Israeli startups are typically built from day one to target the global market, and predominantly the US. It’s impossible to build a decent size business targeting the local market since Israel has a small population and is surrounded by dissimilar and mainly hostile neighboring countries.
However, in the very early stages of a startup Israeli founders often target the local market. First, most of the founders’ network will naturally be Israeli making it easier to penetrate locally. Second, it’s common to get harsh, non-polished feedback from Israelis (if you are willing to take it) which can be helpful in the early days of designing a product. And most importantly, it’s more convenient and efficient to work locally instead of flying back and forth or working with different time zones.
Read more at Venturing Startup Nation.