‘The bubble has burst’, ‘a bloodbath’, ‘the biggest recession in two decades’, ‘massive layout’ – these are just a few of the headlines repeated in the press in recent weeks. You don’t have to be a tech or finance expert to notice the changing environment in the global economy and tech ecosystem. Israel has had a record year of tech IPOs, but reports suggest the party is over. The question is whether we won’t see a recession now, but how bad it will get.
Israeli and Israel-based companies such as Playtica, Trax, Elementor, OpenWeb and others have made public plans to lay off dozens of employees, with many more expected in response to the global market downturn. and expected to hire new employees. , Despite pessimistic forecasts, there are ways to survive a hurricane, no matter how devastating you find it.
Geektime asked four tech leaders for their analysis and advice on how Startup Nation can survive and maybe even thrive in this new era.
Gur Shaz, President and Co-Founder of Kato Networks
“It’s important to first take a look at what’s happening in the cyber industry. Both investors and founders need to focus on operational efficiency, but also on retaining talent and employee innovation. When the dust settles, it’s at its most innovative. There will be companies that stand out. Hackers will not switch to pen and paper just because the valuation of technology companies, whether private or public, has fallen. Conversely, cyber attacks as technology advances. has increased in sophistication and frequency, making cyber preparedness non-optional.”
Oded Kadosh, Partner and President of the Corporate and Licensing Group at Pearl Cohen
“Over the last 3-4 months we have seen a decline in venture capital funding mostly for laggards. Funding from seed and early stage companies appears to be more stable and despite a slight tightening we do not expect a significant slowdown in transactions or a change in usual conditions. We’re seeing smaller investments ($100+ million) at higher valuations, like we’ve seen over the past year, which are expected to continue into the second half of 2022. As is usually recommended in these recessionary times, the coming months should see companies lengthen their runways and prepare for periods of less cash injections. This is done by deducting various budget items, from personnel to marketing costs. Companies, mostly late-stage, that have dramatically increased their headcount in recent years are likely to stop hiring and let people back into the market. We anticipate an increase in mergers and acquisitions, particularly in the lower mid-market, which has been growing steadily in recent years, which will drive growth and efficiency in this market.
dr Tal Tirosh, Amit, Partner at Polack, Matlon & Co.
“Personally, I don’t share the gloomy ‘Winter is Coming’ mood. While this time factors such as the ongoing war in Ukraine, less than a decade of adjusting interest rates and a slow recovery from the pandemic were the reasons. Macroeconomic waves, the hi-tech industry has experienced similar challenging moments in the past decade and has emerged from it stronger and more dynamic. Autumn is simply getting colder than usual. To survive and perhaps thrive in this environment, companies need to be inventive and think creatively about every aspect of their business. Here are some tips. To make sure you don’t run out of money, scale back non-essential activities and renegotiate contract terms. That could be cutting it off from suppliers and demanding better payment terms and customers. is considered to offer discounts to expedite payments. Second, while most VCs have more cash than ever before, they are seeing how the economic climate has evolved and are focused on their portfolio. This means that with fewer deals, investors will be looking for better terms. With that in mind, you have to accept that the valuation will be low. Therefore, to avoid a move to the downside, consider raising funds through SAFE, convertible loans, or other debt financing vehicles. Finally, if you do need to downsize, try a deeper cut – this will have a less demoralizing effect on the team. Think creatively about compensation too, such as increasing commission on sales and reward options instead of cash rewards. Remember these are stressful times for your team so you need to show leadership and keep your team engaged and feeling safe and valued. On the other hand, for companies with cash, this could be a good time to consider smaller acquisitions to bolster talent and accelerate product development.”
Arnix CEO Udi Jive
“This crisis is real, in the sense that it’s being driven by real-world dynamics like war and supply chain constraints — not assumptions or bubbles. Unfortunately, it doesn’t currently look like it will be a quick and easy crisis. It also comes at a time when investors are already shifting from a hyper-growth focus to a sense of “returning to the fundamentals of business model profitability.” Interestingly, investors seem to do just that at times like these. Must do: Wager your dollars a lot. Stable operation with a solid, proven and profitable business model. And I would recommend this to entrepreneurs: focus early on building a viable, solid business model that is driven by real customer value – and be very accountable for expenses.”
From left to right: Udi Ziv, Oded Kadosh, Tal Tirosh, Gur Shazi