Opinion
From cybernation to AI-nation - Israel must become an AI powerhouse
"With greater collaboration, a focus on Israel’s unique advantages, and increased government investment, the country can become the Startup Nation of the AI era," write the founders of AI startup Decart, Dean Leitersdorf and Moshe Shalev.
A few weeks ago, Cursor - an AI coding assistant - set a new record by reaching an annual revenue run rate of $100 million within a year of becoming profitable. This milestone earned Cursor’s parent company, a young startup named Anysphere, the prestigious title of the fastest-growing software company in history. For them, this is just the beginning.
Unsurprisingly, Cursor is a GenAI-based product. Just over two years since OpenAI released ChatGPT, igniting the AI revolution, companies and global superpowers locked in a race for AI dominance. Who will be the first to create a GenAI-based product reaching a billion users? Who will achieve AGI (Artificial General Intelligence) surpassing human-level intelligence? Who will replace Google, Amazon, and Facebook—or stand alongside them?
The ultimate prize in this race: companies valued in the trillions, generating hundreds of billions in annual revenue. AI holds the power to reshape global hierarchies and forge new superpowers. It is a high-stakes, all-or-nothing opportunity. The United States and China are poised to take the top two spots—but why shouldn't Israel claim third place?
Before Cursor, the title of "fastest-growing startup by revenue" belonged to an Israeli company, Wiz, a cloud security provider. Yes, Wiz’s success was in cybersecurity, a field where Israel has long been a leader. And yes, we are entering the AI race late. Competing in AI demands vast capital, world-class researchers, and deep experience. Yet in many ways, the race is still in its early stages, and there are critical steps we can—and must—take, to secure our place.
1. First, Israel must harness its unique strengths. Though small, it is brimming with talent and entrepreneurial spirit. Everyone knows everyone and a collective sense of mission prevails. This should be leveraged to foster close collaboration between academia and industry. Academia will play a pivotal role in the AI revolution—both through groundbreaking research and by training the next generation of AI experts. The few AI models developed in Israel—such as those from AI21, Lightricks, and our work at Decart—all trace their origins to university research labs. Moreover, elite university programs like those at the Technion consistently produce top-tier researchers. The entire industry, including Decart, would benefit from using many more highly trained experts.
2. Beyond academia, it's vital to recognize that Israel is not starting from scratch in the industry. The country has historically led in various fields — most notably cybersecurity. We can learn from the success of our cybersecurity sector, build on it, and even merge expertise between domains. The skills required for vulnerability research, for instance, can support optimization processes in AI model development. At Decart, this expertise has enabled us to cut AI training and inference costs by more than tenfold by optimizing inference engines and training infrastructures, allowing us to compete with significantly larger companies.
3. Speaking of costs - more funding, investment, and financial backing are critical. Israeli companies have already shown their ability to attract top global VCs. It is our responsibility to maintain this momentum and inspire Israeli entrepreneurs to build trillion-dollar companies. Only by aiming high can we secure the massive investments needed to tackle AI’s toughest challenges.
Government support is equally crucial. Initiatives by Israel’s Innovation Authority—such as the national AI investment program, which allocates approximately 500 million NIS (~$135M) to the sector by 2027—are steps in the right direction. However, these efforts must be far more ambitious. They should include international projects, provide significantly greater funding (500 million NIS is negligible in AI terms), and, most importantly, adopt a much faster pace. Why, for instance, is the target set for 2027 and not for this year?
Government investment isn’t just about funding— it must integrate AI into every aspect of daily life, from school curriculums to nationwide advertising campaigns. The necessary infrastructure must also be developed to support this transition. San Francisco offers a prime example of how to begin integrating AI into everyday life. Israel may be a small country, but in AI, there is no reason it shouldn't think and act like a global powerhouse.
The AI race is still in its early stages. There is much more to research, develop, and achieve. With greater collaboration, a focus on Israel’s unique advantages, and increased government investment, the country can become the Startup Nation of the AI era. This time, it could mean trillion-dollar companies, billions of users, groundbreaking products, and pioneering research. We must win.
The authors are the founders of Decart, Dean Leitersdorf and Moshe Shalev.
