For a third consecutive week, tech sector workers took to the streets on Tuesday in 10 locations including Tel Aviv, Yavne, Rehovot, and Haifa to protest the government’s contentious plans to overhaul the judicial system.
Despite the wind and rain, protesters held a one-hour strike and gathered at various locations — the Sarona complex in Tel Aviv, the diamond exchange in Ramat Gan, an industrial park in Rehovot, and the University of Haifa. Many carried Israeli flags and signs in Hebrew or English reading “Without democracy, there is no high tech,” and “No balances – no checks.”
During the protest in Tel Aviv, demonstrators went onto busy Kaplan Street, where they briefly blocked traffic and were overseen by police.
More than 2,500 workers in the tech industry have over the past month joined a movement to speak out against the government’s plan for a sweeping overhaul of the judiciary, concerned over its possible impact on the tech ecosystem and the economy in general.
Companies, moneymakers, business organizations, and policymakers have warned that the judicial overhaul plan, which they say threatens democracy, will hurt Israel’s standing as a stable hub for investments. The fear is that a weakening of the judiciary system will create uncertainty and scare away foreign investors from injecting funds into companies in Israel. This in turn could force local and international businesses to leave and set up shop elsewhere.
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Israeli cybersecurity firm Wiz confirmed a Monday night report that it is moving tens of millions of dollars out of local banks amid increasing uncertainty created by the impending judicial changes. The startup is valued at a staggering $6 billion and is backed by US investment firms Insight Partners and Greenoaks Capital.
For now, the unicorn is expected to maintain its presence in Israel and keep enough funds to pay for its local operations including salaries, rent and other running costs.
Wiz was founded in early 2020 by CEO Assaf Rappaport, Yinon Costica, Ami Luttwak, and Roy Reznik, the same team that founded the firm Adallom (sold to Microsoft for $320 million in 2015) and led Microsoft Azure’s Cloud Security Group.
Wiz is joining another unicorn, Papaya Global, a Tel Aviv-based global payroll and payment management platform, which said last month that it plans to withdraw all of its funds from Israel, along with venture capital fund Disruptive AI, which also said it would move bank accounts out of Israel due to the proposed judicial changes.
Warning about the snowball effect of the proposed changes, former Israeli central bank chiefs recently highlighted examples of countries such as Turkey, Hungary, and Poland, where a judicial review and a deterioration of the status of the legal system have weakened checks and balances, and state authorities have been undermined, vastly increasing the powers of governments. The countries have suffered from drops in foreign investments and a downgrading of their sovereign credit ratings, they warned.
“At the moment we are still not seeing any outflow from our funds but if foreign investors feel that we don’t have the stable system they are used to, they will not feel comfortable to invest in Israel, and examples of what happened in Hungary and Poland show that,” said Natalie Refuah, general partner at tech capital fund Viola Growth, who was speaking at a Zoom panel following the tech community’s one-hour strike. “In high tech it is easy to make such changes as moving elsewhere, as CEOs don’t need to move large factories.”
Also speaking at the panel discussion, Avner Stepak, vice chairman of Meitav Dash Investments Ltd., which manages NIS 215 billion ($62 billion) in assets for more than a million clients, said worry about the repercussions of the proposed legal changes is already starting to have an impact on customers’ thinking and companies’ risk management.
“Customers are starting to prepare the ground and starting to open accounts abroad, as Israeli bank chiefs already talked about an initial outflow of funds,” said Stepak. “The first high tech companies are making announcements about transferring funds out of Israel and we are likely to see more of that same action by additional companies.”