The main message of the survey is that about 70% of Israeli startups have taken the initiative to move part of their operations outside of Israel. The move comes in response to judicial reforms proposed by Prime Minister Benjamin Netanyahu’s far-right coalition, which aim to limit the Supreme Court’s power to veto legislation.
The proposed changes sparked widespread protests across the country, with demonstrators saying the reforms threaten Israeli democracy by removing checks on executive power. The business community also expressed concern and He attributed the 70% decline in technology fundraising in the first half of this year to planned changes.
The technology sector in Israel plays an important role in the country’s economy:
It contributes 15% to economic output and provides 10% of job opportunities. Moreover, more than half of the country’s exports and a quarter of its tax revenues come from this sector. However, most of the investments in the sector are not from institutional investors, but from venture capital funds.
In addition to the above results in the survey 22% of the companies reported diversifying their cash reserves outside Israel, while 37% of the investors indicated that their cash portfolio companies had moved their cash reserves abroad.
It will be difficult to reverse these troubling trends, such as foreign incorporation or new startups outside of Israel
– warned Avi Hasson, CEO of Start-Up Nation Central.
Cover image source: Shutterstock
