Gov't should prevent economic decline caused by judicial reforms - editorial

A lot has been written in recent weeks about the impact the continued legislation of the coalition’s judicial reforms might have on Israel’s economy.

A number of high-profile hi-tech companies have announced that they are pulling their money and some of their operations out of Israel and media reports last week claimed that NIS 4 billion has already been moved out of Israel by clients concerned that the reforms will lead to a decline in Israeli economic growth.

And Israeli economic growth is not something to take for granted. On Thursday, the Central Bureau of Statistics revealed that Israel’s economy grew by 6.5% in 2022 and that despite the economic slowdown that is expected to impact the country in the coming year, the forecasted growth is expected to be nearly 3% in 2023.

Is it possible that the judicial reforms will undermine that? Yes. Should the government take steps to prevent that from happening? Of course.

OurCrowd summit

A positive sign was seen in Jerusalem this week where 6,000 people gathered to attend the annual OurCrowd summit at the International Convention Center. The day event – during which the global venture investing platform showcased Israeli tech – coincided with OurCrowd’s recent announcement that it had received investment commitments crossing the $2 billion mark at the end of 2022.

OurCrowd CEO Jon Medved told The Jerusalem Post that as far as OurCrowd is concerned, the narrative surrounding the event is exclusively on investment, and not engaging in the currently boiling political narrative which surrounds it. “We’re not talking about Israeli internal politics… we’re focused on investment and not legal reform,” he said.

The success of OurCrowd is hard to ignore. In 2022, more than $250 million dollars were raised through OurCrowd, and over 116 investment rounds in start-ups and funds closed. Every year since its founding in 2013, the platform has been awarded the title of Israel’s “most active investor” by Pitchbook, with over 60 recorded exits to date from 370 portfolio companies and an additional 410 companies held via partner funds. Among those exits are several stock market listings, including Beyond Meat, Lemonade, Innoviz and Hub Security.

The participation of people from 80 countries was a sign that Israel’s tech sector – which makes up 50% of the country’s exports – is stronger than ever. The Post’s tech reporter Zachy Hennessey reported how last week’s event, which marked the summit’s 10th anniversary, was charged with excitement generated by the latest groundbreaking developments in AI technology.

“We have over 50 AI companies in our portfolio that we’ve invested in so far. It’s gonna affect everything, really everything,” Medved said. “We have companies in agtech and insurance-tech, automotive and mobility, and all kinds of healthcare applications. It’s just everywhere.”

At the conference, there were 1,700 investors spanning 35 countries, some 631 venture capitalists from around the world, and nearly 2,000 delegates from more than 400 multinational corporations. As Aaron Katsman wrote in Friday’s Post, “That sounds to me like there is still ‘just a bit’ of interest in Israeli ingenuity and creativity.”

OurCrowd and particularly Medved should be celebrated for the work they have done to “democratize” hi-tech investing, by creating a platform that allows private investors to get involved in the tech sector and lowering the minimum investment required. This was revolutionary when it was launched and has allowed private investors access to technology being developed in Israel.

But this does not mean that concern is not warranted. Just as Israel’s tech sector was built into the formidable force that it is today, it can be ruined by wrong Knesset decisions, government intervention, or an atmosphere that makes it seem as if Israel is turning away from its liberal democratic values and system of government.

The OurCrowd summit should serve not just as an example of the amazing progress Israel’s tech sector has made over the years but also as a type of warning of what could be lost if the government goes too far with what it is planning to do.

Judicial reforms are important. They need to be done in a way that strengthens and does not weaken Israel’s economy.