Analysis: War with Hamas threatens funding recovery in Israel's vital tech industry

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The spiralling conflict with the Palestinians is set to derail a fragile recovery in Israel's all-important tech sector, say investors and analysts, after a global slowdown and the government's divisive judicial reforms saw funding drop sharply this year.

Israel, one of the world’s most innovative high-tech economies, relies on the sector for 14% of its workforce and nearly a fifth of its overall economic output. It has weathered decades of turmoil and is ultimately expected to see investment return once the conflict ends and fundraising globally recovers, they added.

According to the IVC Research Center and LeumiTech, Israeli high tech firms saw a 70% fall in fundraising in the first half of the year, but added that the rate had stabilised to a drop of 14% in the third quarter compared with the second. "Certainly, while we are in the midst of the war, it's hard to imagine major deals happening," said Avi Hasson, CEO of Startup Nation Central and a former venture capitalist.That said, Hasson and others expect Israel's tech sector to rebound in the same way it has in past conflicts with Palestinian and Hezbollah militants.

U.S. venture capital fund Insight Partners said it would match up to $1 million in donations to a pre-approved list of charitable organisations in Israel, saying it was a "critical opportunity to stand with our Israeli friends and partners."

 

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