dynamic venture capital sector, and supportive government programs. However, opening a startup in Israel requires careful planning and understanding of the country’s legal, financial, and regulatory frameworks. This guide provides a comprehensive overview of how to establish and grow your startup in Israel.
an Israeli citizenship specialist
Company Registration
The first step in launching a startup in Israel is registering a legal entity. Most startups choose to incorporate as a Private Limited Company (Ltd) under Israeli law. This structure offers limited liability for shareholders, flexibility in ownership, and easy access to investors. Steps to register a company:
- Choose a company name. It must be unique and approved by the Registrar of Companies.
- Prepare incorporation documents. These include the Memorandum and Articles of Association, identification documents for directors, and a declaration of compliance.
- Submit to the Registrar of Companies. Registration can be completed online or through a lawyer.
- Obtain a company number and certificate of incorporation.
- Register for taxes. Companies must register with the Israel Tax Authority for Corporate Tax, VAT, and National Insurance.
Registering a company in Israel lays the foundation for long-term success and credibility. Beyond fulfilling legal obligations, incorporation signals to investors, clients, and partners that the startup operates transparently and in compliance with Israeli commercial law. Although the process is relatively straightforward, attention to detail is crucial—from choosing a compliant company name to correctly filing tax registrations. Working with a local attorney or business advisor is often a wise decision for foreign founders, especially those unfamiliar with Hebrew-language documentation and bureaucratic procedures. Once incorporated, startups gain access to Israel’s advanced financial system, government innovation grants, and international business treaties—creating a solid platform for scaling both locally and globally.
Visas for Founders
Non-Israeli founders must hold a valid visa to live and work in Israel. There are several visa pathways suitable for entrepreneurs:
Entrepreneurs who begin under short-term innovation visas often transition to permanent residency or citizenship under the Law of Return, particularly if they are of Jewish descent. In practice, choosing the right visa strategy allows founders to operate smoothly, avoid compliance risks, and take full advantage of Israel’s global business environment. With assistance from agencies like WRAI, newcomers can ensure that visa applications, legal sponsorships, and renewal timelines are handled efficiently, freeing them to focus on building their company.
Funding Options
Israel offers one of the most diverse startup funding landscapes in the world. Entrepreneurs can secure financing from both private and public sources:
- Venture Capital (VC): Israel hosts over 100 VC funds, including Sequoia Israel, Pitango, and Vertex Ventures.
- Angel Investors: Early-stage funding from individual investors remains a popular option.
- Government Grants: The Israel Innovation Authority offers R&D grants covering up to 50% of development costs.
- Corporate Accelerators: Tech giants like Google, Intel, and Microsoft operate local accelerators.
- Crowdfunding: Platforms such as OurCrowd and ExitValley are dedicated to Israeli startups.
Additionally, collaboration with institutions like the Israel Innovation Authority or international partners can provide strategic advantages. Founders who combine local grants with private investment often achieve faster growth, international exposure, and resilience during early scaling stages.
Government Support
The Israeli government has been a cornerstone of the country’s startup ecosystem. Through the Israel Innovation Authority (IIA), the government provides grants, mentorship, and global partnerships. Startups can apply for programs such as:
- Tnufa Program: For early-stage entrepreneurs developing prototypes.
- R&D Fund: For companies conducting applied research.
- Incubator Program: Government-backed incubators provide office space, funding, and professional guidance.
Few countries match Israel’s level of institutional support for innovation. Through the Israel Innovation Authority (IIA), the government provides both financial aid and strategic direction to help startups grow sustainably. These initiatives go beyond funding—they create a long-term infrastructure that connects academia, venture capital, and global markets. Startups under the IIA umbrella receive access to mentorship, R&D partnerships, and tax benefits that substantially reduce operational costs. Moreover, repatriates and international founders working with organizations like WRAI can integrate seamlessly into these programs. By leveraging these resources, entrepreneurs not only secure financial stability but also become part of Israel’s broader innovation ecosystem—one that continues to produce some of the world’s most impactful technologies and global companies.
Taxes and Accounting
Understanding the Israeli tax framework is essential for any startup founder. Companies in Israel are required to pay Corporate Tax, VAT, and Social Security contributions. The table below provides an overview of typical tax rates and obligations:
| Tax Type | Rate (2025) | Description |
|---|---|---|
| Corporate Tax | 23% | Applied to company profits after expenses. |
| VAT (Value Added Tax) | 17% | Charged on goods and services; startups can claim input VAT credits. |
| Withholding Tax | 20–25% | Applies to payments made to foreign entities. |
| Dividend Tax | 25–30% | Paid by shareholders receiving dividends. |
| Employer Social Security | ~7.5% | Covers pension and health contributions for employees. |
Startups must maintain proper bookkeeping in accordance with Israeli Accounting Standards. Foreign entrepreneurs often hire local accountants to handle tax filings and payroll compliance. Many firms offer bilingual reporting, simplifying communication for non-Hebrew speakers.
Accelerators and Hubs
Israel’s thriving startup ecosystem is supported by a vast network of accelerators, incubators, and innovation hubs. These organizations provide mentorship, office space, funding, and access to investors. Some of the most notable include:
- MassChallenge Israel – A global, equity-free accelerator based in Jerusalem.
- Techstars Tel Aviv – Offers intensive mentorship and investor access for early-stage startups.
- SOSV IndieBio TLV – Focused on biotech and life sciences innovation.
- WeWork Labs and Mindspace – Popular co-working communities for entrepreneurs.
- WRAI (World Repatriation Agency Israel) – Supports English-speaking founders and repatriates moving their startups to Israel by providing guidance on registration, tax optimization, and relocation logistics.
Israel’s startup culture emphasizes collaboration, and many hubs host regular pitch nights, networking events, and hackathons. Founders can connect with investors and government representatives directly through these platforms. Opening a startup in Israel is an exciting opportunity to join one of the world’s most advanced innovation ecosystems. The country’s blend of entrepreneurial spirit, strong governmental support, and access to capital makes it an ideal destination for tech founders and visionaries. However, understanding the local legal, financial, and operational frameworks is essential to success.
Organizations such as the Israel Innovation Authority and WRAI play a crucial role in guiding foreign entrepreneurs through the process—from registration to scaling. With proper preparation, a clear vision, and the right partners, your startup can thrive in the Startup Nation and expand globally from the heart of Israel.
an Israeli citizenship specialist
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