Throughout its history, Israel has experienced a number of economic difficulties; however, GDP, exports, and foreign direct investments have subsequently recovered on a stronger footing. Warren Buffett's initial overseas procurement, industrial corporation Iscar, has its headquarters in Israel and he upped his investment after the Second Lebanon War. Described by many as a “startup nation” for its prowess in tech R&D, 15 Israeli companies were chosen for CNBC's Disruptor 50 list, placing the country second only to the U.S. in terms of selected companies.
Israel has been globally renowned as the "Startup Nation" due to its cutting-edge contributions to today's research and technology. Nevertheless, the shocking events of October 7 shifted attention away from progress to defense. In a matter of hours, the country moved from regular operations to a national emergency and sorrowful atmosphere. Despite the fragile security context, Israeli businesses have demonstrated their firmness and keep delivering their remarkable services worldwide. This is no surprise; resilience has always been essential in ensuring the long-term success of the nation, whether in military or economic fields. For instance, during the financial crisis of 2008-09, the Operation Protective Edge of 2014, and other crises, Israel's GDP, exports, and foreign direct investments have recovered from adversity and gotten even stronger. The Covid-19 pandemic was a serious challenge to the Israeli economy in the second quarter of 2020, causing a reduction of almost 30% in GDP. But the nation was quickly back on track; its GDP spiked by 40% the following quarter and ended 2021 with a growth of 8.5%, which was substantially better than the OECD average of 5.7%. Warren Buffett's decision to invest in Israel in 2006, at the time of the Second Lebanon War, is yet another example of the nation's ability to prevail through turmoil. He purchased 80% of Iscar, a metalworking company located close to the Lebanese border, for $5 billion. Despite the pressure coming from the conflict, Buffett stayed composed and his decision brought him excellent returns. When he acquired the remaining of Iscar's shares in 2013, the company's value had doubled to $10 billion. This return of prosperity was mirrored in the Tel Aviv Stock Exchange's TA-125 Index. After the beginning of the War, the Index decreased by 8% but managed to return to its previous level in only 40 days. Similarly, following the attacks of October 7, the TA-125 Index dropped by 12% and it returned to its original positioning in two months.
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Following the Hamas attacks, numerous initiatives were launched to assist affected companies. The Israeli Innovation Authority (IIA) enacted the Fast Track funding mechanism and private sector funds, alongside business support tools such as SAFE Dome, Iron Nation, and the Frontline Initiative. The Ministry of Economy of Israel held hundreds of investment events across the globe to assist Israeli startups, while the Ministry of Finance increased the IIA's Fast-Track Fund to accommodate the needs of Israeli companies. Additional recognition of Israeli innovation also comes from the private sector, such as Israeli data security startup Mine's recent $30 million Series B co-led by PayPal Ventures, and a McKinsey report that named Israel the No. 1 country worldwide in terms of investments per capita and shares of GDP for the mobility sector. Moreover, 15 Israeli companies have been named to CNBC's Disruptor 50 list since its establishment, making it one of the highest national counts after the U.S. These include four from the 2023 list: Wiz, Orca Security, Snyk and BeeHero.
Despite many tech sector employees being drafted to the battlefield to defend their homeland, Investors and business leaders have still conducted numerous visits to Israel to demonstrate solidarity and promote business opportunities. Organizations such as the U.S. Chamber of Commerce and over 850 leading venture capital firms have shown their support for Israel and encouraged collaboration with Israeli startups, entrepreneurs, and investors. Israel is now beginning to recover with knowledgeable and experienced investors capitalizing on the opportunity. Israeli innovators and entrepreneurs are looking forward to the day after, showing that Israel is and always will be open for business.
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