Over 90 percent of Israeli startup companies face a funding slowdown, even though the Israeli economy has returned to almost full activity, according to a new survey released by the Israel Innovation Authority (IIA) on Sunday.
The survey, conducted by the IIA and Israel Advanced Technologies Industries (IATI) organization, shows that even after returning to normalcy following the decline in COVID-19 morbidity, Israeli startups still experience complex difficulties.
In the survey, about 40 percent of hi-tech companies in the process of raising funds have been notified by investors that they are halting the process, while over 50 percent noted that the process is progressing slowly.
Also, 51 percent of the companies requested additional funds from current investors, and of these, only 19 percent reported receiving the extra support.
According to the survey, 42 percent of the companies have applied or consider requesting a loan from a financial entity because of the crisis.
Half of companies already asked for a loan reported that their banks denied their requests, while 30 percent have yet to receive an answer.
About 54 percent of the companies reported that if the current conditions continue, their operations will be discontinued within six months.
Also, about one quarter of the companies reported laying off employees, with 14 percent of all companies reported wide-scale layoffs of over 15 percent of workforce.
This trend is especially apparent in software and communications companies, with about 19 percent of businesses in the field have announced wide-scale layoffs.
About 57 percent of the companies have reported plans for extensive layoffs in the next six months if current situation continues, while 71 percent reported having frozen hiring processes.
In addition, more than a third of companies reported putting employees on leave of absence, while one-third of companies confirmed extensive wage cuts of more than 15 percent of salary.
As many as 60 percent of survey respondents noted that they are considering applying for the assistance offered by the IIA.
The survey was conducted among 414 hi-tech Israeli companies, of which most employ no more than 50 employees.