There aren’t too many people who would characterize 2021 as a “bumper” year for their field, but that is exactly the word that Dror Bin, CEO of the Israel Innovation Authority, uses to describe the country’s high-tech sector during the second year of a global pandemic that brought additional lockdowns, border closures and successive waves of virus variants.

“I don’t think anyone would have expected Israeli high-tech to peak in such a way,” Bin, who was appointed CEO of the authority a year ago, told The Circuit in a recent interview. “It was possibly the best year ever for Israeli high-tech.”

Bin’s decisive statement is backed up by staggering data collected by the authority, an independent public entity that works to bolster Israel’s innovation ecosystem and serves as a bridge to the government.

During 2021, Israeli companies raised more than $22 billion in capital; exits, mergers and acquisitions, and initial public offerings totaled $80 billion; the accumulated market capital of Israeli companies trading on Wall Street was $300 billion; and there was a record 79 unicorns, companies valued at $1 billion and up.

In addition, the IIA noted that Israel’s high-tech sector now accounts for some 50% of Israel’s total exports and for 15% of the country’s GDP. Ten percent of Israelis work in high-tech, paying some 25% of the country’s total income tax. National expenditure on civilian R&D stands at 4.9% of GDP, second only to Korea and ahead of the Organisation for Economic Co-operation and Development average of 2.47%. It also places third, after the U.S. and China, in the number of companies (116) listed on NASDAQ.

The normalization agreements between Israel and four Arab states in 2020 has also boosted the sector. The newly established UAE-Israel Business Council, which has united more than 6,000 Emirati and Israel businesspeople, is predicting that bilateral trade could reach $2 billion in 2022, an increase of over 50% from 2021 and many of the newly formed ties are in the tech sector.

“I’ve been working in Israeli high-tech for 25 years and two decades ago would never have dreamt that we would reach where we are today,” said Bin, former president and CEO of RAD Communications, a Tel Aviv-based company that manufactures networking equipment.

The COVID-19 pandemic, which forced many businesses and services into the virtual space, actually “stimulated the demand for high-tech,” Bin explained, adding that Israeli companies were quick to adapt to the new environment and the government stepped in to keep investment flowing into the startup sphere.

“There was a digital transformation, and many things that once took place in the physical world had to move to the virtual world, which increased demand,” he told JI. “The Israeli DNA has the ability to be flexible and to adapt quickly to changing circumstances, also there is a long history of entrepreneurs, investors and government policies that benefit the sector.”

“When [COVID] started, the market went into shock; many investors were reluctant to invest because the uncertainty was high,” Bin explained. “We got money from the government and, for a short while, invested in different types of startups until investors were ready to return — this was one of the main reasons we did not see a fall in the number of startups in the country.”

Established in 2016, the Israel Innovation Authority has three main functions — investing in research and development of innovative and ground-breaking products with an annual investment budget of NIS 2 billion ($640,000); preparing for future technology trends; and enabling regulation, including removing obstacles and finding ways to expand human capital for the high-tech sector.

After the “bumper” year, Bin said he expects the industry to keep growing and expanding, with an emphasis on maintaining Israel’s high-tech inside the country, in contrast to the past, and diversifying into new areas of innovation.

“There has been a paradigm shift that will change many things going forward,” he said. “Traditionally, Israel’s start-up ecosystem was based on the establishment of small companies whose goal was to find a multinational or American company to buy it out.”

Now, Bin said, there are around 10-15 companies that have become giants in their space and are choosing to remain in Israel. He estimates that a further 100 Israeli companies have the potential to become leaders in one of the global markets.

Bin also said that Israel’s high-tech market was beginning to branch out in new directions.

“If Israel was strong in cyber and fintech or the enterprise software market in the past, we have seen a shift into new markets like food-tech, specifically alternative proteins, agritech, and Bio-Convergence (developing new medicine and medical devices),” he said. “The imagination can keep on working here full-time to find many more exciting new things.”

In order to further facilitate the growth, IIA has been working to ease Israeli bureaucracy, loosening regulations in order to allow Israeli companies to flourish. Bin gives the example of the drone market, a focus in recent years for the authority. Bringing together Israeli regulators, the Israeli Aviation Authority and industry innovators, he said, was already “defining the playground so that all parties could benefit from it.”

He also said IIA has invested in one of Israeli high-tech’s biggest challenges — the shortage of manpower. “We intervened in this about two years ago and started implementing new models of recruiting manpower to enter the industry,” said Bin, describing a program for re-training for those with academic qualifications and another to bring in underrepresented populations such as women (who make up roughly 30% of the sector’s employees), Arabs and the ultra-Orthodox.

Bin said there was no single element to Israel’s success in creating a booming global innovation hub. “What you need to create this magic is for it all to happen in the right place at the right time,” he told JI.

Citing a combination of Israel’s risk-taking culture, the country’s necessity to develop defense systems and a very smart government policy, Bin added: “There is also the fact that Israel is so small, and being small is an advantage when it comes to innovation, which often evolves in dense places where everyone knows everyone,” he said. “All these things have blended together well to create wave after wave of innovation.”

“No matter how you want to look at the Israeli ecosystem, whether its capital raised, quality of capital, unicorns, IPOs, whatever metric you want to look at, the Israeli tech ecosystem grew exponentially in 2021, it was our best year yet by far,” concurred Hillel Fuld a tech columnist and startup advisor.

Explaining the growth, Fuld referred to last week’s Torah portion, where it talks about the Jews in Egypt and how the more they were oppressed, the more they multiplied.

“We have this tendency as Jews to thrive under pressure,” he said. “There is an inverse correlation between terror and innovation, meaning you would think that if there is more terror there would be less innovation but that is not the case at all, so in 2021, the year of a pandemic, you would think it would be slow or there would be a decrease in innovation but in reality, that was not the case.”

“To say I was surprised, I was not surprised because all indications showed that we were going to keep growing but the rate of growth did surprise me because it was just so explosive this year,” said Fuld.

Video game company Take-Two Interactive has reached a $12.7 billion deal to acquire rival company Zynga, catapulting the “Grand Theft Auto” creator into one of the industry’s most formidable game publishers.

The deal, one of the largest in video game history, was announced on Monday by Take-Two CEO Strauss Zelnick and Zynga CEO Frank Gibeau. Expected to be finalized later this year, the merger will unite Take-Two, which specializes in PC and console gaming, with Zynga, a free-to-play mobile-game behemoth.

The two executives, which described the purchase as a “hand-in-glove fit” in a Monday morning conference call, anticipate the merger will result in an annual cost savings of $100 million and an additional $500 million from improved collaboration between the two firms.

Under the terms of the deal, Take-Two will buy all outstanding shares of Zynga’s stock for $9.86 a share, a 64% premium on the company’s share price as of Friday afternoon. The acquisition will be paid in both cash and Take-Two’s stock, granting Zynga’s shareholders one-third ownership of Take-Two.

Zynga was founded by Mark Pincus in 2007 when it piloted an online poker game played on Facebook. Since then, Zynga has grown into a large company with $2.3 billion in sales in FY2020. 

In a Medium post discussing the deal, Pincus described the “bittersweet moment” and thanked his colleagues over the years for his business’s success. “We’re seeing games expand in every direction from hyper casual to entire persistent worlds,” wrote Pincus. “I believe the company will have the franchises and scale to lead in every category.”

The different specializations of the two firms will complement each other as they now work together. Take-Two, which boasts hits including “Grand Theft Auto,” “NBA2K” and “Borderlands” produces games designed for PCs and consoles, but does not have free mobile versions. Zynga’s business model, which offers free mobile entertainment with in-app premium purchase options, has pioneered successes including “FarmVille” and “Words With Friends.”

With mobile gaming ascendant, Take-Two will benefit from Zynga’s mobile development team, which is expected to develop mobile options for Take-Two’s offerings. Under the planned acquisition, more than half of Take-Two’s projected bookings in Fiscal Year 2023 will come from mobile, diversifying Take-Two’s offerings and making it competitive with other developers as mobile gaming gains traction.

Zelnick called rolling out mobile options for Take-Two games a “high-priority initiative,” saying, “We see tremendous untapped potential to bring Take-Two’s renowned console and PC properties to mobile.”

Take-Two will also benefit from Zynga’s in-house advertising team, removing the added costs of outsourcing advertising operations.

The deal comes after the gaming industry enjoyed a boom during the pandemic, as social distancing interventions and lockdown restrictions pushed consumers to spend more time gaming, a trend that translated to large share price increases for both Take-Two and Zynga over the past two years. Yet Zynga’s stock tumbled last summer amidst societal reopening following COVID-19 shutdowns and after Apple instituted privacy reforms restricting how advertisers can track consumers on its devices, which made gaming less profitable.

Zynga has consistently maintained that its stock downturn from reopenings and Apple’s new privacy policy are transitory, and has remained optimistic about a stock rebound. On the Monday call, Zynga’s Gibeau said that these factors will not contribute to long-term drags on gaming, and explained that Zynga accepted a deal despite a feeling that its stock is undervalued because of the growth opportunities afforded in the new partnership.

“We saw incredible strengths available to us with regards to scale, data, audience expansion into new categories and product capabilities that would help us aggressively pursue cross platform. So from our perspective, we would be able to grow faster together. And the deal that was constructed in the framework with a 64% premium really put us into a position where we felt that this was the right course of action for our shareholders,” explained Gibeau.

The mammoth merger was evaluated by a strategic committee of independent directors from Zynga’s board and decided with unanimous approval from Zynga’s board of directors. Combined, the two companies reach over one billion users and employ 8,000 developers.

Zelnick will continue serving as Take-Two’s CEO, with the rest of Take-Two’s management remaining intact, while Zynga’s leadership team will assume responsibility for Take-Two’s mobile operations. Take-Two will also expand its board to accept two new directors from Zynga’s board.

At a time when Congress appears increasingly fractured along party lines and between chambers, a group of eight House and Senate lawmakers will come together this week to launch a bipartisan Abraham Accords Caucus, focused on supporting and promoting the normalization agreements between Israel and Arab states.

The caucus’s co-chairs will be Sens. James Lankford (R-OK), Jacky Rosen (D-NV), Joni Ernst (R-IA) and Cory Booker (D-NJ), and Reps. Cathy McMorris Rodgers (R-WA), David Trone (D-MD), Ann Wagner (R-MO) and Brad Schneider (D-IL). Lankford described the new group as a “cheerleading squad” for the Accords in an interview with Jewish Insiderlast week.

“The bipartisan, bicameral Abraham Accords Caucus will provide a unique opportunity for world leaders to come together in our common pursuit of creating a better, safer and more prosperous world for our children and grandchildren,” Rodgers told JI. “I am encouraged by the progress we have made, and I look forward to the amazing things we can accomplish together through our shared commitment to a better future in the name of peace.”

Lankford and Trone said the group came together around a shared goal of supporting the Accords, which were signed in September 2020 between Israel, the United Arab Emirates and Bahrain, working to expand the agreements and promoting economic activity among the countries in the agreement.

“In just one year, the Abraham Accords have already transformed the Middle East by contributing to regional peace and stability, promoting U.S. interests, and enhancing Israel’s security,” Rosen added. “The Abraham Accords Caucus will build on that success by providing bipartisan leadership to strengthen existing partnerships and widen the circle of peace to new countries.” Since the signing of the Accords, Sudan and Morocco have also normalized relations with Israel.

Lankford said that the group can also help keep the executive branch focused on adding more countries to the agreement, both during the Biden administration as well as those of future presidents.

“I don’t want this getting lost in the State Department,” he said. “So this is a way that we can actually reach out to State and continue to push that, and continue to be able to encourage those countries… and we have relationships with them as well.”

The group has not yet sketched out any specific projects or initiatives that it plans to pursue, but Lankford said the group has discussed trips to and conferences with the signatory countries.

“Finalizing the Abraham Accords was a historic step toward peace in the Middle East,” Ernst said. “We must continue these efforts to further our nation’s partnership with Israel and promote peace and prosperity, and I look forward to working with my Democratic and Republican colleagues in the Abraham Accords Caucus to do so.”

Lankford also anticipates that the caucus will urge companies to engage economically with countries in the bloc and collaborate with members of the Knesset and government officials in the Arab states. Trone said the group will also work to support U.S. government investments in the Accords countries, as well as reach out to Egypt, Jordan and Palestinian leaders.

“The United States must continue to play an active role in fostering further dialogue and partnership between Israel and other Arab countries, and I look forward to doing just that as part of this bipartisan group,” Booker told JI.

The path to forming the caucus has not been without a few hurdles: The original plan was to launch the group around the first anniversary of the Accords last September.

Lankford primarily blamed the pandemic for the delays, adding that the Biden State Department’s calibration of its policy on the Accords also took time and that Democratic colleagues told him that they wanted “know exactly where State is on this” before joining the caucus.

“My concern initially was [that the] State Department was hesitant on it, to try to figure out, ‘Are we going to continue [the Accords]? Is this larger?’ They were slow to the trigger last year,” Lankford said. “I’m not not trying to throw anybody on the bus under it. State’s got to figure out what they’re going to do — I think they’re on board now… and working to be able to gain support on both sides of the aisle.”

Trone said, “The biggest focus has been that we really wanted to make it bipartisan and it took a little while for everybody to understand why the caucus will matter and what the caucus is trying to do… and that is a bipartisan — no politics, no party”

Trone said he expects the caucus, which will add members in matched bipartisan pairs, to grow quickly.

It’s less clear at this stage how the caucus might engage with the other major congressional initiative, the Israel Relations Normalization Act, which has garnered support from nearly three-quarters of both chambers but has stalled since being introduced last year. Rosen, Booker, Schneider and Wagner are the original sponsors of that legislation in their respective chambers, and all of the caucus’s members are listed as co-sponsors.

In the Senate, Sen. Ted Cruz (R-TX) is blocking fast-tracked unanimous passage of the legislation, citing concerns about language in the bill establishing U.S. policy as supporting a two-state solution between Israel and the Palestinians. In the House, the bill passed the Foreign Affairs Committee in September but has not yet received a floor vote.

Lankford declined to say specifically how the caucus might engage on the bill, explaining, “I don’t want to try to say for the other three that are helping me get this thing off the ground what’s going to be a priority at the beginning. So let me not say that as a priority. I’m just telling you, anything solidifies the agreement and expands the agreement, we’re going to be for.”

Lankford said he had not discussed Cruz’s objections to the bill with him.

A spokesperson for Rosen, one of the bill’s original Senate sponsors, offered a similar response saying, “Senator Rosen is a co-sponsor and a strong supporter of the Israel Relations Normalization Act, and the Senate Abraham Accords Caucus will explore a range of legislative opportunities once launched.”

Trone said that the caucus can “without question” help to move the bill through the House.

The leaders of the Israeli Knesset’s Abraham Accords Caucus congratulated their U.S. counterparts on the announcement in a statement Monday. 

“I deeply cherish the support from the United States and offer my congratulations on the establishment of a sister-caucus in America, with whom we can advance further frameworks for regional cooperation,” Knesset Member Ruth Wasserman Lande said.

The Abraham Accords Peace Institute, a group founded last year by former Trump administration senior adviser Jared Kushner to promote trade and tourism between Israel and the Accords countries, will be collaborating with the caucus.

The caucus “will play a role in a number of ways but the most important I think is to strongly show the support that exists in the U.S. popularly and within the government for the Accords and for their continuing growth and expansion,” the institute’s executive director, Rob Greenway, told JI. He expects the caucus can “do a great deal” to support the Accords’ expansion, keep the Accords top of mind in Congress and help shape pending legislation.

Arab youth consider Israel a formidable presence in the Middle East, trailing behind the United States, Saudi Arabia and the United Arab Emirates in terms of perceived influence in the region, according to the 2021 annual Arab Youth Survey, which seeks to measure the pulse of some 200 million Arab youths. 

The poll, conducted by consulting group PSB Insights from June 6-30 also found that, for the 10th consecutive year, a plurality of respondents ranked the United Arab Emirates as the most desirable country to live in (with 47% of respondents viewing the country as the best place to live), with the U.S. and Canada trailing in second and third places, respectively.

The 13th annual survey, which polled 3,400 people aged 18 to 24 across the Middle East and North Africa, found that 88% of respondents viewed Israel as an enemy, compared to 11% who classified the Jewish state as an ally. The results seem to indicate that recently minted ties between Israel and other Arab countries as part of the Abraham Accords have done little to change Israel’s reputation in the eyes of young Arabs, and that clashes between Israel and Palestinians contribute more to Israel’s image than its recent peace agreements.

Previous surveys have asked respondents if they consider countries such as Iran and Russia to be their enemies. The 2021 survey is the first to include Israel in the question.

Recent fighting in Gaza and the Israeli-Palestinian conflict left young Arabs disillusioned about the prospects for peace: 80% of respondents said they were “very concerned” or “somewhat concerned” about the Israeli-Palestinian conflict, placing concern for the conflict ahead of levels of concern about government corruption or personal debt.

Despite the affinity for the UAE and Western countries, few young Arabs (12%) are actively considering emigration, and many of those who are seeking to leave their countries hail from nations experiencing political and economic turmoil, such as Sudan, Morocco and Lebanon. Young Arabs who are considering emigrating cited the economy and educational opportunities as the top two reasons they’d consider leaving their home countries.

The results of the 2021 survey reflect optimistic sentiments: a majority of young Arabs believe their best days lie ahead, an improvement on the past four years, and desire to emigrate has decreased from the amount reflected in the 2020 poll.