(MENAFN- Trend News Agency)
The year 2022, during which inflation in Israel hit its highest
level in 20 years, was harsh for innovative startups, trend reports citing
According to the Israeli Central Bureau of Statistics, the
annual inflation in Israel reached 5.3 percent in 2022, the highest
'A kind of vicious circle was created,' Gad Lior, senior analyst
for Yedioth Ahronoth daily newspaper, told Xinhua, adding 'as the
prices rise, so does the interest rate, so the economic situation
of some Israelis is less good.'
Bank of Israel, the country's central bank, has raised the base
interest rate seven consecutive times since April 2022 to curb
inflation. The rise in interest rates made financing more difficult
for young startups.
'By summer of 2022, Israeli high-tech companies started to feel
the pressure economically and started to do different rounds of
layoffs,' due to economic concerns and the crisis in Ukraine,
Jennifer Schwarz, executive director of EcoMotion, a startup
community in Israel, told Xinhua.
Most startups and investors started to be more conservative in
2022, with fewer investments and more layoffs, she said.
According to a report jointly published by the Israeli IVC
Research Center and Bank Leumi, hi-tech companies in the country
raised a total of 14.95 billion U.S. dollars in 2022, a sharp
decrease of about 42 percent from the previous year.
Young startups are trying their best to attract investors to
survive, said Eitan Kyiet, CEO of Road2, a startup platform in
Haifa, northern Israel. However, amidst inflation, investors are
more willing to leave their money in the bank.
In the meantime, some industry insiders see a positive prospect
amid the current situation.
'Companies are going to be more efficient and focus on their
core business rather than investing in things that are not bringing
in value,' said Yaron Golgher, CEO and co-founder of AI wealth tech
company I Know First. 'Of course, it's bad when people are losing
their job, but companies are going to be more efficient.'
Thanks to the crisis, companies are focusing on what they must
have, disintegrating the fluff, and switching their pivots to find
the right direction of development, said Kyiet.