Four tech leaders’ guide to surviving financial turmoil.

“The bubble has burst”, “A bloodbath”, “The biggest slowdown in two decades”, “Massive developments”… are just some of the headlines picked up in the press in recent weeks. You don’t have to be a tech or financial expert to notice climate change in the global economy and tech ecosystem. Israel has had a banner year for tech companies going public, but reports indicate the party is over. The question is no longer whether we will see a recession, but how severe it will be.

Israeli and Israel-based companies such as Playtika, Trax, Elementor, OpenWeb and others have made public plans to lay off dozens of employees, and many more are expected to follow suit and halt new hiring in response to the expected slowdown in the global market. . Despite the pessimistic forecasts, there are ways to weather the storm, no matter how destructive you think it may be.

Geektime asked four tech leaders for their analysis and advice on how to survive, and maybe even thrive, in this new era for Startup Nation.

Gur Shaz, President and Co-Founder of Cato Networks

“It is important to first examine what is happening in the cyber industry. Investors and founders need to focus on operational efficiency, but also employee talent retention and innovation. When the dust settles, it will be the most innovative companies that will remain standing. Hackers aren’t going to switch to using pens and paper just because there’s a drop in the valuation of tech companies, private or public. On the contrary, there is an increase in the sophistication and frequency of cyber attacks as technology advances, making cyber preparedness not optional.

Oded Kadosh, Partner and President of the Corporate & Licensing Group at Pearl Cohen

“Over the past 3-4 months, we have seen a decline in venture capital funding, primarily for early-stage companies. Funding for seed and early-stage companies appears to be more stable and, while slightly tighter, we do not expect a significant slowdown in transactions or change in usual terms. We are seeing fewer large investments (over $100 million) at high valuations, as we have seen over the past year, which should continue into the second half of 2022. As generally advised during these downturns, in the coming months companies should expand their leads and prepare for the time with less cash injections. This is done through cuts to various budget items, from HR to marketing costs. Companies, mostly terminally ill, that have significantly increased their workforce in recent years, are likely to suspend recruitment and send employees back to the market. We expect an increase in mergers and acquisitions, particularly in the lower middle market – which has been steadily increasing in recent years – which will enhance the growth and efficiency of this market.

Dr. Tal Tirosh, Partner at Amit, Pollak, Matalon & Co

“I personally don’t share the grim ‘winter is coming’ sentiment. While this time around factors such as the ongoing war in Ukraine, a decade of low interest rates being adjusted and the slow recovery from the pandemic, have caused macroeconomic, high-tech industry has gone through similar tough times over the past decade and emerged stronger and more vibrant. The fall is just going to be “colder than usual”. To survive and perhaps even thrive in this environment, companies will need to be resourceful and think creatively about all aspects of their business. Here are some tips. First, to make sure you don’t running out of cash, cutting non-essential activities and renegotiating the terms of contracts.This can be seen as asking for reductions and better payment terms from suppliers and offering discounts to speed up payment. Second, while most VCs have more cash than ever, they are likely to reduce their investments to see how ate economic conditions develop and focus on their portfolios. This means investors will be looking for better terms in fewer trades. With that in mind, you have to accept that valuations go down. So, to avoid the downside, look to raise funds through SAFEs, convertible loans, or other debt financing vehicles. Finally, if you need to downsize, try doing it with a deep cut – it will have a less demoralizing effect on the team. Also, think creatively about compensation, for example, increase sales commissions and award options instead of cash bonuses. Remember these are stressful times for your team, so you need to show leadership and keep your team engaged and feeling safe and valued. On the bright side, for companies with cash, this might be a good time to consider small acquisitions to bolster talent and accelerate product development.”

Udi Ziv, CEO of Earnix

“This crisis is real, in the sense that it is driven by real-world dynamics like war and supply chain shortages, not perceptions or bubbles. Unfortunately, it does not currently appear that this will be a quick and easy crisis to overcome. It also comes at a time when investors have already changed their minds, moving from a focus on hyper-growth to a return to the fundamentals of business model profitability. Interestingly, that’s what investors should be doing at times like these: betting their dollars on very stable operations with solid, proven, and profitable business models. And that’s also what I would recommend to entrepreneurs: focus from the beginning on creating a viable and solid business model, fueled by real value for customers – and be very responsible with expenses.”

From left to right: Udi Ziv, Oded Kadosh, Tal Tirosh, Gur Shaz

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