Prime Minister Benjamin Netanyahu promised he would help bail out Israeli companies harmed by the collapse of the American investment bank Silicon Valley Bank (SVB).
Netanyahu met with Finance Minister Bezalel Smotrich, Economy Minister Nir Barkat and Bank of Israel Governor Amir Yaron to discuss the collapse.
“The fall of the SVB bank is generating a deep crisis in the world of high-tech. I have had talks while in Rome with high-tech officials in Israel,” he said over the weekend during an official visit to Italy.
“The government is committed, if necessary, to helping Israeli high-tech companies and their employees. We will take steps to help companies with operations based in Israel overcome the liquidity crisis caused by this upheaval,” the prime minister outlined.
He added Israel’s economy “is strong and stable, and this is again being expressed in this crisis.”
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Smotrich said that a team, comprised of officials from the Bank of Israel, Securities Authority, Treasury and Innovation Authority, would be formed to deal with the fallout.
“The State of Israel will stand alongside the local tech industry and help it get through the crisis,” Smotrich wrote on Twitter.
Almost half of the U.S.-based technology and healthcare companies that went public last year were Silicon Valley Bank customers.
The announcement came as Israel is embroiled in nationwide protests against the government’s planned reform of the country’s left-leaning judiciary. Israel has the second highest number of startups per capita than any place in the world outside of Silicon Valley.
In the past few weeks, Israelis from the tech sector have taken to the streets to protest the judicial reform. At the same time, many founders have chosen to take their money out of Israel over the reform plans, including tech giants like Riskified, whose CEO Eido Gal who decided to withdraw all of the company’s cash reserves of half a billion dollars from Israel, and Papaya.
Since the SVB crash, ironically, Israeli companies are rushing to get their money back into Israel. One company called LeumiTech, which helps companies transfer funds, has so far assisted its customers in moving more than $1 billion to Israel since Friday’s shock announcement.
The Haaretz daily cited the CEO of an Israeli startup, which has a large part of its capital in SVB, as describing a frenzied tailspin as news of the collapse emerged. Ultimately he failed to get his company’s money out on time.
“This is something you read about in books, but not only is it something that I’ve never experienced, I never thought in a million years that it was possible with SVB, a bank with a strong reputation and brand, considered the number one bank for startups. What can you depend on? Money in the bank. And suddenly, even what you think is the most basic foundation of your work, is undermined.”