The global financial crisis is now also reaching a place where many thought it would never, the Israeli hi-tech industry. Numerous companies have laid off a large part of their workforce, some even saying goodbye to up to 15 percent. In addition to layoffs in the Israeli branches of large international companies such as Intel and Facebook, many Israeli start-ups and unicorns have also had to lay off employees.
For example, the Unicorn OwnBackup is laying off 15 percent of its workforce (150 employees in Israel and the USA). The cloud backup company was valued at $3.35 billion last year. Real estate startup Veev is also cutting 30 percent of its jobs eight months after its $600 million financing earlier this year. An official justification states that the decision has been made to focus on the development of low-rise buildings in the future, which is why the workforce in the area of high-rise solutions would be reduced. Israel’s current highest-valued startup, fintech Rapyd, which reached a $15 billion valuation earlier this year, is also likely to lay off more than 10 percent of its 900 employees.
Since the financial crisis ended in 2008, Israel’s hi-tech industry has experienced tremendous growth. The industry makes a significant contribution to the Israeli economy. Hi-tech workers make up more than 10 percent of all employees and pay 25 percent of all income taxes. The many upheavals in 2022, political instability, the war in Ukraine, global inflation, high interest rates, etc. are now also affecting the start-up nation. As the focus shifted from growth to profitability, companies found it more difficult to support their business valuations, raise finance and build a sufficient financial cushion to support their R&D (research and development) and ongoing operations.
Article by Katharina Hoeftmann
