26 Importance of high-tech and raising investment in startups Today, Israeli high-tech makes up 20% of the country’s total GDP. In a conversation with Calcalist, Dror Bin, CEO of the Israel Innovation Authority, said: “The high-tech field is more important to Israel than oil and gas are to Russia. On the other hand, the governments’ investments in Israel in the last 20 years have been decreasing, and are lower than what is accepted in the OECD. Israel is special in that it invests less every year in its main economic resource - high-tech - which is so important to the country’s economy, and has been a ‘shock absorber’ for quite a few years now.” However, the growth rate of the sector in 2023 was significantly lower than the annual growth rate since 2018. “The positive side is that despite all the challenges and difficulties of 2023, the decrease in investments and instability, the number of people employed in high-tech has grown. This is not a big increase, but it is still a nice achievement in a year of war and global crisis,” adds Dror Bin. Maya Schwartz, CEO of the Israeli High-Tech Association (HTA), which supports economic growth across Israel’s high-tech sector, said: “The current economic climate is very challenging for entrepreneurs seeking for early stage funding. High interest rates, economic instability, the legal reform and the war affected in a very negative way on the investment side, both early stage VCs and angels.” “The start-up market is facing significant challenges due to a combination of circumstances involving Israel generally,” adds Dechert London partner, Adam Levin. “None of these can be mitigated against by any business, including the uncertainties surrounding Israel caused by the war and the Israeli political environment, the perception of Israel globally and the poor state of the world economy due to global uncertainties, especially from the Russia/Ukraine war and persistently high interest rates,” he adds. So what specifically are today’s challenges – and what factors help make start-ups more attractive to early investors? IP more crucial than ever and greater focus on due diligence As Tzahi Lati, Associate Director, at global investment platform OurCrowd, which connects startups and investors, says: “Companies are struggling with
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