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TEL AVIV, Israel (AP) — Investments in Israel's tech sector dropped by nearly half in 2022, reflecting a global economic slowdown, a nonprofit group reported Tuesday. According to the nonprofit IVC Research Center, Investments in the tech sector fell to $3.1 billion from $5.7 billion in 2021, the lowest amount since 2018.
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The IVC report noted that venture capital Investments fell by 38% in 2021 and by 44% in 2022. Angel Investments in the tech sector were also down, with a decrease of 42% in 2021 and 49% in 2022. The number of deals also declined, falling from 641 in 2021 to 572 in 2022.
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Despite the overall drop in Investments, the IVC report highlighted some bright spots in the tech industry, including a 12% increase in the number of deals with Israeli investors, a 7% increase in the number of deals with foreign investors and a 2% increase in the average deal size since 2021.
Investments Drop by Nearly Half in 2022
Global economic slowdown causes significant investment drop in Israel's tech sector.
The IVC report comes as the Israeli tech industry continues to face challenges, including the coronavirus pandemic and a new tax scheme approved by the Israeli government in 2021. The new scheme, which taxes tech companies on their profits instead of their turnover, has been criticized by some in the tech industry for its potential to dampen investment.
In response to the findings, the Israeli government is working to attract more Investments and spur economic growth. New York Gov. Kathy Hochul announced plans Tuesday to add 1,000 beds for inpatient psychiatric treatment and create 3,500 housing units in the state to help address the mental health crisis.
The government is also taking steps to ensure that Investments made in the tech sector are made responsibly. The U.S. Securities and Exchange Commission has proposed rules that would require companies to disclose their climate-related risks and other environmental, social, and governance (ESG) issues.
In addition, the government is taking steps to promote diversity and inclusion in the tech industry. Did you know that only 14% of investment professionals in venture capital (VC) in the U.S. are women? (According to a study by Deloitte).
To address this, the U.S. government has proposed a new rule that would require companies to disclose the gender, racial and ethnic diversity of their boards and executive officers.
Financial firms are also taking steps to make investing in the tech sector more accessible. Clients can deposit higher dollar checks right into their investment account quickly and safely. Examples of QuickDeposit for Investments include Fidelity Investments®, which today announced it is furthering its commitment to advancing diversity and inclusion in the workplace.
Meanwhile, the government is also looking to attract new Investments in the tech sector. AP to attract sea of Investments ushering in industrial development. JSW Steel Limited has come forward to set up an integrated steel plant at Visakhapatnam, India. The plant is expected to create thousands of jobs, bolster foreign direct investment (FDI) and promote economic growth.
Other Investments in the tech sector are being made with an eye towards the future. According to a 2022 SoFi Investor Study, investors are flocking to non-stock Investments amid volatility. In 2022, nearly all of SoFi’s surveyed investors (96%) reported investing in non-stock Investments.
However, not all Investments in the tech sector are above board. The U.S. government recently charged Samuel Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of charges related to money laundering and securities fraud.
Warren Buffett's company, Berkshire Hathaway, is also selling off its BYD shares despite the positive comments he made in the past about the Chinese electric car maker, citing a lack of confidence in the company's long-term prospects.
Despite some missteps, it's clear that the tech sector is a key driver of economic growth and new Investments are being made to ensure its sustainability. With the right policies and Investments, the tech sector can continue to be a major contributor to global economic growth.