Clear and Present DangerTLV Partners: “If Israel’s democracy is harmed, the hi-tech industry will wither or flee abroad”
Clear and Present Danger
TLV Partners: “If Israel’s democracy is harmed, the hi-tech industry will wither or flee abroad”
“We say these things with a heavy heart and great pain, and we hold hope that the destructive actions will be stopped before it's too late,” wrote partners Rona Segev, Shahar Tzafrir, Adi Yarel Toledano and Eitan Bek
The changes that the new Israeli government is planning to make to the judicial system continue to raise concerns in the local high-tech sector.
One of the leading venture capital funds in Israel, TLV Partners, has released a letter in which it voiced its concern regarding the impending legal reforms.
“The Israeli hi-tech ecosystem was built upon freedom of expression and the support of innovative and creative thinking. It thrives in places where people have rights and freedoms - after all, what is the hi-tech industry if not a mosaic of all of the people who work in it,” read the letter signed by the VC’s four partners, Rona Segev, Shahar Tzafrir, Adi Yarel Toledano and Eitan Bek. “These are values that the current government is trampling. The current steps that have been taken to paralyze the justice system and recklessly disrupt the balance between authorities, drastically harm democracy.
“As a quick background for those who haven’t been following the latest news - the proposed "override clause" is meant to allow the Knesset, with a majority of 61 members (who are subjected to the coalition agreement), to pass any law - regardless of its content and how harmful, extreme or discriminatory it is - without the criticism or inspection by the court. The recent statements of Avi Maoz and the suggested homophobic laws that allow the discrimination of certain customers by service providers - are the canaries in the coal mine of the current state of the government.”
The partners went on to add: “This is not a matter of right or left. It is a matter of having an infrastructure in place that allows for the proper management of a functioning state. It doesn't matter if you support France or Argentina, you still want a referee on the field. It doesn't matter if you support a certain business approach or not, you want a proper board of directors for the public company you invest in. It doesn't matter what type of vehicle you drive, you want it to have brakes.
“An unbalanced system is a dangerous system for everyone, both collectively and individually. It is dangerous for the majority and the minority. It is dangerous for the right and the left. And it is our duty to prevent it from happening.
“TLV Partners was established on Zionist ideals, aiming to help build a thriving international hi-tech industry in Israel. Since the firm’s inception seven years ago, we have raised close to a billion dollars that have been invested back into Israeli companies. The companies we invested in have raised more than $4 billion and employ more than 4,000 people.
“The large sums of capital invested in our industry are its sunshine and water. But no flower can bloom on rotten soil.
“If Israel’s democracy is harmed, the hi-tech industry will wither or flee abroad. The best minds will leave, Israeli entrepreneurs will establish companies outside of the country's borders, the country's credit rating will be affected (S&P has already announced that the legal reform could lower Israel's credit rating), and so on. An entire industry that holds the country on its shoulders will be forced to look for another place to bloom. The damage is enormous and it will affect everyone - left, right, religious, secular, Arabs and Jews.
“We say these things with a heavy heart and great pain, and we hold hope that the destructive actions will be stopped before it's too late.”
Attorney Lior Aviram, Managing Partner at Shibolet law firm, told Calcalist that the effects of the government’s reforms are already being felt. “Last week I was part of negotiations in Paris to acquire a French company in return for shares in an Israeli company. The planned legal reforms were just announced and the following day that was the first topic of discussion in the meeting. The French told me ‘this concerns anyone who works with Israel or to whom Israel is important in any way. They understand that they will receive an asset based in Israel and an asset in a non-democratic country is less valuable than an asset in a democratic country.”