Israel’s Tech Companies Are Fighting Netanyahu—or Leaving the Startup Nation

Some founders have been very outspoken in their criticism of the bill and the Netanyahu government. When Eynat Guez, CEO of the payroll business Papaya Global, launched the business back in 2016, she was proud to be a cofounder of an Israeli incorporated company. Would she make the same decision today? “100 percent no,” Guez says. “If I had the ability to change this decision, I would do that.

For Guez, the problem is that being incorporated in Israel leaves her intellectual property exposed to a government that now cannot be reined in by the courts. And she believes investors are already spooked. “We went from a place where investors and multinational VCs would arrive in Israel on a weekly basis,” she says. That has dramatically changed since January, when Prime Minister Benjamin Netanyahu unveiled his reforms.

Yesterday, Israel’s credit rating was lowered by Morgan Stanley and risk assessment firm Moody’s warned of a “significant risk” linked to political tensions. Thousands took part in demonstrations the night before, as police fired water cannons into the crowd. Military reservists threatened to not report for duty.

While Israel waits for whatever happens next, protestors have pledged to fight on—with many tech workers among them. “All of us never believed that this moment would really arrive,” says Guez. “We need to adapt to the changing economy and changing facts.” For some that means helping lobby the government, for others it means making contingency plans. This is an existential battle for Israeli tech, with democracy—but also the sector’s talent and investor support—at stake.

“We must remain a liberal democracy in order to remain one of the most attractive places for young, talented individuals that have other options,” says Nadav Zafrir, cofounder and CEO of cybersecurity venture capital firm Team8. “We also need to be a part of the league of nations that are liberal democracies because those are our investors, predominantly Europe and the US.”

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