Israel's Technology Sector Influenced By War With Hamas, Facing Funding Uncertainty

Israeli technology industry is affected by the war with Hamas (photo: dock. Israeli21c)

JAKARTA Israel's technology sector has continued despite a year-long war with the Palestinian Islamist group Hamas. However, due to this sector's dependence on large companies and foreign investments, the uncertainty of funding could threaten a wider economy. This is known according to reports by the Israeli government released on Monday, September 23.

Since the war began on October 7, Israeli technology companies managed to raise funds of US$9 billion (Rp136.7 trillion) the third-largest after Silicon Valley and New York, according to the state-funded Israeli Innovation Authority (IIA).

"The investment rate is almost the same as the period before the war," said Dror Bin, CEO of IIA, quoted by VOI from Reuters. "Despite the increased risk of investment in Israel, investors are still seeing potential in these startups and continuing to invest."

High technology boosted Israel's economy, accounting for 16% of jobs, more than half of state exports, a third of revenue tax, and 20% of total economic output.

However, Bin expressed concern that employment in this sector remained stagnant, which could reduce tax revenue at a time when the state needed funding to finance the war. At the same time, most investments are directed at mature startups and cybersecurity companies, while other sectors are experiencing difficulties.

"We see potential problems that may arise," Bin added, explaining that many good companies are supposed to get funding at this time facing difficulties.

To that end, IIA has launched a number of programs to help small startups survive. Bin also said that this war is likely to create a new defense technology startup "explosion" once it ends.

"The technology sector'sfundamental remains the same as before the war," he said. "Once this war ends, we'll see a recovery."

The IIA report comes after a report from the startup Nation Central (SNC) in early September stated that big tech companies persisted, but warned of the sustainability of the sector due to the prolonged conflict and economic policies of the current Israeli government that are "destructively perceived".

Israeli media this week reported that the 2025 budget would reduce tax incentives for foreign investors in the technology sector.