‘Legal reform will harm reputation among investors’
American Jews, political leaders need to speak up now, venture capitalist says
cEos, venture capitalists and other interested parties within the Israeli startup industry want to know whether the government’s planned legal reform, which would undermine the high court of justice’s authority, will hurt foreign investment in local hi-tech.
“It’s an easy answer: definitely,” said Ben Rabinowitz, managing partner and founder of Amiti ventures, a leading early-stage, venture-capital firm in Israel. “It’s a disaster in many ways.”
“Businesses need checks and balances, and they need consistent rule of law,” he said. “when a government has all the power, as an independent business, you’re no longer protected or have that predictability you need.”
According to prof. moshe Zviran, tel Aviv university’s chief entrepreneurship and innovation officer, “with the changes [to the legal system] that are being suggested, the government is trying to aim high at the high court. But undoubtedly, it will affect lower courts as well, and that could have a devastating effect on the willingness of vcs to invest.”
“As well, the vcs’ investors, who put the money in their hands with hopes that they will make more money out of it, may become reluctant to invest in vcs that invest in Israeli companies or in Israel in general,” he said.
Rabinowitz said: “the other problem is that we’re already seeing from the s&p [500 stock-market index] and other rating agencies that this will affect the credit rating of the country, because if you’re not a liberal democracy with checks and balances, you can’t expect to have the same type of credit ratings.”
In addition to the legal reform, anti-LGBtQ and racist sentiment among senior government members stands to harm Israel’s hi-tech industry, he said.
“those things are very important from an economic basis,” Rabinowitz said. “we have a huge shortage of engineers in Israel today, and the more that we can attract women to take leadership roles, the more we can bring Arab-Israelis into the hi-tech workforce, the more we can bring haredi [ultra-orthodox] jews into the workforce, it will only make Israeli tech much, much stronger. It doesn’t matter what your values are, we need more talent,
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