12/14/2023–|Last updated: 12/14/202305:51 PM (Mecca time)
Israel’s economy is receiving successive shocks from the repercussions of the current situation after the Al-Aqsa Flood operation launched by the Palestinian resistance on October 7, as the blow this time came in the technology sector, which represents half of Israel’s exports and a quarter of its tax revenues, but despite the mixed signals shown by the sector, Yedioth Ahronoth newspaper considered that the year 2023 is a lost year for the vital sector of the economy.
In a report entitled “The war affects everything: The Israeli technology sector is beginning to lag behind,” the newspaper alerted of isolated cases of large capital increases, such as the Israeli data infrastructure company “Fast” raising about $118 million, or financing a “company.” Next Insurance, valued at $265 million by Alliance Insurance, or expanding the EA21 fund from $53 million to $208 million, with the participation of influential investors such as Intel Capital and Comcast.
The status of Israeli technology
It is noteworthy that the high-tech sector constituted 18.1% of Israel’s GDP in 2022, becoming the largest contributor to the GDP, according to data from the Israeli Innovation Authority, and the sector’s production doubled to 290 billion shekels ($78.6 billion) in the same year, from 126 One billion shekels ($34.15 billion) in 2012.
According to the data, high-tech sector exports represented 48.3% of total Israeli exports in 2022, amounting to $71 billion, a growth of 107% compared to what was recorded in 2012, and 401,900 employees in Israel work in the sector according to 2022 data.
An unprecedented decline
On the other hand, a report issued by the accounting firm Price Waterhouse Israel revealed an unprecedented decline in sales and public offerings of Israeli companies, exceeding 50% compared to 2022, which is the lowest level in 10 years.
The newspaper pointed out that the Israeli high-tech sector, which was characterized by vitality and transparency, has now become more like a refuge, as about a fifth of the workers in every company in the sector began working 8 hours per work cycle, with no prospect of life returning to normal, which led to a kind of hibernation in the country. sector, while everyone is making an extra effort to fulfill their obligations to customers.
It quoted a high-ranking source in the Israeli venture capital sector as saying that the current increases in capital are “the exception, not the rule,” noting that the phenomenon of the “Israeli discount,” which the market had almost forgotten, has reappeared.
The source added that investors, especially those coming from abroad who do not have a fixed local presence, are concerned about the possibility of their employees being called up for reserve service in the Israeli army, which prompts them to shift their investments to American and European startups, which are already showing signs of recovery after a year and a half of… Difficulties.
A lost year
The source considered it “frustrating,” according to him, that there was an opportunity for the Israeli technology sector to be in a better position, even despite what happened last October 7, indicating that the sector’s companies were preparing for a difficult year in 2023 due to the turbulent political climate in the country. The country.
He pointed out that the widening gap with the United States and even Europe, in terms of value and activity, currently constitutes one of the main concerns for this industry, and the decline began in the middle of the year when Israel fell from fifth place to tenth place in raising funds for high-tech companies, compared to the superiority of countries such as Germany. And France.
During the current year, the source noted that the first half of the current year witnessed a decline in capital increases of Israeli companies in the sector by 75%, followed by a slight stability in the third quarter, but the figures for the last quarter no one wants to expose them to, as information-gathering bodies are resisting this matter. You prefer to wait until the end of the year.
The source described 2023 as a “lost year” for the high-tech sector in Israel and the world, due to political turmoil, but said that many foreign investors see the risk of regime change in Israel as more threatening than war.
