Startups are an effective way of promoting innovation in the software industry. This article intends to improve the theoretical and practical understanding of the key elements and factors that promote the growth of a successful ecosystem by exploring the case of Israel, which hosts one of the most fruitful software startup ecosystems in the world. Data collection was based on semi-structured interviews, observations, and a questionnaire. The data analysis led to answers to research questions related to sociocultural, institutional, technological, methodological, and educational aspects of entrepreneurship, startups, and their ecosystem. The article also introduces a conceptual framework of the Israeli startup ecosystem and presents lessons for entrepreneurs and policy makers. Finally, it proposes a generalized version of the framework that can be used as a basis for future research in the field.