A new survey from an umbrella organization representing the high tech, biotech, and other advanced industries in Israel finds that half of Israel's small high tech startups have suffered significant damage from the coronavirus crisis, with the rest either unaffected or only slightly affected.
According to Israel Advanced Technology Industries (IATI), 45% of startups reported that they were largely past the crisis, an improvement over the 27% of companies that told the Central Bureau of Statistics the same thing in May.
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The IATI surveyed 414 high tech start-ups, most of which employ up to 50 workers.
Among the firms with products currently on the market, 63% said they were dealing with a drop of over 25% in their sales.
One-quarter of the companies surveyed said they had laid off employees, with 14% reporting layoffs of over 15% of their workforce. Layoffs were particularly prevalent in companies in the programming and communications sector and less prevalent in companies in the healthcare sector.
More than half (57%) of the companies said that if the current situation continued, they would institute significant layoffs of staff in the coming six months. A whopping 71% of the companies said that they had stopped recruiting new employees because of the coronavirus crisis.
A comparison between April and May indicates a slight turn for the worse. The number of companies that had laid off workers rose from 17% in April to 25% in May. The number of companies that had cut salaries rose from 33% in April to some 50% in May. Over one-third of the companies said they had furloughed employees without pay.
Financial daily Globes reported Monday that despite the crisis, Israeli tech companies raised over $4 billion in the first five months of 2020, $300 million of which was brought in during the month of May alone.
Still, according to Globes, the $300 million raised in May marked the lowest monthly funding yields for Israel's startup sector since August 2018, and the overall number for 2020 might be a reflection of venture capital funding processes that were underway prior to the coronavirus pandemic.
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