Technology companies dealing with consumers in Israel have suffered multiple losses as a result of the consequences of the war on Gaza and its spread to the Lebanese front and other fronts in the region, according to what the British newspaper The Economist reported.
After the flood
According to the newspaper, after the Al-Aqsa Flood operation and the start of the war on the Gaza Strip, investment capital financing declined to $2.1 billion in the last three months of 2023, which is the worst quarter in 5 years.
The newspaper pointed out that the Israeli financial technology company “One Zero” announced that it would fire 6% of its workers after suspending a deal with Generali – an Italian financial services group – to establish a digital bank in Italy. In a letter to employees, the company’s president, Gal Bar Dia, blamed On “uncertainty about the war situation.”
Aleph Farms, a start-up company working in the field of developing laboratory-grown meat, laid off a third of its employees last June.
According to the newspaper, even in the areas of technology that have achieved better performance, company heads note that the war weakens morale and productivity. Moreover, foreign technology companies – such as Dropbox, an American cloud storage company, and Verily, a biotechnology company owned by Google – have closed. – Its activity in Israel.
It is noteworthy that one of the reasons for Moody’s lowering the credit rating of Israeli government bonds by two notches at the end of last September was the uncertainty about the high-tech sector’s ability to continue to grow, especially since about a quarter of the government’s tax revenues come from technology companies and their employees, and the longer the conflict lasts. The damage was worse.
Israel’s technology sector represents more than half of its exports, a fifth of its gross domestic product, and a fifth of the reserves in the Israel Defense Forces.
Beneficiary companies
On the other hand, the newspaper pointed out that the increase in defense spending over the past year, whether at home or abroad, provides an explanation for the flexibility of many Israeli technology companies, as the defense company Elsight now generates more than half of its revenues from military contracts, up from less than 5% before the start of the war on Gaza, according to its president, Yoav Amitai.
Another model referred to by the newspaper is Extend, a company that manufactures software for inspecting buildings and other infrastructure using drones and robots, which raised $40 million in funding last May.
