It looks like we're about to realise we can "actually make [money] on minds not mines", he says in his Jerusalem office, his voice as loud as his floral-themed shirt.

Some of them were among the 350 people, including Australian businessman and Israeli resident James Packer, who made it to the Australian embassy's "#Ozraeli" party celebrating ties between the two countries on the ocean-front in ancient Jaffa in September.

A rock band, drag queens and a stand-up comedian provided the entertainment at the function, described as "one of the most unusual diplomatic functions that Israel has seen". It was a high point for the innovative diplomacy of Australia's ambassador to Israel (and youngest ever ambassador) Dave Sharma. It even trended on Twitter, briefly.

Up to 40 Australian trade delegations have visited Israel this year: "a record for sure", says commissioner Ethy Levy of the Israel Trade and Economic Commission in Australia. NSW Premier Mike Baird led one in April; Greater Sydney Commission chief commissioner and prime ministerial spouse Lucy Turnbull led one in May.

A further deluge of Australians hit in late September, coinciding with the city's annual DLD Innovation Festival in Tel Aviv where start-ups, governments, multinationals and venture capitalists from all over the world congregate in search of deals. At least six separate delegations including from Telstra, the AMP, Visy Industries and the Trans-Tasman Business Circle toured the start-up capital's innovation ecosystem.

When Sharma took up the post three years ago, Australia "wasn't on the map" for the so-called start-up nation and there was "not much appetite in Australia for doing more" either, he says.

The upsurge in interest has coincided with the end of the commodities boom and Prime Minister Malcolm Turnbull's personal commitment with the billion-dollar National Innovation and Science Agenda launched last December.

The delegations find doors wide open to the local ecosystem of more than 290 local venture capital, angel investor and micro funds; 350-plus megabrand multinationals like Google, Microsoft, Apple, Facebook and Samsung; 25 start-up incubators; 70 accelerators and 5000 start-ups, as well as 282 research and development centres, mostly operated by multinationals.

Treasurer Scott Morrison has announced the two countries are negotiating a tax treaty aimed at improving trade and business links between the two countries.

Lessons from the 'Start-up Nation'

Almost every Australian business person among dozens Fairfax Media met in Israel said the country could teach us a lot about how to build an innovative economy.

Israeli Innovation Authority chairman Avi Hasson says the ecosystem is "mature". "Ten years ago it would have been difficult to name revenues of over $50 million in tech. Today we have hundreds of companies in multiple sectors." High-tech exports make up over 40 per cent of Israel's manufactured exports.

Sharma has studied it more closely than most. People look to Silicon Valley for inspiration, but Israel is "much more comparable" to Australia in many respects, he says. It has a relatively small population and domestic market that depends on exports, open markets and access to foreign capital for prosperity; a large migrant workforce and a forthright business culture that is relatively flat-structured rather than hierarchical.

"There are things we can learn that we could not really learn from a system as big and gigantic as the US," the ambassador says.

And after decades of singular economic focus on innovation, Israelis are willing to share: "The general view in the hi-tech world here is there is plenty to go around, and we can all grow the pie," Sharma says. PriceWaterhouseCoopers says 2014 was a record for Israeli hi-tech exit deals, with more than 70 stake sales from mergers, acquisitions or initial public offerings valued at nearly $15 billion.

A culture of teamwork learned in the military, multiple interlocking social networks, an attitude of "chutzpah" or gutsy determination and an acceptance of failure as a learning experience are the attributes most often credited with Israel's start-up success, notably in the 2009 bestseller Startup Nation by Dan Senor and Saul Singer.

Israel spends 4.3 per cent of GDP on research and development, twice the OECD average and the highest per capita in the world. It also has more venture capital investment than any other nation, and spawns more start-ups a year than anywhere outside Silicon Valley. There are more than 40 government funding streams for start-ups, says Hasson. Yet for every $1 the government invests, the private sector invests a further $5, with the result that the Israeli government has the lowest share of investment in start-ups compared with the private sector of any OECD country. "It's not really surprising, because as a company matures, as the risk goes down, everyone is happy to invest", says Hasson.

Israel-Australia deals are surging

Victoria has led the way in building hi-tech relationships with Israel, but NSW is putting on a late burst, with Baird staking a claim for NSW as "Australia's start-up state". He declared his April trip "life-changing"; the Australia-Israel Chamber of Commerce reciprocated that it was a "game-changer". NSW and Israel committed $2 million to develop co-operative start-up and innovation projects emphasising cyber security, agribusiness and water management.

Partly as a result of that upgrade in relations, a joint Austrade-NSW government delegation of 14 participants from eight NSW cyber security and fintech start-ups became the first alumni of the Tel Aviv Landing Pad, one of five around the world set up under the Turnbull government's innovation agenda to help Australian startups go global. It is housed at SOSA, an entrepreneurial work space occupying four floors of a vintage industrial building in south Tel Aviv. Set up by key players in Israel's innovation sector, it aims to be a "bridge between the global demand for technologies [from multinationals] and the supply of disruptive technologies in the market", says general manager Uzi Scheffer.

The Commonwealth Bank signed a deal last year with the Israeli Office of the Chief Scientist which gives it privileged introduction to emerging technologies from Israeli start-ups in areas relevant to its operations. It has since evaluated "dozens of companies" with disruptive technology in cyber security, blockchain, fintech, robotics and big data, chief information officer David Whiteing said. These have been narrowed down to six for more intensive evaluation, "with a view to experiment with them on our own infrastructure".

Jon Medved, chief executive of OurCrowd, in Jerusalem. Photo: Catherine Armitage

OurCrowd's Australian "Our Innovation Fund" is on track to be fully subscribed with $50 million slated for investment in Australian tech start-ups. Medved says the deals in Australia are "wonderful". "The valuations seem to be very nicely priced, they are not crazy like they are in Silicon Valley ... They are a fraction of the price". OurCrowd has also raised $US60 million-$US70 million from Australian investors on its crowdshare platform, "a big chunk, about 20 per cent of our total capital". That's "way beyond the rightful share", which should probably be under 5 per cent, he says.

There is a growing trend for Israeli tech companies to list on the Australian Stock Exchange. Five have done so since January 2015, including satellite communications company Sky and Space Global and data storage company Weebit Nano Ltd. A further three are expected to list by the end of the year, ASX general manager of listings Max Cunningham told the Times of Israel. Levy says another 10-15 are looking at it.

Australian venture capital firm Square Peg Capital has set up an Israeli office and reportedly intends to spend nearly $200 million on Israeli growth-stage online and technology companies over three to five years. The firm took a delegation of more than 40 technology entrepreneurs, investors and executives to Israel last year, which included one of its lead investors, James Packer. Packer later said his private company Consolidated Press Holdings is working with Square Peg on technology sector investments including data storage, social gaming and cyber security. The IT sector in Israel has emerged as a hub for innovation and start-ups in technology-related services and will "provide major opportunities in the future", Packer told reporters.

Opportunities for Australian companies

Yanir Yakutiel says his Sail Funding is the first Australian company to "completely automate the lending process" by coupling a data-driven underwriting algorithm to accurately price risk with an advanced biometric security solution for verification. Recently launched in Sydney, the online lender to small business, which has raised $8 million in seed funding, will also be the first Australian start-up to take up a 90-day residency at the Australian landing pad at SOSA Tel Aviv. Yakutiel, a Sydneysider who grew up in Israel, says the residency will help Sail to tap into SOSA's extensive experience working with big financial institutions. "It gives us a sounding board for things we want to try which were unavailable to us in Australia." The business culture, which attaches no shame to asking for help and does not hold back with constructive criticism, helps you "check the robustness of your ideas", he says.

Yanir Yakutiel of Sail Funding.

"The whole community here is unbelievably supportive," says Matteo Grand of manner, an online insurance brokerage platform that was part of the NSW-Austrade delegation. He says any kind of progress takes two or three meetings in Australia, but "here, if you don't have key talking points or a resolution reached within 30 to 60 minutes, you get ejected from the meeting very quickly. It's a culture for getting things done".

Katryna Dow, founder and chief executive of NSW start-up Meeco, which seeks to create a mutually profitable relationship between individuals and institutions by leveraging the value of individuals' personal data, says Israel's cultural alignment on innovation is unique. "No matter who you speak to, everyone says you have to go global from day one. The expectation in Israel is, if you solve a problem it is for a mass audience, so people are not afraid to have conversations that are both visionary and practical."

Katryna Dow of Meeco: In Israel, people are not afraid to have visionary conversations.

While "trying to be Israel is not the right strategy" for another country, says the Israeli Innovation Authority's Avi Hasson, "we will work with pretty much anyone who wants to work with us".

An estimated 400 people attended The Bridge, an Israel-Australia Investment Summit, held in Sydney in November. Speakers included Dov Moran of Grove Ventures, inventor of the USB flash drive, Paul Bassat of Square Peg Capital, and Amnon Shashua of Mobileye, the Israeli Nasdaq-traded global leader in driver assistance and autonomous driving technologies. Levy of the Israel Trade and Economic Commission said the summit had led to negotiations on new deals worth "very conservatively" several million dollars between Australian and Israeli companies.

Catherine Armitage is innovation and ideas writer for The Sydney Morning Herald. She travelled to Israel as a guest of the Embassy of Israel in Canberra.