Tech leaders in Israel wonder if it's time to leave

Ahead of a legal overhaul that could transform the country and scare off investors, the leaders of Start-Up Nation are thinking about exodus.
For years, budding Israeli tech executives have asked seasoned entrepreneur Yanki Margalit where they should start their fledgling businesses. For years, he's offered the same advice: here in Israel, where software engineers are plentiful, international investors are eager, and friends and family live.
But as Mr. Margalit plots his own venture, focused on tackling climate change, he reluctantly concluded that Israel was not the right place to start.
"Given the current atmosphere, almost irresponsible to start a business here," the 60-year-old said, "and it's heartbreaking. have already announced that they are relocating or moving money out of the country, including the chief executive of Papaya Group, a payroll company valued at over $1 billion.
The reason for this is that a right-wing government, led by Prime Minister Benjamin Netanyahu, recently announced plans for a radical overhaul of the country's judicial system which many believe will end its 75-year existence as an independent institution.
The proposed changes would reduce greatly increase the court's ability to strike down laws passed by the Knesset, the country's parliament, and would give the ruling coalition much greater control over who sits on the bench.
It has caused so much civil unrest and mass protests that Israeli President Isaac Herzog said in a televised speech last week that the country was "on the brink of constitutional and social collapse".
More quietly, people like Mr. Margalit reevaluates what it means to operate here and decides that if the government revamps the justice system, it's time to leave.
"It's all about management ion of risk and the risk is for the brand that is Israel,” said Assaf Rappaport, CEO and co-founder of Wiz, a $6 billion cloud security company. “It took a long time to build this brand, and today every company in the world can trust Israel as a partner in its cyber defense. These reforms will challenge all that. »
ImageProtests have erupted in Israel in recent weeks over plans by the Prime Minister's government Benjamin Netanyahu seeking to overhaul the justice system.Credit...Avishag Shaar-Yashuv for The New York Times Bezalel Smotrich, declined to comment. In a statement in mid-February, he said claims that the reforms were undermining democracy were part of a "scaremonger campaign".
While the court changes will affect all Israeli businesses, the reaction of the tech sector is of most concern as it provides much of the power to the economy.
Some 54% of Israel's exports are high-tech products and services, according to the Israel Innovation Authority, a supporting arm of the government. The Israelis have created more than 90 so-called unicorns – private companies valued at over $1 billion – including Wix.com, which offers cloud-based web services; game company Moon Active; and financial services company eToro.
Losing high earners and cor...

Technology Feb 28, 2023 0 54 Add to Reading List

Tech leaders in Israel wonder if it's time to leave

Ahead of a legal overhaul that could transform the country and scare off investors, the leaders of Start-Up Nation are thinking about exodus.

For years, budding Israeli tech executives have asked seasoned entrepreneur Yanki Margalit where they should start their fledgling businesses. For years, he's offered the same advice: here in Israel, where software engineers are plentiful, international investors are eager, and friends and family live.

But as Mr. Margalit plots his own venture, focused on tackling climate change, he reluctantly concluded that Israel was not the right place to start.

"Given the current atmosphere, almost irresponsible to start a business here," the 60-year-old said, "and it's heartbreaking. have already announced that they are relocating or moving money out of the country, including the chief executive of Papaya Group, a payroll company valued at over $1 billion.

The reason for this is that a right-wing government, led by Prime Minister Benjamin Netanyahu, recently announced plans for a radical overhaul of the country's judicial system which many believe will end its 75-year existence as an independent institution.

The proposed changes would reduce greatly increase the court's ability to strike down laws passed by the Knesset, the country's parliament, and would give the ruling coalition much greater control over who sits on the bench.

It has caused so much civil unrest and mass protests that Israeli President Isaac Herzog said in a televised speech last week that the country was "on the brink of constitutional and social collapse".

More quietly, people like Mr. Margalit reevaluates what it means to operate here and decides that if the government revamps the justice system, it's time to leave.

"It's all about management ion of risk and the risk is for the brand that is Israel,” said Assaf Rappaport, CEO and co-founder of Wiz, a $6 billion cloud security company. “It took a long time to build this brand, and today every company in the world can trust Israel as a partner in its cyber defense. These reforms will challenge all that. »

ImageProtests have erupted in Israel in recent weeks over plans by the Prime Minister's government Benjamin Netanyahu seeking to overhaul the justice system.Credit...Avishag Shaar-Yashuv for The New York Times Bezalel Smotrich, declined to comment. In a statement in mid-February, he said claims that the reforms were undermining democracy were part of a "scaremonger campaign".

While the court changes will affect all Israeli businesses, the reaction of the tech sector is of most concern as it provides much of the power to the economy.

Some 54% of Israel's exports are high-tech products and services, according to the Israel Innovation Authority, a supporting arm of the government. The Israelis have created more than 90 so-called unicorns – private companies valued at over $1 billion – including Wix.com, which offers cloud-based web services; game company Moon Active; and financial services company eToro.

Losing high earners and cor...