This is according to a survey conducted by startup Nation Central. Avi Hasson, CEO of Start-up Nation Central: "Companies and investors are taking active steps to move operations away from Israel and this behavior has increased significantly in the last three months. Worrying trends such as registering a company abroad or launching new start-ups outside of Israel will be difficult to reverse
Start-Up Nation Central conducted a follow-up survey among the leaders of the Israeli technological ecosystem (founders and CEOs of startups and CEOs of venture capital funds) between July 18-19. The previous survey was conducted in March
The purpose of the survey was to understand the consequences so far in 2023 and the industry's expectations for the future, in light of the reform legislation in the judicial system and the civil unrest that has plagued Israel in the past six months. The survey questionnaire was filled out by 734 professionals, representing 521 companies, according to the following segmentation:
• Start-up/technology companies – 615 respondents
• Investors – 119 respondents.
Although the survey focuses on the local risks posed by the judicial system reform process, it is important to note the difficulty in isolating these risks and actions of investors and high-tech companies from global economic trends, especially regarding the difficulty of raising funds and firing employees.
Therefore, we sought to gauge the expectations of the Israeli technology sector for recovery in the field of venture capital compared to the American technology and venture capital market. Main Highlights Below are the main findings from the survey we conducted in July:
- 68% of the Israeli start-up companies began to take active legal and financial measures, such as withdrawing cash balances, changing the location of headquarters outside of Israel, transferring employees and carrying out layoffs.
- 22% of the companies report that they have diversified cash balances outside of Israel and 37% of the investors say that companies in their investment portfolio withdrew part of their cash balances and transferred them abroad.
- 8% of the companies report that they have already begun the process of changing their headquarters locations, and 29% reported their intention to do so in the near future.
- 20% of investors indicate that companies in their portfolio have begun to change the location of their headquarters and 69% of investors indicate that companies in their portfolio intend to do so in the future. • 67% of investors invest or are considering investing in foreign companies - investments outside of Israel are growing as a component of the Israeli venture capital investment strategy.
- 65% of investors already see signs of recovery in the American venture capital market or believe they will see them in the next six months, compared to only 12% in Israel.
Avi Hasson, CEO of Start-up Nation Central: "Companies and investors are taking active steps to move operations away from Israel and this behavior has increased significantly in the last three months. Worrying trends such as registering a company abroad or launching new start-ups outside of Israel will be difficult to reverse. As an organization with a mission to strengthen the technology industry in Israel, it is our duty to share this data with the decision makers in Israel and provide an up-to-date picture of the situation as it happens."
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