Israeli Tech Sector Reels: Investments Drop, Companies Relocate Amid Gaza Conflict

September 14, 2024
Israeli Tech Sector Reels: Investments Drop, Companies Relocate Amid Gaza Conflict
  • The Israeli tech sector, crucial to the nation's economy, contributes approximately 20% to the country's output and generates 25% of income taxes.

  • Despite its importance, high-tech companies have raised $7.8 billion in investments this year, reflecting a four percent decrease from the previous year.

  • The ongoing conflict has led to significant challenges, with 24% of surveyed companies relocating operations outside Israel due to funding uncertainty and staff shortages caused by reservist call-ups.

  • Since the onset of the war in Gaza in October 2023, 49% of Israeli high-tech companies have reported losing investments.

  • Concerns are widespread, with over 80% of companies and 74% of investors doubting the Israeli government's capability to support the tech sector's recovery.

  • Avi Hasson, CEO of Startup Nation Central, emphasized the need for government action to stabilize the business environment, particularly through passing a responsible budget.

  • A recent survey revealed that 49% of tech startups experienced investment cancellations, and only 31% are confident in their ability to raise capital next year.

  • Hasson also warned that the prolonged conflict could hinder Israel's tech industry's competitiveness and potentially lead to the closure of non-defense-related startups.

  • The ongoing war has prompted companies to rethink their operational strategies, with one-third of surveyed tech firms considering shifting some operations outside Israel.

  • In the northern region, which houses 69% of high-tech companies, only 45% are fully operational, and 41% of tech firms have relocated activities to central Israel.

  • The conflict has also impacted Israel's credit rating, with Fitch downgrading it from 'A+' to 'A' due to heightened geopolitical risks.

  • The humanitarian toll of the conflict is severe, with reports indicating over 41,000 Palestinian deaths and significant displacement in Gaza.

Summary based on 2 sources


Get a daily email with more Tech stories

More Stories