Two Israeli start-up companies intend to withdraw their funds from Israel in response to judicial reforms being advanced by Prime Minister Benjamin Netanyahu’s government, they said Thursday.
“Following Prime Minister [Benjamin] Netanyahu’s statements that he is determined to pass reforms that will harm democracy and the economy, we made a business decision at Papaya Global to withdraw all of the company’s funds from Israel,” Papaya Global co-founder and CEO Eynat Guez tweeted Thursday. “In the emerging reform, there is no certainty that we can conduct international economic activity from Israel. This is a painful but necessary business step.”
It was unclear what actions the company intends to take.
בעקבות ההצהרות של ראש הממשלה נתניהו כי הוא נחוש להעביר רפורמות שיפגעו בדמורקטיה ובכלכלה,קיבלנו החלטה עסקית בחברת פאפאיה גלובל להוציא את כל כספי החברה מישראל, ברפורמה המתגבשת,אין שום ודאות כי אנו יכולים לנהל פעילות כלכלית בינלאומית מישראל, זהו צעד עסקי כואב אך מתבקש.— Eynat Guez (@EynatGuez) January 26, 2023
"Following Prime Minister [Benjamin] Netanyahu's statements that he is determined to pass reforms that will harm democracy and the economy, we made a business decision at Papaya Global to withdraw all of the company's funds from Israel," tweeted Papaya Global co-founder and CEO Eynat Guez. "In the emerging reform, there is no certainty that we can conduct international economic activity from Israel. This is a painful but necessary business step."
"In the emerging reform, there is no certainty that we can conduct international economic activity from Israel. This is a painful but necessary business step."Papaya Global CEO Eynat Guez
It is unclear as of yet what exact actions the company intends to take.
Papaya Global allows companies to payroll their entire global workforce in a single platform. In August, Papaya Global was named in the Forbes Cloud100 list for the second year in a row.The company’s 700 customers include Microsoft, Toyota and General Dynamics, according to Forbes. The company was valued at $3.7 billion in 2021.
Later on Thursday, Herzliya-based Disruptive Technologies Venture Capital, founded by Tal Barnoach, also decided to withdraw its funds from Israel, according to Calcalist. The Disruptive and Disruptive AI venture-capital funds manage $250 million.
Disruptive, Disruptive AI to keep capital calls out of Israel
In their next capital call, the funds will sit in a bank abroad and not in Israel, he said.
The Disruptive and Disruptive AI venture capital funds founded by Tal Barnoach also decided on Thursday to withdraw their funds from Israel, according to Calcalist. The funds manage $250 million.
“Assuming the reform, which is a legal coup, happens, economic instability will be created in the State of Israel, when in practice there will be one authority that will do what it wants, including corrections and changes in taxation and the way companies work,” Barnoach told Calcalist. “Economies are built on stability. I am now in London. I met my investors, and they are very worried. They say that if the reform passes, it is not clear to them if they will continue to invest in Israel, and they may have to make a change because they do not want to be at the mercy of one authority.”
“The message here is that the banking activity in Israel will also be affected, and this is what they do not understand: that the next in line to be affected will be the citizens of Israel and less money for people who need it,” Barnoach said.
Lapid: Netanyahu is weak
In response to the announcements, opposition leader Yair Lapid tweeted: “Netanyahu is weak and is leading us to an economic disaster.”
Culture and Sport Minister Miki Zohar tweeted: “We will not break. Don’t bet on it. There will be a reform.”
Guez's opposition to the judicial reform
Guez has expressed staunch opposition to the planned reform in recent weeks
On Wednesday, she tweeted a link to an article about the Bank of Israel’s governor warning Netanyahu of the economic repercussions of the reform, writing: “This is about our democracy, this is about our tech nation. Israel is fighting for freedom.”
Guez also spoke at the protest against the reform in Tel Aviv over the weekend.