‘All Hands On Deck. How Israels Vital Tech Sector Is Navigating The War

Israel's vast tech sector has faced many crises, from the financial collapse to the Covid-19 pandemic to the outbreak of the Israeli-Palestinian conflict. And every time the industry backfires, why is a country with only 9 million people always referred to as the “startup country” of the world?

But the war sparked by last weekend's Hamas attacks in Israel, which killed more than 1,300 people, has upended daily life and posed a unique challenge to the country's vital industries.

Schools are closed, Tel Aviv's once-bustling streets and shopping centers are empty and many shops are closed. Some are closed for safety reasons, but many simply cannot work because their workers are being drafted into military service.

“This is unlike anything we have experienced before,” said Avi Hassan, CEO of Start-Up Nation Central (SNC), which works to promote Israel’s tech industry globally.

“I think it is hard to find an Israeli who is not personally affected by what happened. “Right now there is a very high level of uncertainty about how this will play out,” he told CNN.

Technology is the most important sector of the Israeli economy. Before the war, feelings were hurt. Some tech executives say the government's plan to weaken the justice system misinformed investors, leading to a global slowdown in startup fundraising.

The direct impact of the war on technology companies was felt at the human resources level. Israel has called up more than 300,000 military reservists for the war; Most work and study in Israel, although some return from abroad.

SNC estimates that 10% of Israel's tech workforce is employed, and at some companies the figure is as high as 30%.

Monday.com (MNDY), a Nasdaq-listed project management software company based in Tel Aviv, said 6 percent of its global workforce is under consideration.

“As a global team, we can support each other and do not expect any disruption to operations,” communications manager Leah Walters told CNN.

Startups need money

Israeli technology companies accustomed to armed conflict have "rules of the game" to continue operating in the midst of war, said Yaron Samed, managing partner of the Tel Aviv technology company Founders Network.

“The pandemic has given our companies and their employees the opportunity to work from home,” he added.

However, some important functions of the technology ecosystem cannot be performed remotely. At least three high-tech conferences scheduled for this month have been canceled, including an AI summit by chipmaker NVDA where CEO Jensen Huang was scheduled to give a private speech.

Technology executives who spoke to CNN said fundraising and lobbying could also be important as investors wait to see how the situation develops after the country abruptly halted visits.

“The next two weeks will be tough, especially for those like us who are raising money,” said John Medved, executive director of the Israel-based Global Venture Investment Forum.

“The biggest challenge for the startup economy is making sure the money is spent because most of these startups are not profitable... they need continued investment,” he said. - he announced to CNN.

Although venture capital funding for Israeli startups has declined over the past two years - in line with global trends - the country remains one of the top destinations for technology investments.

Israeli startups will raise a record $27 billion in venture capital investments by 2021, more than in the last three years, according to the Israel Innovation Authority, a government agency.

A word of support

The technology industry accounts for 18 percent of Israel's gross domestic product, half of the country's exports and 30 percent of tax revenue, making its prosperity crucial to Israel's economy.

Some industry players believe the war will give a boost to the sector as it could attract support from investors interested in rebuilding the country.

TechAviv’s Samad said: “Sophisticated investors with experience in backing Israeli startups are not deterred by the war. » “On the contrary, they supported us a lot this time too.”

A “declaration of support” for Israeli startups, entrepreneurs and investors attracted more than 500 signatures from venture capital funds around the world on Friday.

“Israel is a constant partner in the global innovation ecosystem, leading technological development and supporting startups,” the statement said. “Now is the time to support Israel and the Jewish people.”

The same technology companies have settled their differences with the government over wartime reforms aimed at purchasing critical equipment for the military, and are offering expertise in areas such as missing person detection and artificial intelligence and cybersecurity.

“Integration is critical to the tech ecosystem,” says columnist and startup advisor Hillel Fuld. “The country is more united than it has been for a long time.”

“It’s about everyone’s place on the board,” SNC’s Hassan added.

Big tech companies like Microsoft (MSFT) and Alphabet's Google (GOOGL) are also stepping in to help first responders, such as with digital services.

For many in Israel's tech industry, the devastating situation only underscores the sector's renowned resilience. “Israeli technology has not stopped,” stressed Hassan.

“Customers are contacted, code is coded, new ideas are born… the engine is running. She’s very, very powerful.”

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