Participants at the DLD Tel Aviv Digital Conference, Israel’s largest international high-tech gathering, held at the Old Train Station complex in Tel Aviv on Sept. 6, 2017. Photo: Miriam Alster/Flash90.

CTech – Israel is set to become a research and development nation instead of a startup nation, according to Hanan Brand, partner at Cornerstone Venture Partners, an early-stage venture capital firm headquartered in New York with offices in Israel and California.

Brand spoke Tuesday about opportunities for seed-stage companies in Israel at Calcalist‘s investors’ event It Tech Two to Tango, held at the events space of LABS, a coworking space located on the top floors of the Azrieli Sarona Tower in Tel Aviv.

On the surface, things look quite well for the Israeli tech ecosystem, but there is a worrying trend, Brand said. In Israel over the past five years, later stage financing rounds have doubled, while seed-stage rounds remained flat. The number of companies established in Israel has declined substantially since 2013, Brand said. Multinational corporations operating in Israel are at fault for this, he said, because these companies have sent tech salaries skyrocketing.

“Where is the incentive to start your own company?” Brand asked.

According to Brand, for Israel to maintain its Startup Nation status, more investments are needed in the seed and pre-seed stages. More companies need to be created in Israel, and more people from all sects in Israel need incentives to establish their own companies, Brand said.