Employees of Israel’s tech sector are among the 360,000 reservists in the country’s military being called up to mobilize for an expected ground invasion of Gaza following weekend attacks by the terrorist group Hamas.
Israel’s tech sector punches far above its weight, powered in large part by its lauded cybersecurity sector. Startups in the country received $8.8 billion in investment last year, Crunchbase data shows. In addition, a number of large U.S. tech companies have operations in Israel, including Intel, Microsoft, IBM and Meta.
For investors in Israeli technology companies, the possibility of employees being called up to military duty is an established risk factor. In Jerusalem-based Mobileye’s IPO registration last year, for instance, the company warns that “operations may be disrupted by the obligations of personnel to perform military service.”
Most Israelis are conscripted to serve in its defense forces for two or three years when they turn 18 and are required to continue annual reserve duty each year until they reach the age of 40, or in some cases, older. Reservists are also subject to being called for additional active duty in emergency circumstances.
“With a heavy heart, I can say that this is our 9/11,” Omer Rimoch, co-founder and CTO at PayEm, said via a message to Crunchbase News. “Israel is at war due to the vile and unforgivable actions of the terror organization Hamas. As the nation confronts this challenge, so too does our company. With team members being called to serve on reserve duty, necessitating a shift in our plans.”
Rimoch said the company has an office in Sderot, which was a central target in the attack, and employees in Israel’s south are also “at the heart of the action.”
“We pray for their safety, stand in unwavering solidarity with them, and extend our support to their families. Our immediate focus is the safety of our employees,” Rimoch said.
Lior Simon, general partner at Cyberstarts in Israel, told Crunchbase News many founders and tech employees — both within her firm’s portfolio and beyond — are part of Israel’s elite intelligence units and combat units and were called up for reserve duty as recent events unfolded.
“In response, companies are swiftly adapting, taking the necessary measures to maintain business operations as usual despite the very unusual circumstances,” Simon said. “However, startups haven’t halted their activity by any means; instead, they’re demonstrating their creativity through temporary reorganizations and constant prioritization to move forward and deliver results.
“In my view, this is the embodiment of the Israeli spirit — we are agile, dynamic, and quickly address challenges as they arise,” she added. “Above all, it exemplifies the individual’s willingness to go the extra mile, stepping in wherever needed, either on the military, business or humanitarian front.”
Simon also said Israel’s tech expertise has proven invaluable as volunteers developed innovative solutions within 24 hours, including facial recognition technologies to aid national search efforts and a logistics platform for collecting military equipment.
“These collective efforts highlight the entrepreneurial spirit that shines brightest among our people,” she said. “From extensive global fundraising campaigns to heartwarming social initiatives, the response has been nothing short of remarkable.”
Ofer Schreiber, senior partner and head of the Israel office for cyber venture firm YL Ventures, added that Israel’s tech community is well known for its agility, creativity and determination to provide top-of-the-line technology to the global market.
“These characteristics are ingrained in the Israeli spirit and have proven their value in tech innovation for Israel’s defense and security needs throughout the country’s history. In this most recent war, by far the most catastrophic we’ve endured, Israeli startups and VCs have rallied quickly to help the wounded, displaced and those in need within the civilian population, and are supporting the Israeli army and the needs of the troops in combat.”
He said countless Israelis in the tech sector have been drafted for reserve duty, including startup founders and CEOs, VC executives and men and women in all industry positions. Many more have volunteered to provide critical services to the civilian authorities, others help with funding, fundraising, logistical coordination and PR efforts to ensure that the world knows about the atrocities conducted by Hamas and its allies, he added.
“This catastrophe has impacted every Israeli citizen, and despite the ongoing threat and the fact that the conflict is far from its conclusion, it is truly inspiring to witness the resilience of the Israeli people during these challenging times,” Schreiber said. “The civilian population in Israel is taking the lead in providing relief, with numerous volunteers courageously putting their lives on the line to assist those who require help.”
Aviad Eyal, co-founder and managing partner of London-based Entrée Capital, an investment firm that invests in startups globally, estimated in an interview with The Wall Street Journal that most Israeli startups are seeing 10% to 30% of their workforces mobilized in the war effort.
Several employees of Capitolis, a fintech startup with offices in Tel Aviv, New York and London, have been called up to serve in the reserve forces, company founder and CEO Gil Mandelzis told Crunchbase News via email. “We thank them for their service and are praying for their safety, as well as the rest of the military and civilians in Israel,” he said.
The company has “been operating continuously since the weekend with people going the extra mile, working from home or the office,” he added. “I have zero concern about our ability to continue to operate in full, and Israel will continue to bring the world the brilliance and force of its technology and entrepreneurship.”
While venture funding to Israel-based startups has fallen in the past two years — as it has globally — the small nation still attracts outsized venture capital, particularly from investors in the U.S., which maintains strong relations with Israel’s tech sector.
Since 2019, $32 billion has been invested in companies headquartered in Israel, according to Crunchbase data. Of that investment amount, around 51% were led or co-led by U.S.-based investors.
Many Israeli tech companies have a dual presence in the U.S. and strong connections with American investors, some of whom have worked to support their portfolio companies based in the country.
Staff at Boston-based Battery Ventures, which employs about 10 people in Tel Aviv, helped evacuate people from areas near the border and delivered food, a spokesperson for the firm told The Information.
Israel-based startups raised $1.4 billion from venture investors in Q3, new Crunchbase figures show. While still down significantly from the $2.2 billion those companies raised in the same quarter a year earlier, the total marks the highest quarterly investment since Q3 2022.
“Overseas investment will slow for the next couple of weeks and months, especially to the extent that there are still hostilities going on,” Jon Medved, CEO of Israel-based venture firm OurCrowd, told Reuters.
Already, the conflict in Israel and the Gaza Strip has killed at least 900 Israeli civilians and more than 800 people in Gaza. More than 100 Israelis, including young children and elderly people, were taken hostage by militants as part of the attack and remain captives in Gaza. U.S. President Joe Biden said Tuesday that 14 Americans were killed in the attacks and others are being held hostage by the militants.
“Israeli society is at a critical junction and the Israeli tech community is joining the effort,” Omer Keilaf, CEO and co-founder of Innoviz Technologies, said in a message to Crunchbase News. “Some men and women have been drafted and others are using their technological acumen to solve challenges currently facing our country. In the meantime, we continue to run our companies, provide value for our customers, and support our team. We work night and day because we know our work is critical — now more than ever. And we have one goal driving us — to stay strong and safe.”
Related Crunchbase Pro queries
Illustration: Li-Anne Dias
Search less. Close more.
Grow your revenue with all-in-one prospecting solutions powered by the leader in private-company data.
Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.