TOKYO -- The eyes of the tech world on venture companies in Israel. Even the U.S titan Google and Japanese online retail giant Rakuten are paying attention to the venture boom taking place in the country.
The amount of funds raised by start-ups through initial public offerings in the first half of this year in Israel is already more than the whole of last year -- nearly 60% more.
In Israel, the military ends up producing many entrepreneurs. The government and the private sector also help by providing financial support for venture companies.
Many companies and investors around the world are paying close attention to competitive Israeli venture companies that are proliferating in a wide range of areas, including software, cyber-security and medical care.
Former military elites
ShareTalk is one of those promising venture companies. Based in Tel Aviv, Israel's commercial hub, ShareTalk has a smartphone app that allows users to share their locations on a single map and photos from Facebook, among other features.
The start-up's co-founder Amit Yogev said that he will seek to succeed in the business world together with his former colleagues in the Israeli military.
Yogev hails from Unit 8200, the Israeli Defense Force's unit specializing in countermeasures against cyberattacks and intelligence gathering using computers.
Israel has a conscription system, and only a tiny fraction of high school graduates are assigned to the military's intelligence organizations. A unit specializing in the development of military technologies is staffed only by members who have particularly high academic standing and pass extremely tough tests.
This elite group often finds members eventually entering the business world, which is what ShareTalk's Yogev did.
The Israeli military has military technologies unrivaled in the Middle East, including an electronic map for field, or open, battles that accurately shows the positions of allied and enemy forces, and a virtual reality training software for fighter pilots.
In short, the Israeli military is a treasure-trove of excellent human resources and technologies.
According to an executive at an Israeli IT-related company, those who founded cyber-related companies get updates on cyberattacks for their future business while they temporarily go back to the military for reserve service every year.
Government, private sector
In addition to the military, the central and local governments and the private sector are also playing key roles in helping new businesses.
People in their 20s wishing to found companies were recently seen vigorously exchanging views on business ideas and financing methods at a so-called incubator in Tel Aviv that supports the commercialization of promising technologies.
In Israel, there are more than 20 facilities run by the central and local governments to help people start businesses. The state-run facilities provide a subsidy of up to 80 million yen ($781,000) to a future entrepreneur if he or she passes a screening.
Venture capital funds are also playing an important role in helping new businesses grow. They are growing in size as many IT and biotechnology venture firms become known.
The amount of funds raised by IPOs in the first half of this year reached $570 million, 58% more than the amount for the whole of last year.
David Heller, who runs a venture capital company, has set up funds jointly with European financial institutions such as UBS and Dresdner since the 2000s. Heller said he is also looking for promising venture firms in Japan.
Good match for Japan
Many foreign companies have become fascinated by the creativity found in Israeli technologies.
Last year, Google acquired Waze, an Israeli smartphone navigation app start-up. Earlier this year, Rakuten acquired Cyprus-based free smartphone chat app provider Viber Media, which has a business foothold in Israel.
Meanwhile, some Israeli companies have also clinched business deals with Japanese companies as equals since last year.
Semiconductor foundry service provider TowerJazz acquired three semiconductor plants from Panasonic, while Teva Pharmaceutical Industries, the world's biggest generic-drug maker, formed a sales alliance with Takeda Pharmaceutical.
During his visit to Japan in May, Israeli Prime Minister Benjamin Netanyahu called for closer cooperation between the two countries in the area of high technology.
Israel will likely draw growing attention from Japanese people and companies as the Japanese government plans to step up top- and ministerial-level contacts with the Israeli government.