The government on Wednesday approved a NIS 650 million ($180 million) stimulus plan to bolster Israel’s tech industry amid the coronavirus pandemic.
The Treasury will transfer the funds to the Innovation Authority, a government body that encourages technological development and research in Israel, which will then disburse them to companies.
The authority said that NIS 50 million ($14 million) will go to programs aimed at combating the coronavirus.
The remaining NIS 600 million ($166 million) will be fast tracked to companies that have applied for grants with the Innovation Authority, which has received 1,161 applications since the start of the year.
Israel’s tech industry will be a key player in the country’s response to the pandemic, said Aharon Aharon, CEO of the Innovation Authority. The industry is fueled by private capital, which dries up during times of economic hardship.
Sales revenue is also dwindling as the virus rocks global markets, and supply chains, manufacturing and distribution are being disrupted, which hurts tech companies that produce physical products.
The Innovation Authority, Health Ministry and the Ministry of Social Equality in March announced NIS 50 million ($13 million) in grants for Israeli tech companies developing tools to combat the coronavirus. The authority has received over 400 submission for the grants and is currently evaluating the proposals, it said.
It is taking other measures to aid companies amid the crisis, including expediting reports and budgetary changes, allowing time frame extensions and budget changes and extending proposal deadlines.
“I expect there will be many closures,” said Ami Appelbaum.
At least five percent of Israeli tech companies have already fired workers, and 64% have frozen new hires, an unofficial survey by Israel’s Viola investment group found. The venture capital firm queried 135 chief financial officers and human resources staffers at tech companies to study the effects of the virus on the Israeli tech industry.
At least one-third of Israeli tech firms are planning layoffs due to the pandemic, the survey said.
In addition, global startup financing is already taking a hit, according to New York-based data firm CB Insights. Funding to private companies in the first quarter of this year was down nearly 12% compared to the same period a year earlier, on pace to reach $77 billion. This figure represents a 16% drop on fourth quarter 2019 funding, the data showed.
The coronavirus pandemic has largely shuttered Israel’s economy, with over a million Israelis seeking jobless benefits for the first time in the state’s history.
Over 840,000 people registered for unemployment in March. Some 160,000 were already unemployed, leading to a total of 1,004,316 as of Wednesday.
The staggering figure amounts to 24.1% of Israel’s workforce. Only a month ago, before the coronavirus outbreak, unemployment in Israel was at a record low of under 4%.
Israel has unveiled a NIS 80 billion ($22.5 billion) economic rescue plan to help the economy survive the pandemic.
The virus has infected over 6,000 Israelis, and killed 29.