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Fundraising fears overtake hiring as lead concern for Israeli startups, survey finds

Study by Startup Snapshot shows how tech firms are reacting to market conditions, as interest rates climb and market turmoil continues

Luke Tress is an editor and a reporter in New York for The Times of Israel.

Illustrative: An aerial view of the Tel Aviv Stock Exchange and the surrounding area, April 20, 2022. (Matanya Tausig/Flash90)
Illustrative: An aerial view of the Tel Aviv Stock Exchange and the surrounding area, April 20, 2022. (Matanya Tausig/Flash90)

The ability to fundraise is the leading concern for Israeli startups, replacing worries about hiring and retention, a new survey of over 450 tech workers showed.

Startup Snapshot, a data-sharing platform for the Israeli startup ecosystem, found that 74% of firms were worried about their ability to raise their next round of funding.

Their other lead concern was sales and results, with 47% saying they were worried, up from 35% the previous month.

The data reflected changing market conditions, and how tech firms are coping with the shifting sands.

Startup Snapshot’s previous report, in April, found that hiring and retention was the lead concern for startups, with 58% saying it was a worry. In May, that figure fell to 40%.

In recent weeks, interest rates have climbed, stock markets have dropped and inflated private market valuations have fallen, the group said.

The Bank of Israel raised interest rates in both April and May, and the US Federal Reserve went through with a widely expected rate hike on Wednesday.

Public markets in both the US and Israel have fallen, with many highly valued tech stocks hit particularly hard.

Over half of startups in the survey, 52%, had their investors tell them in May to cut costs, as venture capital firms brace for uncertain times ahead.

Sixty-eight percent of startups reduced hiring strategies in May due to recent market dynamics, with 45% slowing hiring, 18% freezing it and 4% firing people.

Despite the drawback, a little over half of all startups surveyed said they don’t expect to meet their hiring targets, citing a “talent gap” involving high competition, lack of applicants and high salary demands.

The respondents reported high employee turnover in the past year, with workers mainly leaving for higher salaries. Most employees were not worried about job security, and close to half were considering quitting their job in the next year.

Job-seekers were more attracted to smaller firms, with 49% wanting to work for a growth-stage startup and only 11% looking to a large public firm like Wix or ironSource.

That dynamic switched in recent months as public markets experienced turmoil and employees looked to smaller firms that could have a lucrative IPO down the road.

Startup Snapshot collected data from over 450 startup founders and employees to compile the report.

The Startup Snapshot initiative, launched in 2020, aims to bring greater transparency to Israel’s tech ecosystem by creating a data-sharing and cooperation platform within the community.

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