Israel Start-Ups: Navigating Post-Attack Challenges
Israel has gained widespread recognition as a hub for innovative ideas and groundbreaking inventions. Prominent among the nation's contributions are successful startups such as Wix, Mobileye and Waze, which have significantly influenced the modern world.
According to TechCrunch, approximately 14% of Israeli citizens are employed in the high-tech sector, with a significant portion working for the country's 9,000 active startups. These workers, largely comprising younger individuals, are typically army reservists, and as such, are more likely to be called up by the IDF. Additionally, it is noteworthy that a substantial 18% of Israel’s GDP is derived from the technology industry, underscoring the nation's concentration and reliance on the tech and start-up ecosystem.
Following the devastating attacks on October 7th, it is unsurprising that a mobilization effort, involving 10-30% of these workers, is underway to defend our homeland. Among those not currently serving, numerous individuals within the tech world have been dedicating substantial time and effort to volunteer in the collective fight against Hamas.
This significant reduction in human capital has had a profound impact on start-ups, especially those dependent on a limited workforce for their operations. Noy Leyb and Danielle Eisenberg, co-founders of Bachplace, exemplify this impact. Following the attack, Mr. Leyb was called up to duty, while Ms. Eisenberg took the initiative to fundraise for Israel. The simultaneous absence of both founders has compelled them to temporarily pause business operations.
While not every story is as extreme as Bachplace, many startups are still feeling the pain. According to a survey from the Israel Innovation Authority, 70% of Israeli tech firms and start-ups are facing disruptions in their operations. According to one venture capitalist in Israel, “At least one person in every company has been called up.” Losing skilled workers, particularly in the critical early stages of a company, can be a pivotal factor that greatly influences its success and trajectory.
Another significant aspect is the massive toll these attacks have taken on people's emotional well-being. "People lost relatives and friends, said Isaac Gili, CEO of Shuffl. “You can't just go back and work on stuff, you can't code when someone died." .
Due to the country’s small size and interconnectedness, many people personally know victims of October 7th. The familiarity with these victims intensifies the emotional struggle, making it nearly impossible for individuals to channel their focus into work amidst the overwhelming grief and profound loss.
The last difficulty facing start-ups that I would like to address is their ability to raise capital . Without the help of 10-30% of their workers, startups have struggled to organize funding from venture capital firms. Lack of cash flow, especially for companies that have not yet generated strong revenue, can lead to financial trouble and potential bankruptcy.
The combination of these factors has posed significant challenges to one of Israel's key economic pillars. While facing these challenges, a steadfast constant persists — the unwavering support of the Jewish people for each other. Numerous organizations have emerged during this war, actively engaging in initiatives to assist struggling start-ups.
A notable group of entrepreneurs and venture capitalists has captured attention by establishing a collective known as "Iron Nation." The primary objective of this group is to raise $20 million in funding for early-stage start-ups facing challenges in securing financial support following the October 7th attacks. Driven by a shared vision for Israel’s recovery, Iron Nation's efforts serve as a beacon of hope, showcasing the resilience and solidarity within the Jewish community during challenging times.
On the home front, Yeshiva University has also contributed its efforts to assist Israeli start-ups. On October 25th an email was delivered to Sy Syms students, “In partnership with the Israeli trade group Retail Innovation Club, the Sy Syms School of Business and the Shevet Glaubach Center for Career Strategy and Professional Development have teamed up to match the temporary needs of tech start-ups in Israel with available Syms students in order to fill gaps created by employees being called up for military service”. Volunteering students are required to commit to a minimum of 5 hours per week for a duration of one month.
Amidst the trials faced by Israeli start-ups in the aftermath of the October 7th attacks, a resilient spirit and unwavering support have emerged as guiding forces. From the establishment of initiatives like Iron Nation to the collaborative efforts of educational institutions like Yeshiva University, the Jewish community stands united in the face of adversity. As Israel navigates the multifaceted challenges posed by terrorists, the ongoing dedication and selfless endeavors showcase a profound determination to overcome obstacles and pave the way for a robust recovery.
Photo Caption: A night in Tel Aviv, Israel’s start-up capital.
Photo Credit: Unsplash