The Impact of War on Israel’s Tech Industry and the Israeli Startups: Insights from 8 Industry Leaders

The Impact of War on Israel's Tech Industry and the Israeli Startups: Insights from 8 Industry Leaders

The war named ‘Iron Swords’ was unexpected and caused a lot of uncertainty. Israel, no longer a young nation, is approaching its 76th anniversary, a period that has seen both wars and remarkable recoveries. History, however, has often shown that periods of growth, prosperity, and increased entrepreneurship often follow wars, and as this year comes to an end, we have gathered insights from eight influential figures in the industry. These esteemed members of our entrepreneurial community have shared their perspectives and experiences, and outlook into the future.

Insight #1

Ifat Bechor

CEO of Unistream

Credit: Sahar Azran

"

In the weeks since the war started, despite the hardship and ongoing sadness, we’ve witnessed a remarkable aspect of Israeli society. Its strength, quickness, cooperation, and significant impact have been evident. The concept of initiative has gained new dimensions and meanings, leading to the realization that a new form of resilience has emerged: resilience through entrepreneurship.

At Unistream, we engage year-round with youth in socially and geographically remote areas, using entrepreneurship as a transformative tool. This approach is meant for empowerment, success, and to break through perceived limitations. The war made us quickly realize the importance of our role in the long-term recovery of these young people and their communities, particularly in areas directly hit by the crisis. Entrepreneurship, to us, is the new form of resilience. It’s about cultivating the ability to look far into the future, to feel in control, and recognize personal responsibility. It’s about moving from a place of concern to a place of influence, and doing things for others. Building a hopeful future with our own hands is the ultimate expression of youth and community resilience.

I predict that this terrible crisis will set us on a new path as individuals, communities, and as a nation. From the deep division that engulfed us, we’ve united around what truly matters. We’ve realized what we desire, and what we are impatience about, and we will not tolerate under any circumstances. Our society has shown its ability to respond swiftly and creatively, and the ability to partner and make wise choices.

This led us to the recognition of the immense untapped potential, to transform Israel into an ‘Inclusive Start-Up Nation’. We aim to extend the tech industry from Tel Aviv and its surroundings to the south, cultivating a new generation of entrepreneurs. Our goal is also to establish an educational infrastructure for innovation and business leadership among young people in Gaza Envelope and the north.

When the plans for rebuilding the south, and subsequently strengthening the north are implemented, Israel will have a long-term engine for growth into the next century. In developing the south and the north, these areas can become the hub of the Israeli tech industry. Civil society will continue to play a role in fostering connections between sectors and working in harmony with authorities, communities, and the business sector to empower these regions.

"

Insight #2

Ziv Elul

Serial Entrepreneur, Founder of Pery

Credit: Tal Shahar

"

The war is yet another twist in our ongoing roller coaster. Tech companies are designed to thrive through turbulence, and this resilience is a fundamental part of the mindset for both entrepreneurs and investors. This time, however, resilience has taken on a deeper meaning due to the war’s duration, the war’s global impact on Israel, and the resulting fear among investors. The people of Israel, often referred to as the eternal people, have historically turned crises into opportunities. The current situation is prompting companies to focus more on profitability, adopt realistic salary structures, and reassess company valuations.

Both the Israeli government and investors, whether local or international with affinity to Israel, need to step up and contribute to further investments. Flexibility and creativity are essential in these times. The battle isn’t just against a physical enemy; it’s also about securing the future of our economy. Therefore, we must maintain our business operations during times of conflict, to avoid starting business again from a lower point after the war is over. Initiatives like those of Chemi Peres, Hila Hadad, and others are commendable. A particularly noteworthy initiative, set this Hanukkah by the Shay family in London, Yizhar Shay launched an initiative called ‘Next October’ that aims to establish 1,400 new companies by October 2024. It’s exciting and hopeful that these startups will receive funding and priority. Such programs foster a sense of belonging and optimism.

Let’s use this crisis as a stepping stone to something greater!

"

Insight #3

Hila Rom

Managing Partner and Co-Founder of RUNI Ventures

Credit: Koteret Studio

"

Israel faces several critical battles following the severe event on October 7th. These include the military and propaganda fronts, and significantly, the front of technological entrepreneurship, which is essential for the economy. Israeli tech, originally emerging from the defense sector, has flourished out of the country’s need to develop exceptional capabilities for its protection.

In these challenging times, Israeli tech has quickly regained momentum. We are now seeing numerous initiatives supporting, funding, and accelerating startups. There’s also a strong drive to enhance current abilities, develop missing ones, and continue building robust Israeli tech companies.

The ongoing global success of our industry will be driven not just by pro-Israel sentiment but by a clear business understanding that Israel’s excellence in creating technological solutions for global challenges, improving human life in health, finance, agriculture, and beyond.

Additionally, many tech companies are deeply involved in volunteering and taking social responsibilities in their own hands. It’s important to keep bringing Israelis from all backgrounds into the tech sector, united by shared values of equality, freedom, and mutual support.

"

Insight #4

Aviv Antebi

Founder & Chairman of Geomatrix Group

"

Every work-related contract usually includes a ‘Force Majeure’ clause, which covers significant, unforeseeable disruptions. Often overlooked at the time of signing, this clause comes into effect only in extreme situations. Unfortunately, this became a reality on October 7.

The war dramatically impacted companies as many Israeli employees, called to defend the country, set their jobs aside to fulfill their duties. A crucial segment of the workforce shifted to the front lines, leaving offices and companies understaffed. This led to delays in processes and work plans, with some coming to a complete halt.

The sudden shift in human resources required businesses to adapt quickly to the new reality of a manpower shortage.

While legal protections exist, the challenge lies in explaining the ‘consequences of war’ to investors. Investors typically focus on returns and ROI, which are now uncertain and subject to change due to the current situation. Can we make them understand and even persuade them to invest at this time? It’s well-known that extreme situations can present significant opportunities for strategic investors who recognize the potential for injecting vital funding into companies in need. During times when money is ‘expensive,’ the potential for higher returns increases, sometimes by as much as 50%.

To the savvy entrepreneurs reading this: now is your chance to bring innovative and relevant products to life.

"

Insight #5

Bat-Sheva Moshe

Entrepreneur and investor, Chairman of ‘Yozmot Atid’, GM Israel at Wix

Credit: Shlomi Balbul

"

Currently, we’re experiencing a period of extreme uncertainty, affecting our ability to forecast, plan, set goals, and make commitments for the future.

However, one key factor behind the growth of Israel’s tech industry is the Israeli DNA: an innate ability to handle sudden changes, adapt to dynamic situations, and quickly find solutions to emerging challenges.

Another strength is the remarkable solidarity within the community. There’s a unique sense of togetherness, cooperation, and a direct connection between people of all ranks, both known and unknown, united by common goals.

In the last two months, we’ve seen these qualities at their peak. Thousands of initiatives, mostly technological, have been launched in response to the needs arising from the war. New teams have formed, combining military personnel and civilians, bound together by shared objectives and, at times, shared tragedies.

I am very optimistic about the future of Israeli tech. The drive to strengthen Israel, to succeed not just militarily but also economically, through innovation and global branding, is stronger than ever.

Additionally, the war and its global attention have increased curiosity about Israel. The global tech industry largely supports and aligns with the Israeli narrative. We’ve seen this in how the Web Summit event unfolded, with visits from industry leaders in Israel, and support from major tech companies given to Israeli employees during the conflict. The narrative about the resilient and warrior Israeli that withstand any crisis is demonstrated in the unique ability of Israeli companies to remain productive despite significant numbers of employees serving in the reserves. This resilience is a powerful asset, differentiating Israeli startups from others in the field.

I believe that these factors will soon lead to global investments and collaborations with the Israeli industry. Even if not immediately, certainly in the long term, once we achieve victory, B”H, and restore security and stability.

Another growth driver is the technological demands arising from the conflict. There are large-scale purchases of Israeli military technology underway, requiring the development of new, advanced solutions. Israel’s unique reality, which is under constant threat from all directions, demands continuous innovation from defense and cyber companies. Israel, being the most threatened country globally, leads across these areas, making it an attractive market for nations seeking defense solutions.

In conclusion, from my perspective, working with entrepreneurs who have overcome incredible hardships in physical, technological, and mental aspects, yet have not given up, but instead founded companies, developed innovative technologies, and built resilient teams, is highly appealing. It positions Israel literally on the front line of business and innovation.

"

Insight #6

Kobi Bendelak

Founder & CEO at InsurTech Israel

"

Saturday, October 7th, will forever be etched in our memories as a day of tragedy for Israel and the global community. On this day, fourteen hundred Israelis were murdered and hundreds kidnapped by Hamas-ISIS terrorists. Our world came to a sudden halt. Despite this, we collectively realized the need to swiftly recover. Insurtech Israel, a leader in the Israeli Insurtech ecosystem, soon understood that shifting our focus from the event itself to the ongoing operation of our ecosystem was essential. This was critical in order to avoid a collapse like what happened in Ukraine.

In the insurance world, trust is everything. Losing it is easy, and regaining it is hard. So, we immediately directed our efforts to communicate our ecosystem’s stability, strength, resilience, and reliability, providing reassurance to our partners and customers during these tough times.

Under normal circumstances, it’s a challenge to convince insurance companies to adopt technologies from startups due to concerns about continuity and stability. These concerns were even more pronounced in this period of anxiety and fear.

Our first step was to assemble as many startups as possible for a virtual meeting to send a unified message of stability and strength, which generated a lot of positive energy. The next step was to continue our participation as an Israeli delegation at the world’s largest international insurance conference. With over 12,000 attendees, this conference was the perfect stage to convey our message to the global insurance industry.

We then organized virtual pitch events to draw investors and insurance companies’ attention to our startups. These events were crucial not just for showcasing our resilience but also for creating new business opportunities.

Our core messages to the world are resilience, strength, stability, and continuity. We are dedicated to supporting our partners and customers, constantly developing cutting-edge technologies for the insurance sector, and ensuring our reliability as business partners.

"

Insight #7

Senia Waldberg

Co-Founder of Annabella Tech

"

I believe that despite the severe shock we all experienced on October 7th, the post-war period will bring improvements. My optimism stems from a couple of reasons. Firstly, there’s been a noticeable increase in patriotism and support for Israel among its global supporters, who are now more inclined to invest here. Additionally, I foresee public pressure leading to reduced regulations and business facilitation, including corporate tax cuts, which the state is likely to act upon. I’m already in talks with several ministers and Knesset members who are in agreement on this matter. While there have always been hurdles, I believe they will diminish given the current urgency.

In my view, we are approaching a challenging period, but there is light and hope ahead. Those who put in the effort now are likely to see the benefits soon, not just in the distant future.

"

Insight #8

Mor Cohen

Founder and CEO of VAGA. Consultant and submits grant applications to the Israel Innovation Authority.

Credit: Aviad Shitrit

"

As Israeli entrepreneurs, we’re accustomed to navigating uncertain environments. This current situation has brought us to a new height of unpredictability, a unique experience compared to the global challenges like the Corona pandemic or the worldwide economic crisis, which are more universally felt. However, we believe that this war, too, will eventually end. Although it’s difficult to envision now, we anticipate a future where Israel triumphs and investments in Israeli startups resume. The question isn’t ‘if’ but ‘when.’

Israel, AKA The Eternal Nation, has a history of overcoming adversity. Despite comprising just 0.15% of the global population, Israelis have earned about 25% of all Nobel Prizes. Our startups attract over 10 billion dollars in investments annually, and with one startup for every 1,400 Israelis, we contribute to about 10% of the world’s cyber transactions. The Jewish contribution to global innovation is unparalleled.

Israel, often referred to as the eternal nation, has a history of overcoming adversity. Despite comprising just 0.15% of the global population, Israelis have earned about 25% of all Nobel Prizes. Our startups attract over 10 billion dollars in investments annually, and with one startup for every 1,400 Israelis, we contribute to about 10% of the world’s cyber transactions. The Jewish contribution to global innovation is unparalleled.

In the meantime, it’s wise for entrepreneurs to refine their products and business plans, launch pilot projects, and for those ready, even seek funding from Israel’s supporters who are eager to help grow the economy. Applying for grants from the Innovation Authority, which has opened special tracks to support startups during this period, is another viable option. I am confident that when the day of victory arrives, we will be well-positioned to capitalize on the ensuing growth and prosperity.

"

We sincerely thank the best in the industry who have given their time to dedicate their perspective to a better future for entrepreneurs and companies.

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