AnalysisLayoffs in Israeli high-tech intensify as Jewish holiday season comes to an end
Layoffs in Israeli high-tech intensify as Jewish holiday season comes to an end
High-tech companies in Israel hoped the financial situation might improve by the end of the Jewish holiday period, but their wishes did not come true, leaving them to make cuts in order to make it to 2023
The Jewish holidays were a time for illusions in Israeli high-tech, a time when the industry was mainly busy with family vacations, away from all the noise of the world. But in the meantime, companies have been planning big moves whose main goal is survival for the next year or two.
Israeli companies and companies that have operations in Israel, as a rule, will not fire employees during the holidays. With the exception of multinational companies that are less aware of this sensitivity, most companies will wait as long as they can for the end of this unique period in Israel, and this is what has happened.
In the United States, tens of thousands of employees in the high-tech industry were laid off, while in Israel there was a sort of hope for better days. But experienced investors and entrepreneurs, who have gone through quite a few crises, realized that the crisis is deeper than it seems, and the startup fundraising report of IVC and LeumiTech published on Sunday proved that the crisis is here and it is serious. A 38.5% decrease in capital raising compared to the previous quarter and over 50% compared to the corresponding quarter prove that raising capital today will be very difficult, especially at a value similar to or close to 2020 or 2021. Fundraising for companies that are not experiencing high growth at the moment will be at the same or a lower value, a step that no one wants to take - not the funds that invested in the company and will be forced to write off part of the investment, not the founders who will be forced to write off almost all of their holdings, and not the company's employees whose options will disappear.
That's why most companies have already cut everything that is not necessary, whether it is welfare budgets, marketing budgets and, in fact, everything that does not bring money to the company, including expenses that are suitable for better days. But, for most companies, this step was a drop in the ocean and did not really affect expenses.
The step that most affects the company's expenses today is manpower and real estate. Many companies have begun to examine a transition to working from home to reduce rent, but most of them realize that the necessary step for them today is a significant reduction in manpower. The week started with the layoffs of about 62 employees at OrCam, founded by Amnon Shashua and Ziv Aviram, the founders of Mobileye. In addition, Antidote will lay off 20 employees, which are a significant part of its operations in Israel. Both are good examples of companies that thrive in times of abundance but have to streamline during hard times. There are few companies that are not affected by the crisis, but as for the rest, they will be forced to reduce activity and wait for the storm to pass.