I'm working for a thriving startup in a European country of 11 million people. We had 100% growth per year until we had basically everybody in our own country and then it got massively harder. If we had started in the USA, we would have reached that point being 30x bigger, making billions of dollars, and much better prepared to conquer foreign markets.
So maybe Israel is doing quite well, but I know from experience that it would also do massively better if it had the size of the USA.
Most of the super successful companies in Israel are either doing things for the state or working for American corporations (or the American government).
Yeah, in general any successful EU/Europe startups target the American market, because Americans are typically richer, and the market is huuuuuuuggggge (relative to European countries, at least).
So maybe Israel is doing quite well, but I know from experience that it would also do massively better if it had the size of the USA.