Israel startup boom post war? Hope in hard times

"Israel's economy is driven significantly by high-tech, more than in any other country," stated Avi Hasson, CEO of Startup Nation Central, during the Calcalist's Israel Resilience Conference in collaboration with Phoenix. "To keep this sector thriving six years from now, a collaboration between the public and private sectors is essential, along with visionary leadership that avoids damaging policies," he emphasized.

Hasson highlighted critical issues currently threatening the sector's leadership. "To maintain our high-tech leadership, it's crucial that we avoid drastic measures like severe cuts to higher education budgets, reductions in funding for the Volcani Institute, or any actions that undermine the ecosystem which is foundational to Israel," he said. He stressed the importance of maintaining a supportive political, economic, and tax environment to reassure investors that innovation and entrepreneurship will continue to be priorities, regardless of the circumstances.

He also pointed out that the future of Israeli high-tech lies in its global connections and the ability to innovate across various sectors. "Without a forward-looking approach that integrates more industries into the innovation landscape and ensures that top talent remains in Israel, the future of our high-tech sector is at risk," Hasson added.

Referring to the resilience of the high-tech sector amid challenges, Hasson noted that despite recent adversities, including a war and economic downturns triggered by rate hikes and proposed judicial reforms, the sector has continued to perform.

"Even as 15% of the workforce was called to reserves, and travel disruptions prevented investors and clients from visiting, the high-tech sector did not stop delivering," he explained. This resilience is evident in the significant capital raised by tech firms and continued investments, like Intel's commitment to building a factory in the south, demonstrating the sector's crucial role in maintaining national economic stability and growth.

Juan Delgado-Moreira, co-CEO of Hamilton Lane, a $900 billion asset management company, said in a recent interview:

“now is the best time to invest in israel. the only real essential market for venture capital, apart from the usa, is in israel, and those who do not invest in it should be ashamed

Or the words of Justin Borus, the founder and chief investment officer of Ibex Investors who just raised $106M to invest in early-stage Israeli startups

“the U.S. credit rating forecast dropped in November, and since then the S&P 500 index has jumped by 15%. investors do not give the credit rating the same attention as before. what is important for them now in the context of Israel is a permanent ceasefire. this could accelerate a new rally in the domestic market, so we are also becoming more aggressive here. we recruited two more people to the office in Tel Aviv, and in terms of investments, the current situation in Israel is the best in the 12 years i have been working here. today it’s hard to see that, and we also felt that way after 9/11, but since then the markets in the U.S have quadrupled.

Israeli tech startups raised a total of $1.6 billion from investors in the first three months of the year, in a first sign that the fundraising drought caused by the outbreak of the Israel-Hamas war is beginning to show some recovery, according to a report compiled by research center IVC and LeumiTech, a Bank Leumi arm that specializes in tech companies.

Capital raised by Israeli tech companies rose 10 percent in the first quarter of 2024 from the previous quarter, when $1.45 billion was secured as the war led to a sharp plunge in investments

By Jon Simmons – Director of Israelinvestment.org

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Source. Calcalist