JERUSALEM, Jan 15 (Reuters) - Israel's cabinet on Monday approved a stimulus package to boost the country's tech industry and elevate its standing as a global tech hub, shortly after a report showed the impact of war and a planned judicial reform had sapped investment in the sector.
The high-tech sector drives Israel's economy and accounts for 12% of employment, more than half of Israel's exports, 25% of income taxes and nearly a fifth of its overall economic output.
A report by Startup Nation Central published on Monday found private funding for the Israeli tech industry, once undisclosed rounds have been included, was expected to have fallen to nearly $10 billion in 2023 from the nearly $19 billion in 2022.
Under the stimulus plan from the Finance Ministry and state-run Israel Innovation Authority, a startup fund will be launched to collaborate with private investors to inject more than half a billion shekels annually into seed, pre-seed, and Series A rounds for startups with limited access to capital.
Also, an investment fund will be established to encourage Israeli institutions to invest in Israeli venture capital funds, with over 4 billion shekels ($1.1 billion) in the coming five years.
Aside from the impact of a global slowdown, foreign investment declined last year because of an Israeli government plan to overhaul the judicial system that sparked nationwide protests and concern over the country's democratic principles among Western allies.
Israel's Supreme Court has since struck down the law, but the Israel-Hamas conflict has also required a mass call up of workers for military reserve duty - many of them from the tech sector.
Monday's report by the group that coordinates global organisations with Israel's innovators found that for 2024, 88% of multi-national corporations plan to either sustain or grow their presence in Israel.
It added however investor sentiment was mixed, with 52% predicting a downturn in investments for 2024.
"We hope the ecosystem's bedrock of innovation, global partnership, and proven resilience will steer it through uncertainty toward a continued growth trajectory," Start-Up Nation Central CEO Avi Hasson said in a statement. ($1 = 3.7535 shekels) (Reporting by Emily Rose; Additional reporting by Steven Scheer; editing by Barbara Lewis)
