A survey revealed that Israeli startups are changing their place of residence due to the judicial change

JERUSALEM, July 23 (Reuters) – A survey published Sunday by an Israeli nonprofit found that nearly 70% of Israeli startups have taken action to move parts of their businesses out of Israel.

The poll, conducted by Start-Up Nation Central, sought to gauge economic impact plans by Prime Minister Benjamin Netanyahu’s far-right coalition that would curtail the Supreme Court’s powers in striking down legislation.

For months, demonstrators have staged massive street protests against plans they say threaten Israeli democracy by removing checks on the executive.

Business groups also cited the proposed changes as the reason for a 70% drop in tech fundraising in the first half of the year.

The technology sector in Israel is an engine of growth, accounting for 15% of economic output, 10% of jobs, over 50% of exports and 25% of tax income. But institutional investors haven’t made up much of its success, with most of the investment coming from venture capital funds.

The survey, which was completed by specialists representing 521 companies, said that 68% of Israeli startups “have begun to take active legal and financial steps, such as withdrawing cash reserves, relocating headquarters outside Israel, relocating employees and making layoffs.”

In addition, 22% of companies say they have diversified cash reserves outside Israel and 37% of investors say that companies in their portfolios have withdrawn some of their cash reserves and moved them abroad.

“With regard to trends such as registering a company abroad or launching new startups outside of Israel, it will be difficult to reverse them,” said Start-Up Nation Central CEO Avi Hasson.

The poll was released as lawmakers began debating a bill that would prevent the Supreme Court from overturning the legislation on the grounds of apparent “unreasonableness”.

(Reporting by Emily Rose). Editing by Barbara Lewis

Our standards: Thomson Reuters Trust Principles.