Amid overhaul, some 80% of new Israeli startups choosing to incorporate in the US

Tech workers march in Tel Aviv to protest against the government's planned overhaul of the judicial system, January 31, 2023. (Tomer Neuberg/Flash90)
Tech workers march in Tel Aviv to protest against the government's planned overhaul of the judicial system, January 31, 2023. (Tomer Neuberg/Flash90)

Some 80% of new Israeli startups are choosing to incorporate in the United States, particularly in the state of Delaware, the Reuters news agency reports.

Israeli entrepreneurs tell Reuters that the move is spurred both by economic advantages in the US and growing uncertainty over the judicial overhaul in Israel.

The report cites an Israel Innovation Authority (IIA) survey indicating that as many as 80% of new Israeli tech startups in 2023 chose to incorporate in Delaware, up from 20% in 2022.

IIA did not give the number of companies surveyed.

“The fact that you are shaking up the judicial system puts Israel in a very high level of uncertainty and investors don’t like uncertainty,” IIA Chairman Ami Applebaum, who is also chief scientist at the Ministry of Innovation, Science and Technology, tells Reuters.

However, others said the decision was purely a business one, citing proximity to US investors and Delaware’s low corporate and no state sales taxes.

Existing companies as also moving abroad.

A survey of 615 firms by Startup Nation Central showed that 8% of Israeli startup/tech companies had started moving their headquarters abroad, and 29% intended to do so soon, Reuters reports.

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