Some Israeli business media are currently campaigning against the Netanyahu government. They blame Netanyahu for alleged withdrawal of venture and investment capital from Israel. They join more the woke left-wing chorus of scaremongering with little-substantiated reports and facts on their side. However, it seems more accusatory blame-game and political propaganda than solid business news.
The economic news seems only to be bad, but the opposite is true as the news on VonNaftali daily proves: One good news of success after the other.
And, much of the bad news – and there are of course bad news – are due to global conditions: war in Europe and an associated economic recession. Russia and Iran are the warmongers and one of the main reason why the world is stuck in a global economic crisis today. And Israel is within this frame of a global mayhem. There is no exit.
This is ignored by many left-wing business media, as is the fact too that market adjustments and a shift in the ecosystems are currently taking place: software and hardware companies are experiencing declines and are facing extensive mergers.
But other ecosystems are in the aspiring and promising establishment such as FoodTech, MedTech, SustainTech, SpaceTech, Quantum Supremacy, or BioTech, to name just four industries in which Israel is currently positioning itself as a leader. There is no sign of the crisis here.
A word on these left-woke behaving business media: Their articles against the Netanyahu government, according to which investors are pulling out of Israel because of Netanyahu, are based almost entirely on anonymous sources – and, well, imagination and anonymous rumours are not a solid basis and do not replace facts – or ex-CEOs who failed and had to answer to their companies in lawsuits worth billions.
Business media are more media that address doers and founders and not politicizing whineers about how evil and bad the world is now. They’re just poorly disguised calls for tax money. Entrepreneurship is different and these media are less and less addressing the interests and information needs of decision makers and founders and CEOs.
And if one or the other European state fund then considers – by the way, European investors are quite irrelevant for Israel – to stop investing in Israel, the sums involved are rather ridiculous and many other investors are already queuing up to do so to take over. Finally, the European VCs are rather small and not of real relevance for Israeli start-ups.
Pitchbook reported about European VCs performance for 2022: “Some €91.6 billion was invested across an estimated 12,383 deals in 2022, representing year-over-year declines of 16% and 5%, respectively. Nevertheless, it was still the second-biggest year for European VC activity.” Put this in relation to the sum Israeli start-ups raised 2021: About $26 billion. That’s almost one quarter of what European VCs invested.
The Real Challenges
Besides that, there are in fact other major problems and obstacles why Israel is loosing ground in innovation and VCs too, as reported on VonNaftali.
The last global ‘Innovation Ranking‘ by WIPO can be summarized: Israel is still considered one of the leading states when it comes to innovation, but Israel has suffered a sharp decline year after year since 2019. The reasons are not surprising: Bad infrastructure and institutions, and low creative outputs are the reasons.
Israel ranks 16th in the WIPO’s (World Intellectual Property Organization of the UN ) global innovation ranking for 2022. In 2019, Israel ranked 10th and has been deteriorating year by year.
A closer look at the individual factors, immediately reveal the problem zones. They, these zones, do not just exist in Israel since yesterday but are escalating more and more from year to year. Result: Israel occupies 41st place globally in the pillar ‘Institutions’. A poor performance for a modern OECD state.
The inefficiency and redundancy of the bureaucracy are particularly problematic. Here Israel comes in at an embarrassing 115th place (out of 190 countries). Bureaucracy is the main problem for innovation in Israel. And not only for innovation and business but also in everyday life for the average citizen. Accordingly, the ranking for the economic framework conditions are rather poor: Here Israel takes place 47.
So the the problem bear is the bureaucracy aka deep state. Democracy and economy are more threatened by a bureaucracy aka the deep state which wrongly assumes they are the real representatives of the public will&democracy. The spearhead of this erroneous view seems to be the judiciary. The judiciary clearly holds today the lead among the three powers. Justice and the bureaucratic executive are too closely intertwined.
The separation of powers is threatened by that intermingle of Justice and bureaucracy. The legislature is degraded to its shadow and turns more and more irrelevant. The will of the people is mocked. That needs to be changed.
Neither the High Court nor the bureaucracy are elected. There is a dire need for reform where the last say has to be on the side of the legislative aka parliament as in nearly all western democracies.
To give just one of the abundant examples quoted from one of the business media which obviously loves to blame Netanyahu. They wrote under the headline: “Bureaucracy leaves Israel-UAE trade well below potential” and explains: “The main obstacle to trade with the UAE is the difficulty in transferring money to the UAE, mainly because of Israeli banks.” And why? ““Globes” revealed last year that these restrictions stem from Bank of Israel instructions. In a letter sent by the Supervisor of Banks in April 2021 to the management of Israel’s banks following the signing of the Abraham Accords, it was stressed that international standards on the prohibition of money laundering and terrorist financing must be applied in trade with the UAE.” In a nutshell, the business papers of Israel know it obviously better due to the facts they publish.
Oh, big news from GLOBES today. GLOBES coins the headline: “Tech cos to join warning strike against gov’t reforms“. Sorry, what is newsworthy? There are about 650,000 companies in Israel, and about 125,000 are in scientific and technical biz. Conclusion: 130 companies allow their employees to protest. It makes up 0,2% of the businesses in Israel. So the correct headline might be: “0,2% of companies join protest against the Government“, Sucks, mmhh?
Israel is embraced by Investors
So, investors are not fleeing Israel. The opposite is true. Day for day you can read on VonNaftali one success story – be it on the order side, the investment side or innovation side – after other of Israel’s economy at large and Israeli companies in particular.
Today Netanyahu announced: “The State of Israel has successfully completed a major issue of government bonds. The state raised $2 billion from international institutional investors, with demand having reached over $10 billion.” That does not sound like the investors turn to Israel for a cold shoulder and are running away.
The books of order are good, sure, it can be always better. But, we have a global crisis. All economies are bleeding. That the Israeli tech exits plumb about 80% to $16,9 billion and the investment volume was shredded by almost 50% down to about $13 billion, has, as said, nothing to do with the new government.
And finally ‘The Economist’ ranks Israeli economy 4th best in 2022 and as ‘The Economist” writes “Despite political chaos, Israel did well.” Well, let us assume the chaos may continue, it will not harm the economy. That’s the lesson of 2022.
Fact is, Israel is the second most innovative zone of the globe only surpassed by Silicon Valley. No investors of the world can and will bypass or neglect Israel. Netanyahu finally gives a promise that all investors and businesses love to hear: The liberalization of the market.
Well, there is a lot to do in Israel concerning the liberalization of the markets, but the markets have confidence as Netanyahu says: “The markets have confidence in us because they know that our economic policy will continue to foster free markets, initiatives and the liberalization of the economy.“
And in this listing of some facts that there is a trust of the markets in Bibi, I left behind the Abraham Accords States: They trust in Bibi and ready to invest huge sums and boosting the trade volume to the advantage of both sides. Just to give one example. Amir Hayek, Israel’s ambassador to the UAE, said trade jumped 109.7 per cent to $2.56 billion (Dh9.4 billion) in 2022 as compared to $1.22 billion in the previous year. This excludes software trade. The UAE is now the 16th largest trading partner out of 126 countries. A win-win situation as far you can see. The sky is the limit.
We, the People
And in order to achieve that, it needs state reform where the judiciary (High Court) is referred back to its proper place. As in all western democracies, the legislature has the last word. It, the legislature, is the foundation of every Western democracy, because it embodies the essence of democracy: one man, one vote.
All violence comes from the people. This is how it is in all Western democracies and is a good Jewish tradition too. The people of Israel were asked if they would accept the Torah. The people of Israel decided democratically – one man, one vote – in the past, today, and will tomorrow: We, the people, … The left and Wokis hate this.
Also, the baby crying about the alleged failing separation of the three powers should not go unmentioned. In fact, Israel is very strongly leaning toward a ‘Juristocracy‘. So, there is an imbalance in favour of the power of Justice. Further, it is argued that investors will bow away. That’s blatant rubbish. London, without a doubt, the major financial center and investor center of the world is the capital of the oldest democracy in the world. No investor is afraid of the principle, construction, and power of the legislative in the United Kingdom. Quite the reverse! Let’s read and conclude with a quote from the website of the United Kingdom Parliament:
“Parliamentary sovereignty is a principle of the UK Constitution. It makes Parliament the supreme legal authority in the UK, which can create or end any law. Generally, the courts cannot overrule its legislation and no Parliament can pass laws that future Parliaments cannot change. Parliamentary sovereignty is the most important part of the UK constitution.”
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