ISRAEL AT WAR - DAY 148

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Eido Gal: 'Israel may turn into more authoritarian state'

Tech unicorn taking $500 million out of Israel, offers some staff relocation packages

Riskified CEO worried gov’t may limit transfers amid financial instability; says limited number of workers can relocate to Portugal, others will have support if move independently

Screen grab from NYSE video marking Riskified's IPO, August 3, 2021. (Used in accordance with Clause 27a of the Copyright Law)
Screen grab from NYSE video marking Riskified's IPO, August 3, 2021. (Used in accordance with Clause 27a of the Copyright Law)

Israeli tech unicorn Riskified said Wednesday that they would be transferring $500 million dollars out of the country and offering a limited number of relocation packages to interested staff members.

The fraud prevention company’s CEO and co-founder Eido Gal said in an email to staff that the company was transferring the money, which was “essentially all” of the firm’s reserves in Israel, due to concerns that the government may begin to place restrictions on cash transfers.

“Our concern is that as the financial situation deteriorates, and in order to maintain financial stability, the government will limit transfers and withdrawals of large amounts,” Gal wrote in the English-language email to all staff.

“The laws being passed can lead to the dismantling of our independent judicial system,” Gal wrote.

“In high likelihood, this will lead to a meaningful and prolonged economic downturn in Israel. More importantly, this will result in Israel changing from a democracy with liberal values into a more authoritarian state. I believe that only bad outcomes will come from this ‘reform,’” he wrote.

Gal also said the company would be expanding its research and development operations in Portugal and that there were relocation options available for staff.

“We have a limited number of available relocation packages, but can also support individuals who are interested in making the move on their own,” Gal said.

Riskified CEO Eido Gal, July 2021. (Screengrab via Facebook; used in accordance with Clause 27a of the Copyright Law)

Riskified was one of the earliest tech companies to publicly lend support to the protests, giving workers explicit permission to join strikes and demonstrations against the controversial judicial overhaul.

Gal reaffirmed that staff members would be allowed to continue to protest without being docked for vacation time.

Critics say the government’s plans to curb the judiciary will weaken Israel’s democratic character, remove a key element of its checks and balances, and leave minorities unprotected.

The Riskified announcement came a day after the Moody’s rating agency said the government’s proposals could weaken the country’s institutional strength and negatively affect its economic outlook.

The agency’s warning was the latest signal from the business community that the government’s plans may hamper continued investment in the country, with reports saying some investors have already begun curtailing or completely freezing the flow of money into Israel.

Israeli tech company employees stage protest in Tel Aviv against the judicial overhaul, January 21, 2023. (Courtesy)

Moody’s noted that the judicial plans would “materially alter judicial independence and effective checks and balances” in the government, and said Israel’s institutions were a significant factor in its credit profile.

The report highlighted Israel’s crucial tech sector, which accounts for about half of all exports and a quarter of income tax, and relies on foreign investment.

Moody’s also said government hardliners promoting West Bank settlements could harm relations with neighboring Arab countries which could have a negative economic impact.

Moody’s is one of the main international credit rating agencies used by banks and other financial institutions to gauge investment risk.

Last week, Fitch Ratings affirmed Israel’s A+ credit rating with a stable outlook, citing the country’s “diversified, resilient” economy, but also warned that the government’s planned judicial changes could have a “negative impact” on the country’s credit profile.

In addition, a group of hundreds of Israeli economists issued a fresh warning last week that a financial meltdown could occur more “powerfully and faster” than they had originally forecast when they penned an “emergency letter” cautioning that the far-reaching judicial shakeup being advanced by the government could have grave implications.

Last month, Tom Livne, the founder of another of Israel’s most successful tech unicorns — Verbit — declared that he was leaving the country and ceasing to pay taxes in protest over the new hardline government’s planned judicial overhaul.

Livne, whose hybrid AI-based and human transcription and captioning software company was valued at $2 billion in its last funding round in late 2021, said that he encouraged other prominent tech executives to follow his lead.

Israeli cybersecurity startup Wiz, which raised $300 million at a $10 billion valuation in its latest private funding round, said last month that the capital will not be invested in Israel given the uncertainty around the country’s judiciary system.

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