By Amalya Teitelbaum, Senior Business Editor and Business Manager
Israel has frequently been referred to as “the startup nation of the world” – a powerhouse of a state when it comes to business and financial growth. However, war has a way of creating fissures in even the strongest of economies and Israel is no exception. As the Israel-Hamas war continues from the ceasefire breach on October 7, 2023, Israel finds itself in a state of economic chaos.
Businesses of all sizes and scales, both on domestic and international levels, have been strongly impacted by the recent attacks as the war surges onwards. With prominent quantities of the Israeli workforce being called up to serve in the Israeli Defense Forces (IDF), doors are struggling to stay open. Israel reported the largest mobilization of reservists in history since the 1973 Yom Kippur War (40,000). As of October 11th, it has been reported that 360,00 reservists, approximately 4% of Israel’s 9.8 million population, have been mobilized. A survey sent to 1,680 businesses conducted between Oct. 24-26, 2023 reports, “About 11% of businesses reported that more than 21% of their workforce was called up.” Small businesses have of course been particularly hit hard, with their already limited workforce slowly diminishing due to the military call-up.
Standard business is not the only Israeli career sector that is suffering the consequences of the interstate pandemonium. A major contribution to Israel’s well-earned title of “the startup nation of the world’’ is its technology sector. The tech sector constitutes about a fifth of Israel’s gross domestic product, and many big U.S. tech companies including Intel, Amazon, and Google have big offices in the country. However, the size of this industry sector and its related companies did not protect it from the repercussions of the war. SNC estimates that about 10% of tech employees in Israel have been drafted, with the number climbing as high as 30% in some companies.
While the impacts in the Israeli-Palestinian region are undeniable, there are major concerns regarding the economic and trade issues of the region spilling over across the Middle East and spreading globally. Troubling statements have been issued from economic leaders such as Kristalina Georgieva, head of the International Monetary Fund (IMF), who stated, “What we see is more jitters in what has already been an anxious world,” and continued her description of the current economic landscape stating, “And on a horizon that had plenty of clouds, one more — and it can get deeper.” These concerns were primarily born from the entering of external players such as Iran and Lebanon, as the world sees the conflict becoming less contained than originally believed. As the effects of the war scatter beyond the borders of the Israeli-Palestinian region, there is a high chance the business world will see international-level delays in products and services.
Even with havoc being wrecked on all aspects of the Israeli economy, Israel has seen no shortage of support from external investors. In a statement titled, “Venture Capital Community Statement of Support for Israel” support from 868 venture capital (VC) firms has been affirmed:
Over the last 24 hours, leaders from the venture capital community convened to address the recent terrorist attacks against Israelis that have taken place. We stand united in our support for the nation of Israel, and we condemn the senseless and barbaric acts of terrorism that have occurred in the past week. While we hope and pray for peace in the region, we also acknowledge Israel’s right to defend itself from Hamas, and all other terrorist organizations who threaten the very existence of the State of Israel and the Jewish people.
Forbes reports that “VC firms such as Bain Capital Ventures, Bessemer Venture Partners, GGV Capita, and 8VC were among those that had signed by Thursday morning, joining a group of early contributors including Aliavia Ventures and irrvrntVC.” Venture Capital firms and technology corporations alike have put their political differences aside and rallied to the support of Israel, providing necessary resources, equipment, and funding.