Nearly half of Israel's start-ups lost investments due to war: Report
The investments-related uncertainties are such that only 31% Israeli start-ups are confident of securing funding next year
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Nearly half of Israeli start-ups have lost investments since the beginning of the war with Hamas last year, according to a report.
The terrorist group Hamas attacked Israel on October 7, 2023, following which Israel declared war on Hamas. The two have been warring since in the Gaza Strip, which Hamas had controlled since 2007, and the fighting has devastated the Palestinian enclave.
In a report released over the weekend, the Tel Aviv-based Startup Nation Central (SNC) has said that 49 per cent of Israeli technology start-ups reported losing investments since the beginning of the war.
The findings were based on two surveys, one of which focussed on partners and managing directors (MDs) of investment funds and companies and another focussed on founders and CEOs of tech companies ranging from pre-funding start-ups to publicly-traded companies.
The future outlook was also not upbeat in the industry as only 31 per cent companies were confident of securing funding next year and 48 per cent were expending a decline in investments in the upcoming year, according to the report.
Since the outbreak of the war, the trust in Benjamin Netanyahu-led government’s ability to steer the economy through the crisis is also low, as per the report.
Israeli tech sector doesn’t trust Netanyahu
The vast majority of the Israeli companies doubted Netanyahu’s ability to help the crisis-ridden industry.
Netanyahu has been receiving all-round criticism for his failure to secure the release of the hostages over his new demands in July, such as the control of the Philadelphi Corridor along the Gaza-Egypt border. He has also been blamed for the failure to stabilise the situation in the northern part of the country along the border with Lebanon where Hezbollah has mounted attacks on a near-daily basis since the war with Hamas began.
At such a time, over 80 per cent of companies expressed doubt about the government’s ability to lead the industry’s recovery, according to the SNC report.
In Northern Israel, the distrust was as high as 90 per cent, as per the report.
The war has also affected the companies in terms of operations. The report said that the war forced 24 per cent of the companies to relocate some of their operations and 44 per cent companies reported some shortages in human capital.
Even with such disruption and poor projections, the Israeli industry has broadly been resilient through the war so far, as per the report.
The SNC reported that the technology companies had received $7.8 billion since the outbreak of the war in private funding, which was a decline of just 4 per cent year-on-year.
Similarly, the report said that mergers and acquisition (M&A) transactions were also just slightly down from the previous $10.6 billion to $9.6 billion.