The Israeli newspaper Globes quoted a recent report issued by the Association for Advanced Technology Industries in Israel (IATI) in cooperation with the Israel Research and Policy Institute (RISE), as an important warning about the future of the technology industry in Israel, highlighting major challenges and risks that have emerged over the past year.
The report, titled “The State of High-Tech in Israel in a Year of War,” presented a more bleak picture compared to other assessments, such as the recent report issued by “Leumi Tech.”
Decline and concentration of investments
According to the report, venture capital investments by Israeli companies saw a 6% decline from October 2023 to September 2024, along with a sharp 30% decline in the number of foreign and Israeli investments.
These trends are particularly worrying because they indicate a shrinking pool of investors participating in the Israeli technology sector, according to Globes.
The report highlighted a worrying trend of investments being concentrated in a smaller number of companies. In 2024, the 10 largest investments represented about 50% of the total investments in the technology sector in Israel.
In addition, 76% of companies that have succeeded in raising significant funding are based outside Israel, which raises concerns about Israel’s ability to maintain its competitiveness and leadership in the high-tech sector, according to the newspaper.
The report of the Association for Advanced Technological Industries in Israel contradicts the more optimistic vision presented by the Leumi Tech Institute report. According to its latest report, investments in Israeli technology increased by 32% in the first nine months of 2024, showing the sector’s resilience.
Concerns about AI leadership
The report of the Association for Advanced Technological Industries in Israel also highlights the decline in Israel’s position in the global artificial intelligence classification prepared by Tortoise Media, as it fell from seventh to ninth place during the past year, after it was occupying fifth place in 2021, according to what was reported. Globes.
This decline reflects a worrying trend of declining competitiveness in an increasingly important area of global technological innovation.
The report also indicated that about 50% of companies that raised seed funding rounds in 2022 are having difficulty raising subsequent funding rounds, which could threaten the growth and sustainability of startups in the Israeli technology ecosystem.
The CEO of the Israel Research and Policy Institute, Uri Gabbay, called for immediate action to confront these challenges, stressing the “perfect storm” that threatens Israel’s high-tech future.
“The war has created a perfect storm that threatens the future of high-tech in Israel,” he said. “The report we published shows on the one hand the resilience of the industry, but it also highlights warning signs and very worrying trends that have dramatic consequences for its future.”
Gabbay stressed the need for the Israeli government to adopt a clear vision that inspires investors and entrepreneurs, adopt responsible economic policies, and reduce international isolation, according to what the newspaper reported.
Gabbay warned that failure to take decisive action could expose Israeli high-tech to serious risks, which would affect the broader national economy.
