Israeli startups that continue to operate in their country despite the war in the Middle East will now receive support from a new emergency fund. With "Iron Nation," the founders aim to promote venture capital-backed young companies facing significant challenges due to the escalation of the conflict, such as the sudden absence of employees amid the mobilization of hundreds of thousands of reservists.

"Approximately 10 to 25% of all Israeli tech workforce and 15% of all founding teams are currently enlisted in the Israeli Defense Forces," states the fund's website. This endangers the ability of many promising startups to continue working successfully, acquire customers, and secure future funding.

The fund, which waives both a management fee and profit-sharing, has set a target of $20 million. The initiators are the founders of the Israeli VC firm Calyx Venture Studio, Gil Friedlander and Chen Linchevski, along with the co-founder of the Israeli software company Genie, Jason Wolf.

"We see strong interest both from investors and startups," said Wolf to Börsen-Zeitung. More than $2 million was raised within 24 hours of the launch, and nearly 200 startups have already applied for funding.

The war against the radical Islamic terrorist organization Hamas presents a significant economic burden for Israel, which is heavily reliant on its high-tech industry. According to the Israeli Innovation Authority, the sector accounted for nearly half of all exports abroad last year. A recent survey conducted by the authority among around 500 Israeli startups and high-tech companies revealed that over 80% are currently affected by the conflict – not only in terms of personnel but also financially. Investment agreements have been canceled or postponed for more than 40% of the companies.

Even before the outbreak of the war, the industry faced a massive decline in investment. In the first six months, funding volumes plummeted by 70% to just over $3 billion compared to the previous year, as reported by the IVC Research Center and the venture capital firm Viola. This decline was partly due to global economic uncertainty and high comparison figures from the previous year. Observers also attribute the downturn to the controversial judicial reform of Prime Minister Benjamin Netanyahu, that led to months of mass protests and significantly unsettled the scene.

In the third quarter, venture capital investments did show an increase, rising by 56% compared to the previous quarter, as data from the service provider Crunchbase indicates. However, the total of $900 million collected by Israeli startups during that period still falls significantly short of the $2.2 billion raised in the third quarter of the previous year. A particularly substantial investment took place at the end of August when the startup AI21 Labs, which develops various AI tools for text creation and editing for corporate clients, secured $155 million.