Survey finds 50% of high-tech startups in Israel may exhaust funds in six months
Survey finds 50% of high-tech startups in Israel may exhaust funds in six months
As a result of financial constraints, around 20% of companies reported in the Israel Innovation Authority's survey that they relocated activities or staff abroad, and approximately 40% reported deliberately reducing their cash burn rates.
The Israel Innovation Authority published on Sunday the results of the third survey it conducted on the state of high-tech companies in Israel since the outbreak of the war. Most of the companies surveyed identified raising capital as the primary challenge facing the high-tech sector, particularly against the backdrop of the war and ongoing uncertainty. According to the findings, approximately 50% of companies stated that their funds would be depleted within six months if no new funding is secured. Additionally, 80% of companies indicated a need to raise capital within the next six months, with 43% identifying fundraising as their main challenge. Despite these hurdles, 70% of companies anticipate sales growth, and nearly half foresee employment growth in Israel and abroad, signaling cautious optimism and the industry’s ability to adapt under pressure.
As a result of financial constraints, around 20% of companies reported relocating activities or staff abroad, and approximately 40% reported deliberately reducing their cash burn rates.
“The findings of this survey reflect the immense complexity faced by the Israeli high-tech industry during this period. We see companies struggling not only with capital raising and meeting development and sales targets but also with their very ability to operate in an environment deeply affected by the security situation, massive military reserve call-ups, and flight restrictions that complicate the management of global relationships,” said Dror Bin, CEO of the Israel Innovation Authority. “Nonetheless, it is precisely in these challenging times that the strength of Israeli high-tech becomes evident: rapid adaptation to a new reality, creative problem-solving, and a willingness to face unprecedented challenges. The entire ecosystem—government, investors, and companies—must come together to ensure the future of this industry, which is not only a critical growth engine but also a symbol of Israel's innovation and leadership on the international stage. This is no time for compromises. We must seize this crisis as an opportunity to build stronger infrastructure, improve the business environment, and increase investment in growing companies to ensure that Israeli high-tech returns to rapid growth and prosperity."
According to the survey, 62% of high-tech companies largely or very largely agree that the security situation has caused them to miss development and/or sales targets. Around 30% of companies noted that the primary employment-related impact of the war is the effect of prolonged reserve duty on employees or their spouses. This impact was most significant for companies where a substantial portion of the team or their spouses were called up for duty.
Additionally, 74% of companies reported that flight cancellations hinder their ability to conduct business abroad.
The survey was conducted between November 6 and November 27, 2024, targeting over 8,800 high-tech companies across all stages and sectors of the industry. A total of 664 responses were received, with more than 73% of respondents being company founders.
