As Israel reels from the Hamas terrorist attacks, some tech entrepreneurs and investors in the so-called “startup nation” are considering relocating to America, sources told On The Money.
“There’s a surge of patriotism right now but that will wane,” said one venture capitalist who has been told by multiple tech founders they are looking to leave. “I could see a mass exodus of people going to Miami — or another city like it.”
“The best entrepreneurs aren’t admitting it to many people but they’re contemplating leaving,” he added.
Likewise, top investors — who previously made trips to Israel’s high tech region known as “Silicon Wadi” — are now canceling visits they’d been planning in the coming months, sources said.
Employees from companies like popular stock-trading app eToro are now focused on defending their nation rather than moving forward with an initial public offering, according to sources.
Given so many tech workers are now being called to fight, capital raises and new products will likely be delayed, sources add.
Still, many venture capitalists remain confident Israel is still the best place in the world to recruit and build a company — and that the conflict demonstrates the strength of the people.
“I don’t think founders will get pity money. I think we’ll come out of it in the same position,” adds Gigi Levy-Weiss, a founding partner at NFX. “ We’ve been through hard times and we’ve already seen waves of this. We’re not happy about it but it’s not a problem to the business community.”
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Israel’s vibrant tech sector makes up nearly 20% of the country’s GDP. There are more VC firms per capita in Israel than anywhere in the world and most deals to invest in Israeli startups include US based investors, according to PitchBook.
Still, it was a brutal summer even before the attacks, when a “Start-up Nation Central” poll found that of 500 startups, nearly 70% were considering moving some capital and staff outside Israel in response to controversy over efforts to restrict the powers of Israel’s supreme court.
Israel’s tech industry has likewise grappled with soaring interest rates that have hammered the sector worldwide.
This year to date, the nation has secured just over $3.3 billion — a steep drop from 2021 when the nation received $25.9 billion in venture investments, according to Statista.
In the face of the drop, some Jewish venture capitalists are emphasizing the importance of doubling down to support Israeli businesses.
Gili Elkin, managing director at venture firm ICI fund, said she signed a term sheet to invest in an Israel company earlier this week.
“This is the best time to invest in Israeli founders since there’s less competition,” Elkin said. “This will end and Israeli companies are very resilient.”