A survey conducted by Start-Up Nation Central has revealed that 68% of Israeli startups have taken active steps to pull money and shift parts of their businesses outside of the country due to the uncertainty created around the proposed judicial overhaul.
Israel’s parliament on Monday passed the controversial “reasonableness” bill.
The overhaul calls for sweeping changes aimed at curbing the powers of the judiciary, from limiting the Supreme Court's ability to challenge parliamentary decisions to changing the way judges are selected. Netanyahu and his allies say the changes are needed to curb the powers of unelected judges.
78% of the surveyed startup executives reported that the government’s plan to weaken the country’s judicial system is negatively impacting their operations, and 84% of venture capital investors said it has a negative influence on their portfolio companies.
The survey also showed that 22% of companies have diversified their cash reserves outside Israel and 37% of investors said companies in their portfolios have withdrawn some of their cash reserves and moved them abroad.
Start-Up Nation Central CEO Avi Hasson has expressed his concern over the proposed changes, which would restrict the Supreme Court's powers to strike down legislation, and has been met with mass protests and criticism from the public. He believes that the proposed changes could have a long-term impact on the country’s startup ecosystem, and that the government should take into consideration the needs of the startup community.