Israel has become the first pit stop in the Federal Government's mission to create innovation "landing pads" across the world.

Israel's Tel Aviv was touted as the equivalent to Silicon Valley when Prime Minister Malcolm Turnbull and Innovation Minister Christopher Pyne announced the international focus of their $1.1 billion "ideas boom" strategy last week.

Israel — which has a population of 8 million — is home to thousands of technology start-ups raising billions in capital.

The small country has the third highest number of companies listed on the Nasdaq stock exchange in New York and locals have even dubbed the cluster of high-tech companies around Tel Aviv as "Silicon Wadi" — the term in Hebrew and Arabic for valley.

"We in Australia have watched Israel's economy rise from an economy primarily based on agriculture and traditional manufacturing sector to a technologically advanced nation," Mr Pyne told a room full of the CEOs of some of Israel's most promising start-ups, at a lunch in Tel Aviv this week.

"It has been nothing short of meteoric.

"I'm here because our Prime Minister Malcolm Turnbull said 'Israel is where you have to go.'"

In the Middle East, to promote the creation of a new innovation landing pad Minister Pyne said Australia had a lot to learn from the small nation.

"The potential for Australian companies to take advantage of Israel's knowledge-based, technologically advanced economy is enormous," the Minister said.

Launching Australian start-ups with global help

Minister Pyne said his department allocated $36 million towards creating five landing pads around the world to help Australian tech companies get a foot in foreign markets.

The pads will be a physical space for Australians who are looking to undertake entrepreneurial activity in the overseas location with access to venture capital funds, facilities and contacts — with the first pad to be set up in Tel Aviv.

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Israel-Australia Chamber of Commerce executive director Paul Israel told the ABC it was exciting to know Israel was the first landing pad.

"Its a great sign of the relationship between the two countries. With the mining boom now slowing down, Australia has a real challenge now to find new means of growth," he said.

He said Israelis were not scared to take investment risks.

"In start-ups there is a high chance of failure and that cannot be frowned upon by entrepreneurs or funders," Mr Israel said.

"And that is something that Israel is very good at.

"A lot of our guests comment that Israel's attitude toward failure is that it is not the end of the world."

Australia's business environment is 'too conservative'

Australian-Israeli businessman Andrew Hamilton works for an Israeli start-up firm called Neotop that is using new modular technology to stop water evaporation from reservoirs and dams.

Last year, his company won the Israeli Prime Minister's award for innovation.

Mr Hamilton said Israel was a more welcoming environment for new start-ups.

"Israel is inspired. Full of energy," he said.

"You can make things happen here.

"Australia is such a conservative business environment."

While Mr Pyne was in Israel, he signed a declaration of collaboration with the country's chief scientist Avi Hasson and also spent 45 minutes with the Israeli Prime Minister Benjamin Netanyahu to discuss security and innovation.

Mr Pyne also met with the Palestinian Authority's Minister for Education and Higher Education Dr Sabri Saidam.

The Palestinian Minister highlighted the biggest innovation challenge for the Palestinians was 3G-phone coverage, as the vast majority of the occupied Palestinian West Bank is still without the service.

Under interim peace agreements, Israeli authorities control cellular networks in the West Bank, but under a new deal signed in November Israel agreed to allow the installation of a 3G cellular network in the occupied territory.

It is not clear when the new measure will go into effect and the agreement will not extend to the Gaza strip.