April Edition 2022

14 several years has often slowed technological innovation, especially for technology start-ups that operate in more heavily regulated industries, like Fintech or Medical Devices. However, this could be an opportunity to leverage compliance against competitors. Start-ups have significant competitive advantage over established companies when it comes to compliance in a changing regulatory landscape – they are more agile and less stuck on the old way of doing business. They can make changes much more rapidly, and can build a product with the needed capabilities in mind, at the outset. Factoring nimble compliance into product design will attract perceptive investors and, perhaps more importantly, smooth entry into established markets. Uni at Gornitzky adds: “Regulatory challenges are mostly affected by sector and should be examined case by case-by-case. For example, start-ups in the crypto-currency and financial services industry could be subject to a close review by the regulator, while other sectors can enjoy a relatively convenient regulatory environment.” “The fact that the Israeli market is small sometimes leads Israeli companies to focus on global markets. Therefore, in some industries, Israeli regulation may become less relevant. For example, in the medical aesthetic industry, certain companies will not make efforts to obtain an “Israeli FDA” because they do not intend to sell in Israel anyway. They will probably work to obtain a CE mark and FDA approval. Investors should also bear in mind that there are Israeli companies that receive grants from the Israeli government and are therefore subject to certain restrictions on their ability to transfer their know-how and IP out of Israel and this could impede a future sale of the company. However, the law provides for ways to relax or lift these restrictions. In any event, before an investment is made it is advisable to check whether the company has received governmental grants. In terms of investment regulation, it is quite easy to invest in Israeli start-ups. There are no restrictions on nominating non-Israeli individuals as directors in Israeli companies and receiving dividends as shareholders (subject to certain standard tax laws).” Regulatory challenges will depend on the sector