The Israeli Innovation Authority, backed by the government, announced on Monday that the government's plan to amend the judicial system undermines investor confidence and drives high-tech companies to leave the country. A survey conducted by the authority found that 80 percent of the startups established so far this year have opened outside of Israel, and these companies also plan to register their intellectual property abroad in the future, which could severely impact Israel's tax revenue.
According to the CEO of the Innovation Authority, Dror Bin, "Even if the legal-judicial crisis is resolved, it will take time to reach a solution, and even after that, rebuilding trust with investors will take time." He added that the legal plan leads to increased damages from a weak economy.
The authority noted in a report submitted to the Minister of Science and Technology, Ofir Akunis, that there is a significant gap between the trading of technology stocks on the Tel Aviv Stock Exchange and their trading on the NASDAQ. While the NASDAQ index rose by 17 percent this year, the Israeli technology index fell by four percent. The authority stated that if the gap broadens, "many Israeli high-tech companies will face great difficulty in raising investment and will have to shut down or relocate to other countries."
Furthermore, the authority reported that high-tech companies raised only $1.7 billion in the first quarter, marking their lowest quarterly level since 2019. The authority recommended several steps, such as easing restrictions and providing incentives to encourage investment and giving startups incentives to register their intellectual property in Israel.
