While the past weeks were packed with mega-rounds from Decart, Kela, and Unframe, a deeper threat is quietly reshaping the Israeli funding landscape: the strong shekel. The dollar dropped below ILS 2.9 this week — a multi-year low — and the ripple effects are becoming impossible to ignore.

Wages in Israeli tech have jumped 15%-20% in dollar terms in a matter of months. An experienced Israeli engineer now costs roughly $170,000 a year — more than a comparable engineer in Silicon Valley, and roughly double a peer in Portugal or Poland.

VCs advise portfolio cuts

Conversations with investors and founders reveal a troubling pattern: venture capital funds are advising portfolio companies preparing for fundraises to cut headcount by at least 10% to show leaner cost structures. "Entrepreneurs come and say — to hit the milestones we promised when we raised capital a year ago, when the dollar was at ILS 3.7, we now need 22%-25% more funding," one foreign investor told Calcalist.

Quiet hiring freezes

Large public Israeli companies including Riskified, Pagaya, and Oddity have effectively frozen hiring in Israel. Monday.com scrapped plans to lease 10 additional floors in Tel Aviv. Industry insiders report what some call "AI washing" — layoffs officially blamed on AI efficiency gains that are actually driven by soaring Israeli labor costs.

The broader picture

The deepest concern is that positions that leave Israel won't return. "Startups determine the future of Israeli high-tech, and that's where the greatest damage is occurring," warns Haim Sadger, founding partner at S Capital and former Sequoia representative in Israel. "If the shekel stays at its current level, there will ultimately be fewer companies and fewer employees here."