Nearly 70% of Israeli entrepreneurs have already made steps to shift some of their operations outside of Israel, according to a survey on the government’s proposed judicial overhaul that was presented on Sunday by an Israeli non-profit organization.
Start-Up Nation Central conducted a survey to gauge the economic impact of Prime Minister Benjamin Netanyahu’s hard-right coalition’s proposals to limit the Supreme Court’s ability to overturn laws.
For months, demonstrators have held mass street protests against the plans they say they threaten Israeli democracy by removing a check on executive power.
Business groups have also cited the proposed changes as the reason for a 70% drop in tech fundraising in the first half of the year.
Israel’s tech sector is a growth driver, accounting for 15% of economic output, 10% of jobs, more than 50% of exports and 25% of tax income. But institutional investors have not been a big part of its success, with most investment coming from venture capital funds.
The survey, completed by professionals representing 521 companies, said 68% of Israeli startup companies “have begun taking active legal and financial steps, like withdrawing cash reserves, changing HQ location outside Israel, relocation of employees and conducting layoffs.”
Additionally, 22% of companies said they have diversified cash reserves outside Israel and 37% of investors say companies in their portfolios have withdrawn some of their cash reserves and moved them abroad.
“Concerning trends like registering a company abroad or launching new startups outside Israel will be hard to reverse,” said Start-Up Nation Central CEO Avi Hasson.
The survey was released as lawmakers began debating a bill that would prevent the Supreme Court from quashing legislation on the grounds of manifest “unreasonableness”.