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Promising Rise Of Israeli Tech Entrepreneurs Amid Turbulent Global Conditions

Israel’s technology startup ecosystem is rapidly changing amid a whirlwind of economic and political challenges. However, across the world, from Silicon Valley to Singapore, information technology startups are struggling as venture capital funding dries up, and investors halt their enthusiasm, for now at least.

Ongoing macroeconomic problems have seen big tech companies such as Amazon, Meta, Microsoft, and Google parent company Alphabet downsize their headcount, laying off thousands of tech employees.

The layoff trend wasn’t only seen taking place by some of the world’s biggest tech names, smaller startups in the software, mobile application, and information technology industry have also trimmed some of their headcounts.

A report by Israel Innovation Authority and Start Up Nation Policy Institute (SNPI) released in May, revealed that around one-quarter of high-tech Israeli companies have paused job hiring, while a number of them are planning layoffs this year.

However, tech layoffs, job freezes, and dried-up funding aren’t the only problems tech firms are currently facing. Back home, in Israel, a judicial overhaul could completely shift the balance of powers and could have an even bigger impact on the nation’s startup ecosystem.

While both sides of the scale are reaching a tipping point, as uncertainty looms over the nation’s tenuous tech and startup ecosystem, perhaps this could present an avenue of new opportunity for the country’s tech entrepreneurs stepping onto the scene.

Israel’s Startup Potential

While younger, and more innovative entrepreneurs aren’t able to ignore the ongoing problems, the local startup ecosystem is still rife with potential – it’s only a matter of how entrepreneurs approach the problem.

A review of last year’s performance indicates that Israeli high-tech companies raised more than USD 14.95 billion through 663 deals and back in 2021, around 57 companies went public, raising more than three times in funding from Initial Public Offerings (IPOs) in 2020.

Against a backdrop of economic, political, and at the time, pandemic-related issues, the local cybersecurity industry amassed more than USD 8.8 billion in 2021.

While the balance has shifted somewhat over the last several years, Israel remains a stronghold for Research and Development (R&D), ranking second in the world based on expenditure per capita.

The recent momentum garnered around Artificial Intelligence (AI) and Machine Learning (ML) software has established new avenues of opportunity for tech entrepreneurs, especially as attention to these tools becomes increasingly mainstream.

Despite the headwinds experienced over the last several months, new developments in the tech industry – AI and ML – have helped to establish a new line of interest for entrepreneurs, further highlighting the country as a destination of investment and opportunity for investors from the West.

Where there’s light there is opportunity

Even under current circumstances, tech entrepreneurs continue to garner attention and financial support from international investors.

A recent visit to Israel by the Lincoln Club of Orange County, a political donor organization, again showcased that American business leaders remain fascinated with Israeli-based ingenuity and technological drive.

According to ACEBEAM, a pioneer in R&D and a production leader in the combination of optical design and lighting applications – they believe that by giving young tech entrepreneurs the ability to leverage adequate resources, they can help transform our understanding of where the industry is heading.

“Given the current micro and macro-economic environment challenges tech entrepreneurs have to face, it’s perhaps important that we as existing business leaders and professionals provide new entrepreneurs with industry-specific support, but also the resources that could further help scale up their businesses, from startups to enterprises,” said CEO and founder of ACEBEAM, Michael Song.

There’s risk in anything these days, and it requires business leaders to be open to upcoming entrepreneurs through innovative experimentation.

Creating new channels doesn’t come easy, and it requires backing from private and public institutions. Nonetheless, it’s perhaps this support that can take Israeli innovation to parts of the world where improvement in technological systems and applications is needed.

While it’s still too early to call what the startup ecosystem will look like in the future, the tech entrepreneurs of today will help reshape how it will play a part on the global stage.

“There should be clear distinction about what entrepreneurs require to succeed, and how we can provide it to them. Creating opportunities for dialogue, and actively introducing these changes can establish a new avenue of approaching antiquated problems. Producing products and services that creates an experience not only helps create surprise and excitement among consumers, but it also ensures that entrepreneurs and their mentors create enough rooms for expression and creative partnership,” said Michael.

New tech entrepreneurs need to consider their forward-looking strategy which can help them establish a foundation on which they can build their influence.

Diverse product and service offering, customer retention, collaboration and the formation of strategic partnership can help entrepreneurs understand their forward-looking plan. “It’s important to remain agile, and resilient, making changes as you grow and discover new opportunities, while keeping the end-goal in sight,” says Michael.

In this case, where we are seeing Israeli-based entrepreneurs garnering Western interest, using these connections and resources could be the difference that the local ecosystem might just need.

Change comes through transformation

While it’s hard to establish what the outcome might be based on our current understanding, we can consider how conditions have perhaps played in favor of tech entrepreneurs in recent years following admirable changes through political efforts.

The establishment of the Abraham Accords has steadily been changing the economic landscape within the Middle East and North African (MENA) region.

In addressing the new opportunities that have come from the Accords, data provided by the Central Bureau of Statistics indicate that trade between Israel and the United Arab Emirates increased by 163 percent between August 2021 and August 2022.

Bilateral trade between the two nations increased by 121 percent during the first eight months of 2022. This translates into more than USD 1.62 billion in trade.

While the application of the Accords is directed towards bilateral trade agreements, helping to boost local economic activity, these channels continue to prove successful and could begin to present new opportunities for entrepreneurs of all industries in the coming years.

“Aligning investments with future business goals, strategies and market analysis ensures that entrepreneurs can identify their opportunities. With the ability to assess risks associated with investment options, but also consider how their products and services are being accepted by consumers, and using their feedback to improve, makes it possible for them to establish new benchmarks against industry best practices,” says Michael.

Song goes further to explain that once businesses, leaders and governments are able to reap benefits from the improvements they have made, they can begin to see how change does constitute transformation, and considering this, on a smaller scale, among entrepreneurs, and startup business owners, they will surely reap the benefits in the near future.

This opens new forms of dialogue, perhaps important for tech entrepreneurs that are currently navigating a tumultuous tech landscape. However, these forms of dialogue can only exist under the right circumstances, but it also requires entrepreneurs to consider how they can turn a fable into a fortune.

“We’ve seen in our line of work, where we conduct business with more than 100 different countries, that under the right conditions and with the right driving force at hand, it’s possible to even outpace normative challenges that are continuously causing tech entrepreneurs to lag,” informs Michael.

Navigating so much uncertainty could pose a potential barrier for many Israeli tech entrepreneurs. However, it’s placed them in a position whereby they can leverage difficulties and challenges to only further advance their place in the domestic startup ecosystem but also on the world stage.

About the Author
I am the founder and CEO of ValueWalk - a popular financial information company. Before launching ValueWalk, I was first an equity analyst at a micro-cap focused private equity firm and then moved to a small/mid-cap value-focused research shop. I also have experience working in business development for hedge funds. I live with my wife and four kids in Passaic, New Jersey.
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