So far in 2022, dozens of Israeli firms have been forced to make huge cutbacks including layoffs. Even Startup Nation Unicorns have been having problems, as well as companies that have already gone public. And in August two large Israeli owned businesses went under entirely, declaring bankruptcy.
This trend is largely attributed to the current global inflation crisis and the steps being taken to curb it. The U.S. and Israel have both raised interest rates. That move means there will be less money for future investments so companies of all kinds are contracting, if only temporarily.
2 Big Bankruptcies: Cineworld and Reali Real Estate
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Reali Real Estate
Reali Real Estate, a real estate and fintech company that offered services for home buying and selling, was forced to declare bankruptcy in August. It is shutting down its operations and expects to let go of most of its workforce by September 9.
The shutdown came only a few months after Reali brought in $250 million in funding in April 2021. But even such a large sum of money, it seems, could not save the company.
Reali explained that it failed due to the “challenging real estate and financial market conditions and unfavorable capital-raising environment.” As a result the company determined that its best course of action was to close. Active real estate transactions will continue to be supported through the end of the year by a small team of employees. Reali added that it is in ongoing conversations with companies that have expressed interest in acquiring specific parts of its business, including mortgage origination, title & escrow, and power buying.
Founded in 2015 by Ami Avrahami and Amit Heller, Reali is a real estate and fintech company creating a one-stop-shop to make homeownership “simple, affordable, and stress-free every step of the way.” Reali states that it leverages “first-in-kind” technology to serve home buyers and sellers in a single, integrated platform.
Cineworld, a worldwide chain of movie theaters owned by Israeli brothers Moshe “Mooky” and Israel Greidinger, is also going under. The once superpower of the entertainment industry was devastated by the worldwide Covid pandemic and the shutdowns that it caused.
Cineworld, and others, just can’t compete with a whole family – or even a 20 people party – getting to watch movies at home with modern home theater tech on big screen HDTVs for less than the price of two movie tickets.
And recent years hit Cineworld especially hard, maybe worse than any other movie theater business. While it was booming at the end of 2019, the company now has $9 billion in debt. And its stocks traded on the London FTSE exchange have plummeted more than 80%
Even Wix, the highly successful Israeli company that offers people a way to build their own websites free of charge, is not immune from the ongoing economic crisis in the markets. The company is set to fire another 100 employees. Wix currently has 6,000 workers and about half of them work in Israel.
This marks the company’s second round of layoffs. Wix fired several dozen employees in June when it closed its subsidiary firm Wix Answers.
Melio, an Israeli fintech unicorn, was also forced to make cutbacks in August. The company laid off 60 people from its sales and customer success team. And the move came after the company hit a $4 billion valuation last fall.
Melio provides a single, integrated tool that allows small businesses to transfer and receive payments in a faster, easier way; giving oversight and control over cash flow, reducing or eliminating late payment costs, and giving businesses back valuable time.
Tufin, an Israeli cyber security company offering a policy-centric approach to security and IT operations, was forced to lay off 55 employees, including 25 in Israel. This amounted to 10% of its workforce. Tufin is making the cuts as the company is being taken over by Turn/River Capital, a software-focused investment firm, in an all-cash transaction that values Tufin at approximately $570 million.
Founded in 2005, Tufin says that it simplifies the management of some of the largest, most complex networks in the world, consisting of thousands of firewall and network devices and emerging hybrid cloud infrastructures.