High Tech Leaders Strike Back at Finance Ministry Report

YERUSHALAYIM -

Several leaders in the Israeli high tech industry rejected on Monday the claims of a Finance Ministry report which asserted that they are no longer the growth engine of the economy.

Israel Advanced Technology Industries (IATI) co-chairmen Erez Tsur and Yaky Yanay told Globes that “despite what the Ministry says, it is important to note that this [report] does not involve venture capital-supported companies, and there is therefore no real reason to say that the high-tech and life sciences industry is no longer a growth engine for the Israeli economy. Entrepreneurship and innovation are flourishing in Israel. The industry accounts for 40% of Israel’s exports, with exits and investment in high-tech companies hitting a peak in 2015. The local ecosystem currently has an unprecedented number of startups, together with large multinational firms. There is no doubt that the human capital and the entrepreneurial spirit are our real natural resources,” they said.

Carmel Ventures, part of the Viola Group, likewise disputed the Ministry’s claims. Senior partner Daniel Cohen observed that “it is evident that most global high-tech companies come here to look for brilliant technologies and excellent development teams.”

Cohen did, however, acknowledge the challenge posed by a skilled labor shortage. “As far as the future is concerned, there is no doubt that the pool of personnel must be enlarged by investing in education and incentives for technological education.”

Regarding external factors, Cohen said that “2016 is emerging as a slow year in global high tech, with a downturn in the value of public companies and unicorns in Silicon Valley. We should prepare for this slowdown, but without panic. Israel has already been through high-tech crises (2001 and 2008), and emerged stronger than ever.”

Erez Shachar, a managing partners in the Qumra Capital growth fund, charged that the government is not doing its part. “The Ministry of Finance’s report is a final warning of what we have already known for a decade: the startup nation is plowing ahead, but the state support system is not keeping pace. On the one hand, the Office of the Chief Scientist in the Ministry of the Economy and Industry is providing an excellent support platform, with a new incubators program and assistance for startups. On the other hand, the Ministry of Education and the government are not formulating a productive policy or encouraging personnel to support the accelerated development of the startup nation.

“The technology sector has used up the technological personnel that came to Israel from Russia in the 1980s and 1990s, and we are now left with an enormous shortage of engineers. The state must devise an immediate emergency program for accelerated training in technological subjects, explanatory campaigns in schools, and technological education programs in elementary schools.”