Israeli Tech Sector Closes Ranks During Conflict

Israel’s tech industry, a key sector of the country’s economy that accounts for nearly half of exports, has closed ranks since the start of the conflict with Hamas, with numerous startups seeking to help civilians.

Eran Orr, chief executive of the Israeli-American start-up XRHealth, rushed back to Israel after Hamas militants stormed into the country from the Gaza Strip on October 7, and killed at least 1,400 people, mostly civilians and kidnapped more than 220 others, according to Israeli officials.

Gaza’s Hamas-run health ministry said retaliatory Israeli strikes have killed more than 7,000 people, mostly civilians and many of them children, raising growing calls for protection of innocent people caught in the conflict.

Orr’s company, founded in 2016, makes virtual reality headsets for therapeutic use.

XRHealth has donated hundreds of headsets to Israeli hospitals to help survivors deal with post-traumatic stress, because “there’s a very big shortage of mental health clinicians,” Orr told AFP.

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But the company believes the need is much greater and is seeking $3 million (2.8 million euros) in donations to help 2,000 households that have been directly affected by the October 7 attack.

Such examples were increasing in a country which hosts at least 7,500 tech firms, according to Start-Up Nation Central, an Israeli non-profit that helps match up investors and entrepreneurs.

The tech sector accounted for 18 percent of the country’s output last year and nearly 48 percent of exports at $71 billion, as well as 14 percent of salaried employees.

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From software development to chip manufacturing, all of the global players in the industry are present to tap into the country’s rich ecosystem.

But with the war, the objectives have changed.

In these circumstances, “there are immediate needs that we need to serve, there are people dying,” said Avi Hasson, chief executive of Start-Up Nation Central.

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“And we need to see how we can use our assets, our know-how, and our technology to create solutions that will meet those needs,” he added.

Merav Bahat, co-founder and chief executive of the cybersecurity firm Dazz, said tech firms were pitching in to quickly create platforms to collect donations and help get people from place to place.

“We take the power of Israeli tech to help Israel become stronger,” said Bahat, whose husband’s cousin is one of the people taken hostage by Hamas militants during the October 7 attack.

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Web designing platform Wix is part of a group of nearly 300 start-ups that assembled within days to put the tech industry in a position to help the civilian population.

One of the requests has been to develop virtual panic buttons to quickly alert the authorities in case of need, the company said.

All of these initiatives require on the fly adjustments by tech firms as many of their staff are military reservists.

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Start-Up Nation Central estimates 15 percent of its staff has been called up.

At Trullion, which develops AI-powered accounting software, about 10 percent of staff have been called up, said CEO Isaac Heller.

“Most are going to active military duty where they are just on the borders, near Gaza and near the north near Lebanon,” he said.

“They’re okay, we check in every day,” said Heller, adding they checked in with their families as well.

To ensure operations continue, the company is leaning on its foreign staff, with employees in New York working overtime.

“Our company has turned into a close, close family overnight,” said Heller.

What impact will the conflict have on the Israeli tech sector when funding for start-ups has already been dropping across the world as the global economic outlook worsens?

Security risks are part of calculations when investors decide whether or not to invest in Israel, noted Start-Up Nation Central’s Hasson.

“I doubt there’s a single investor that hasn’t calculated that into the formula” of investment decisions, he said.

Trullion’s Heller said he’s not scared for the tech sector.

“I’m scared of the humanitarian crisis that’s unfolding,” he said, mentioning the plight of Israeli hostages and civilians in Gaza caught in the conflict.

“Those are the things that scare me,” he said.


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