28 Mar 2023

A polarised society: will political chaos push Israel’s tech ecosystem to the brink?

Proposed judicial reforms have prompted widespread protests in the country. What impact is the political upheaval having on Israel’s world-class tech ecosystem? And what are the responsibilities of communicators in challenging markets?

Ben Carr
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Israel has been facing its biggest protests in over a decade. Yesterday, a general strike was called, with schools and universities closed and Tel Aviv’s Ben-Gurion airport, its international gateway, forced to shut. Widespread civil action has been prompted by a highly controversial set of judicial reforms that would shift power away from the courts and strengthen its executive.

In what is an already polarised society, Netanyahu’s government has been under growing pressure both domestically and internationally to back down and change direction. Especially if the country’s longest-serving Prime Minister wants to keep an already fragile governing coalition intact. On Monday, a month-long delay to the reforms was announced to allow time for discussions.

Israel’s tech ecosystem has been a beacon of strength for the country over the last decade. Tel Aviv-headquartered firms rank third in terms of total VC investment in the EMEA region in 2022, after London and Paris and ahead of Berlin, a report from Dealroom said last week.

If start-ups haven’t faced enough of a battering with falling valuations, funding rounds drying up and the collapse of Silicon Valley Bank, this political turmoil is set to further dampen the outlook for the country’s most promising firms.

Cloud security firm Wiz said last week that it will not be transferring any of the proceeds from its latest $300m funding round to the country while the political uncertainty continued. There’s even talk of businesses relocating to alternative, bourgeoning tech hubs in Europe.

This is an unnerving time for the country’s entrepreneurs and tech community. Many will have been waiting to see if the civil action would force the government’s hand on a U-turn and for calm to return. But this saga risks scarring the reputation of the country’s tech credentials in the long term. Investors are likely to shy away from deploying further capital into Israeli start-ups and businesses may find it difficult to plan for their future success amid such instability.

Communicating effectively during turbulent political conditions

Businesses headquartered, or with a significant presence, in Israel will be watching the coming weeks unfold closely. Eynat Guez, the CEO and co-founder of Papaya Global, a payroll software unicorn, was the first to publicly criticise the reforms in January. But others, particularly international firms with large Israeli offices, will likely decide against any public declarations of support and remain neutral.

Regardless of whether or not to take a stand, from our experience working with firms around the world, we know that many will be keen to continue business-as-usual communications and marketing activity. However, they should be mindful of the external backdrop they are operating in and consider how stakeholders will view the appropriateness of messages at a time of political crisis.

With heightened feelings amongst audiences, businesses should also consider the potential for their communications to become unintentionally politicised and used as leverage by political forces, risking reputational damage for being seen to take sides.

Finally, but no less important, setting the right tone in internal communications is crucial. Employers should respect employees’ right to protest and show understanding towards the weight of feelings that will have taken hold amongst workers.

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