Global Business Ties with Israeli Start-ups
International business relations with Israeli start-ups have been influenced by the war in Gaza. Several global corporations and authorities have announced the end of their relations with Israel. Contrary to them, some have seized the opportunity to create new partnerships with Israeli start-ups in various fields. This whitepaper lists the companies and states that have cut off ties with Israel and those that have established new partnerships with them.
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Severing Business Ties
?The war in Gaza has led to numerous protests in public squares and universities all over the world, calling for universities and authorities to cut all ties to Israel. These protests have influenced business relations between Israel and its global partners.
In November 2023, iO Associates, a UK recruitment company in the tech, engineering, and defense market announced its decision to sever ties with Israeli defense company Elbit Systems Ltd (Elbit), after having been a target of months of disruptions by anti-apartheid activists. As part of efforts to drive iO Associates to cut ties with Elbit, activists stormed and occupied its Manchester office in September and again in October. Activists also painted iO offices red in October in London, Reading, and Manchester.[1]
Another company that ended its ties with Elbit is the Japanese trading corporation Itochu, which announced in February 2024 that its aviation unit would end its strategic cooperation with Elbit amid the war in Gaza, and after the International Court of Justice ordered the State of Israel to suspend its military operations in Gaza on January 26.[2]
In March 2024, more than 600 Google employees signed a letter addressed to the leadership of Google marketing demanding that it drop its sponsorship of Mind the Tech, an annual conference to promote the Israeli tech industry that took place in New York. The conference aimed to highlight the resilience of the Israeli tech industry, especially in the face of Israel’s economic downturn following the attacks by Hamas militants on October 7.[3] During the conference, several Google workers protested against the company’s participation, however, the conference continued as planned.[4]
In May 2024, Turkey’s Trade Ministry halted all exports and imports to and from Israel.[5] A month later, Colombia announced it would cease its coal export to Israel. Additionally, several investment companies have announced that they will not participate in tenders for the construction of railway lines in Israel, and companies in other fields have already announced that they will examine the continuation of their investments totaling billions of dollars in Israel. The oil company of Abu Dhabi has already canceled its plan to buy 50% of Israeli energy company NewMed. Companies in Morocco and Bahrain are also looking into collaborations they planned to have with companies in Israel.[6]
Following the recent Israeli military activity in Rafah, which began recently, France canceled the participation of defense companies from Israel in the Eurostory 2024 arms exhibition which was held in June 2024.[7] 74 Israeli companies were supposed to participate in the exhibition, including Elbit, Rafael, UAV manufacturers Aeronautics and UVision, combat drone manufacturer Robotican, security camera manufacturer Thirdeye Systems, and even small companies such as the military battery manufacturer Epsilor.[8] A day after the exhibition had started, the District Court for Commercial Affairs in France annulled the decision banning the entry of Israelis, however, the Israeli companies that planned to participate claimed it was “too little, too late,” after they already canceled their arrival and would not board planes on the last day of the exhibition. The Israeli area of the exhibition stood empty and desolate.[9]
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Partnerships
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Despite global protests and severing ties with Israeli companies, global corporations are looking into establishing partnerships with Israeli start-ups, and the latter are searching for new business opportunities in the global market.
Europe
?The number of Israeli companies seeking collaboration opportunities within different sectors in Europe has increased in the past few years. The European market is attractive to Israeli businesses for several reasons:
·???????? The European market is big and diverse.
·???????? Europe contains a vibrant innovation ecosystem and technology hub.
·???????? The financial resources available in Europe are plentiful, from venture capital funds, angel investors, and even grants provided by governments.
·???????? Collaborating with European businesses enables Israeli firms to gain strategic benefits such as entering new markets, receiving access to distribution channels and acquiring innovative technologies.
According to Dr. Adi Horowitz Lavie, Vice President of Investments and Growth at Poalim Tech, with the decrease in investments and demand following the war in Gaza, Israeli entrepreneurs are looking for new markets to raise funds and partnerships beyond the US, which used to be the main market to which the industry's eyes were directed. One of the new developing markets is Europe. The entrepreneurs and investors continue to make new connections with the international industry to maintain the strength of Israeli tech.[10]
Simultaneously, Europe is eager to invest abroad, even in war-hit Israel, because Israeli start-ups offer global competitiveness and innovative tech solutions, and since the start of 2024, 22 venture capital funds and European financial entities have already made significant investments in Israeli tech. For example, drone manufacturer Xtend has received a 50,000 euro grant from the European Union (EU)’s Horizon Europe fund.[11]
Additionally, in May 2024, approximately 10 Israeli startups from a wide range of fields presented their companies to representatives of European venture capital funds as part of a round table organized by the Export Institute during the tour of the Calcalist and Bank Hapoalim business delegation in Paris. In this way, Israeli start-ups reach out from the beginning to the global markets and not the local one, a fact that pleases investors in France in particular, since they see companies directly focused on growth from their first day.[12]
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United States
?Many university campuses in the United States have become a hostile arena against Israel. Nonetheless, the University of Utah announced in June 2024, that it is embarking on a new program with the Frontier Innovation Center (of the investment company Arieli Capital and Ramat HaNegev R&D), the Utah Ministry of Commerce, the Ministry of Agriculture and the Utah Governor's Office of Economic Development. The plan aims to develop the Israeli Negev based on common knowledge and to connect it with the Great Desert In the USA, the Utah desert. This cooperation is expected to contribute to the development of innovative technologies, with an emphasis on commercial projects. The goal is to find solutions to the desert's global challenges: lack of water, energy, and food security. As part of the program, a connection was created between regional authorities, government officials, universities, and research entities from Israel and the US, to promote innovation in the desert. Moreover, Israeli start-ups participated in events with government representatives, toured agricultural areas and research laboratories, and met investors and industry executives from Utah.[13]
Middle East
After the United Arab Emirates (UAE) signed the 2020 Abraham Accords with Israel, business deals between the two countries boomed. The UAE has maintained its business relationship with Israel throughout the war in Gaza. However, the deals announced before the war, including investments in cyber security, fintech, energy, and agri-tech, are now kept low-key. Raphael Nagel, a German Jewish entrepreneur living in the UAE who heads a private business group that promotes business relations between Israel and the UAE said that the deals are still happening, but they are less frequent and less public.[14]
Conclusion
Following the outbreak of the war in Gaza and Israel’s unstable economic status, many Israeli start-ups are turning to the global market for business and investment opportunities. Several states and international corporations choose to sever their ties with Israel. On the other hand, a substantial number of global companies and authorities see the Israeli market as a good opportunity for cooperation and investment. As the war continues, Israeli start-ups rely on the local and international markets to survive and improve their economic situation.
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