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Financing for Israel’s tech sector takes nosedive

The Cradle | NOvember 21, 2023

Israel’s venture capital (VC) sector has recorded a sharp slowdown since the start of the war between Tel Aviv and Palestinian resistance factions in Gaza. 

This sudden slowdown has proven to be a brutal bump in the road for Israel’s tech industry, one of the country’s most important economic sectors, alongside manufacturing and diamond polishing and cutting. 

In October, $325 million in funding across 120 deals was invested in Israel’s VC sector. This is a steep drop against the $1 billion in funding across 232 deals just one month prior in September, according to Tel-Aviv-based IVC Research Center. 

The drop in VC funding raised anxiety among Israel’s financial elite, as a group of venture capitalists started up a fund to help the crippled tech sector named Iron Nation, which 150 companies have already joined. 

“The tech economy is critical to our nation, and we encourage more to join us through investment, donation, or contribution,” said Gil Friedlander, co-founder of the project. 

Chemi Peres, the son of former Israeli prime minister and president Shimon Peres, is also a part of the fund. “Some start-up companies that were about to close an investment, they were about to close a deal, everything seemed fine. And then the war broke out,” Shimon Peres said, adding that investors are still around, waiting to see what happens. 
“Clearly, there has been some slowdown in new investments being closed since the war. Some slowdowns — but not a total slowdown by any stretch,” Alan Feld, founder of Vintage Investment partners, has said. 

Israel’s economy has taken a severe hit since the start of the Al-Aqsa Flood operation, with economists saying that the war has thrown the country into a recession. 

No previous war that Israel has fought has affected the Israeli economy in the same way.

The Cradle columnist Kit Klarenberg wrote regarding the successes of Al-Aqsa Flood, “Tel Aviv’s settler-colonial economy, reliant on the subjugation of Palestinians, may be facing a precarious future, possibly marking the next domino to fall in this unfolding scenario.”

With technology being a significant pillar of Israel’s economy, investors are trying to remain hopeful despite the latest drop in VC investments being worse than that of the 2014 war with Gaza. 

November 21, 2023 - Posted by | Economics, Ethnic Cleansing, Racism, Zionism | ,

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