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Decline in Israel Venture Capital Investment Is Unrelated to Judicial Reform Controversy

(Ynet News) Michael Fertik - Israeli startups have never been stronger, more inventive, more dynamic, more sophisticated or more attractive. The recent downturn in venture capital investment in Israel mirrors the declines across the globe. In the U.S., venture funding fell by 40%. European venture investment was down by 75% and Asian VC investment declined by 70%. The doomsayers can't blame judicial reform for investment declines in China, Korea, Finland, and Germany. While Moody's credit rating agency downgraded Israel's outlook from "positive" to "stable," never once in recorded history has the alleged creditworthiness of a country entered into an investment committee discussion about a particular startup. The reason for the global decline in venture capital investment is related to the fact that the U.S. Federal Reserve has raised interest rates from 0% to 5% in the space of a year. When interest rates collapsed to near zero in response to the global economic crisis of 2008, investors plowed funds into riskier high-tech ventures. Suddenly, U.S. bonds once again produce beautiful returns. It's only natural that investors would look to reallocate a lot of their money into safer, liquid assets like U.S. government bonds instead. The writer is founder of Heroic Ventures, a Silicon Valley-based serial entrepreneur and early-stage venture investor.
2023-06-08 00:00:00
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