(TIMES OF ISRAEL) – A group of leading venture capitalists and serial entrepreneurs have launched an emergency impact fund to raise $US20 million to provide early-stage Israeli start-ups with a lifeline during the ongoing war.
The impact fund – dubbed Iron Nation and founded by Chen Linchevski and Gil Friedlander, both managing partners at Calyx Ventures, and serial entrepreneur Jason Wolf – was created to ensure the continuity of operations of viable start-ups hurt by the October 7 atrocities perpetrated by Hamas and the onset of the war.
The fund is backed by pro-bono volunteers from across Israel’s tech ecosystem and venture community as well as supporters abroad.
An estimated 15 to 20 per cent of tech sector employees have been mobilised as reserve soldiers in the wake of the October 7 massacre. The massive call-up presents challenges for Israeli early-stage start-ups in terms of attaining critical funding, and their daily operations.
About 70 per cent of Israeli tech firms and start-ups are facing disruptions in their operations, including the postponement or cancellation of orders and projects, according to a recent survey by the Israel Innovation Authority and Start-Up Nation Policy Institute (SNPI).
“Young men and women have been forced to set aside their dreams as an act of duty to their country,” said Chemi Peres of Pitango Ventures, a supporter of the fund. “The investor community refuses to allow them to be another casualty of this war.
“Their widespread support speaks not only to the resilience of the tech ecosystem but to the belief that we can save a critical segment of the Israeli tech economy while creating a sustainable double-bottom line for investors,” he added.
The Israeli economy’s dependence on the tech sector has significantly grown in the past decade, and it now contributes 18 per cent of GDP. About 14 per cent of all employees work in the tech sector and in tech jobs in other sectors. The Israeli economy relies on high-tech products and exports, which make up about 50 per cent of total exports, as well as taxes from the sector.
More than 150 start-ups have already applied for funding in recent days, according to the fund’s founders.
“Israel has just suffered its 9/11 and I am proud to join the ranks of those working to ensure that the Israeli tech industry bounces back to the booming centre it was,” said Charlie Federman of Silvertech Ventures, who was among the first to join the Iron Nation investment committee.
Israel’s cabinet has also approved an outline of a war compensation package to help businesses continue operating as the war continues.
The compensation aid package presented by the Finance Ministry for approval includes grants to businesses across the country that have suffered indirect damages due to the ongoing war, and benefits for employees put on unpaid leave.
More than 300,000 reservists have been called up and some 200,000 people have been internally displaced from their homes near the borders with Gaza in the south and Lebanon in the north.
But a group of employers’ and manufacturers’ associations have criticised the plan for not going far enough as it provides only partial compensation for affected businesses and employees.