There’s trouble in Startup Nation
For Israeli entrepreneurs, the prospect of rising pressure on the country’s credit rating made banking diversification a more pressing issue.
There’s trouble in Startup Nation by Anna Heim originally published on TechCrunch …
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Tel Aviv has the fifth most unicorn companies in the world. Yet, relatively little has been written outside of Israel about the major concerns local entrepreneurs are currently dealing with. We talked to one of them, MDI Health CEO Avishai Ben-Tovim. — Anna
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The Exchange recently noted how Sweden was punching above its weight in terms of startup dollars raised per capita. But Israel is even more outstanding when it comes to tech — so much so that it earned the nickname “Startup Nation.”
Israel’s tech scene is also remarkably resilient and relatively immune from the country’s global and local political woes. But in recent months, the Israeli startup ecosystem has found itself at the forefront of the protests against the government’s highly controversial judicial reform plan.
The reform, its opponents claim, would harm Israel’s democracy and its economy, in a country where the tech sector “makes up about 25 percent of Israel’s income taxes and contributes about 15 percent to the country’s annual GDP,” according to The Jerusalem Post.
Driven by these political and economical worries, major players from the Israeli startup scene took a public stance; Index Ventures, for example, “denounce[d] the proposed reforms in Israel that foster discrimination and threaten democracy.”
Others chose not to make official statements or formally join the strikes, leaving it up to their employees. But regardless of their position, many are concerned about the economic consequences that this political crisis might have.
These concerns have also turned into actions, especially finance-related ones. In January, Reuters reported that an Israeli venture capital fund and a local startup were moving their bank accounts out of Israel, and others similarly started looking into keeping funds in different locations.
MDI Health CEO Avishai Ben-Tovim was one of these. His health tech company, which has raised $26 million to date according to Crunchbase, is both Israeli and American. As political instability increased in Israel, it made sense to make good use of its Silicon Valley Bank account … until it didn’t. Ironically, Ben-Tovim found himself in the position of moving money back to Israel in a rush before the banking entity collapsed.