Tel Aviv's war on Gaza dries up investments in Israeli tech startups

Investments in Israeli technology startups declined by 46 percent in the last quarter of 2023 amid the ongoing war in Gaza, according to an independent think tank.

"The events of the past year have thrown Israeli high-tech into ongoing uncertainty, making 2024 a pivotal year that will shape its future trajectory," said Uri Gabai on Thursday, CEO of the Start-Up Nation Policy Institute ( SNPI).

"Amid accelerated global competition alongside local instability, the challenges faced by Israeli high-tech are growing more substantial and intricate."

In the last three months of 2023, startups secured $1.3 billion in capital, a decline of 46 percent compared with the same quarter a year earlier, the report showed.

With the outbreak of the Gaza conflict on October 7, more than 350,000 reserve soldiers, many of whom remain in uniform after nearly three months.

''Israel’s tech sector contributes 18 percent of Israel’s gross domestic product, with about 14 percent of all employees working in the tech sector and in tech jobs in other sectors.

Tech-sector's pivotal role

The Israeli economy relies on tech exports, which make up about 50% of total exports, as well as taxes from the sector.

"Without a world-leading high-tech sector, there will be no economic and national resilience," Gabai warned.

Israel has launched air and ground attacks on Gaza since a cross-border attack by Palestinian resistance group Hamas on October 7.

At least 22,438 Palestinians have since been killed and 57,614 others injured, according to Gaza’s health authorities, while nearly 1,200 Israelis are believed to have been killed in the Hamas attack.

The Israeli onslaught has left Gaza in ruins, with 60 percent of the enclave’s infrastructure damaged or destroyed, and nearly 2 million residents displaced amid acute shortages of food, clean water, and medicines.