Israeli Tech Workers Prepare To Mobilize In Wake Of Attacks

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.

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. 

Eric Reiner, founder and managing partner at New York-based venture firm Vine Ventures, told the Journal that the firm has several portfolio companies based in Israel. Some Israeli startups are seeing as much as 50% of their staff called to duty, he estimated. 

“Those folks who are from combat units are being called and saying, ‘hopefully see you soon,’ to their wives and kids,” Reiner said. 

Itamar Friedman, co-founder and CEO of Tel Aviv-based artificial intelligence startup CodiumAI, told the Journal he has reported to reserve duty, saying “I want to be part of the people who are protecting our country.”

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.

Tomer Landesman, an investor at Israeli venture firm Pitango, told The Information that the country’s tech community has tapped into its deep ties to the country’s military as it faces its biggest assault in 50 years. “That’s one of the secret sauces of Israeli high tech. These people have gained their expertise, knowledge and experience from the military.”

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.

The conflict could again stymie investment into Israel, which has also dealt with turmoil surrounding highly controversial judicial reform proposals from Benjamin Netanyahu’s far-right government. 

“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.

“Tough times. Gut-wrenching and blood-curdling stories,” Yoav Shoham, co-founder of large language model startup AI21 Labs, told VentureBeat via email. “Our 9-11. But we’ll prevail.”

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Illustration: Li-Anne Dias