The coronavirus pandemic has led to “drastic changes” in Israeli startups’ hiring strategies, with a survey finding that 71 percent had frozen hiring, fired workers or put them on unpaid leave.
Twenty-nine percent of the 400 respondents said they were hiring as usual, and 86% said they believe there are more qualified applicants available today than pre-coronavirus crisis. As a result, 57% of startups see the crisis as an opportunity to restructure their teams and tap into a new pool of talent that is now suddenly available in the market.
Before the pandemic struck, one of the key challenges of the tech industry was the ability to find talented workers amid an acute shortage of programmers and engineers.
The survey is part of a new initiative, called Startup Snapshot, set up by consultants Y. Benjamin Strategic Marketing in partnership with Leumitech, the tech arm of Bank Leumi Le-Israel Ltd.; Samsung Next, the investment arm in Israel of the South Korean electronics giant; and legal firm Herzog Fox & Neeman.
The survey of the 400 startups released Tuesday also showed that because of the crisis, startups are finding it harder to raise funding. Forty-two percent of founders polled said that it is taking longer to close the round, and 25% said they have frozen the fundraising efforts. Sixty-four percent said they were willing to take a valuation cut to make sure they secure funding, the study showed.
Of the startups polled, 66% had raised $10 million or less, 80% had fewer than 40 employees and 61% were funded by venture capitalists.
The Snapshot initiative, launched on Tuesday, aims to bring greater transparency to Israel’s tech ecosystem by creating a data-sharing and cooperation platform within the community. Startup Snapshot seeks to arm entrepreneurs with the relevant data, statistics and benchmarks they need for growing their ventures, by providing “a window into the life of a technology startup as it is being experienced by the entrepreneurs themselves,” the partners said in a statement.
When making decisions, especially in times of crisis like that posed by the coronavirus pandemic, it is important for entrepreneurs to have access to as much information as possible. “The reality is that when making crucial decisions, founders are often in the dark, missing a very significant opportunity to leverage the vast knowledge that exists in their peer group,” the statement said.
“As an investment banker, I saw the wealth of information that was available with public companies,” said Yael Benjamin, founder of Y. Benjamin Strategic Marketing. “The startup world is missing that kind of material today. With Startup Snapshot, my goal is to create a new standard of data-sharing for our ecosystem, providing a comprehensive picture that Israeli entrepreneurs could consult for guidance.”
Startup Snapshot’s partners are working to expand the initiative, collecting data for a series of reports that are set to be released throughout the year.