“At the hiring meeting we held this week, I asked the team to look for employees outside Israel because I do not want to and cannot keep paying salaries in shekels,” Liad Agmon, a serial entrepreneur who was also a partner at the venture capital fund Insight and now heads a new startup called Sunny, which is building an AI-based platform for emotional support, told Calcalist.
Agmon previously sold Dynamic Yield to McDonald’s for $300 million. “We are now growing from eight employees to 11. It is still small, and it does not pay to pay Israeli salaries,” he said. “In Israel, the expectation is an annual salary that, in dollar terms, is now about $170,000. In a country like Portugal, for example, I can hire an employee with the same skill level for $100,000 a year.”
Until recently, discussion among startups about hiring development workers outside Israel was considered taboo. It was mostly reserved for larger companies that were already profitable and had an international customer base. Young startups, by contrast, built their core teams through “friend brings friend” recruitment from military units, and for years, the prevailing view was that “there is no one like Israeli developers.”
But the shekel’s dramatic strengthening is forcing high-tech companies to start making difficult decisions. Beyond the complexity of implementing them, these decisions could harm Israel’s Startup Nation and its future growth. In 2025, high-tech accounted for a quarter of Israel’s tax revenues and one-fifth of the country’s gross domestic product.
‘Expenses rose 17%’
“Of course, it is preferable and easier to be close to employees. I live here and my network is here, but the reality is that, perhaps except for fields such as cyber, Israel has no special advantage,” Agmon said. “With the shekel at its current level, if I could, I would hire everyone abroad. Israeli employees have long been very expensive, but the shekel is changing the rules: If I built an annual budget based on an exchange rate of 3.3 shekels to the dollar, my expenses at the new rate have risen by 17%. That means I either have to hire fewer employees or raise more money.”
Agmon warned of the longer-term consequences. “The shekel is also becoming a factor for the large international companies because if I am now a manager considering where to hire workers, I will not go to Israel,” he said. “People are now starting to talk about R&D leaving Israel, but the next stage, which is harder to measure, is how much R&D does not come here because of the shekel, with the political situation also in the background. Later, this could also affect exits, because companies considering the acquisition of an Israeli startup will look at its cost structure, understand that profitability is lower than at others and want to pay a lower valuation.”
Agmon, who stirred a minor storm Wednesday after posting about the issue on X, expects some kind of solution from Jerusalem, such as intervention by the Bank of Israel.
“If the dollar returns above 3 shekels, the damage to the industry will be temporary, like putting your head underwater and immediately pulling it out,” he said. “But if this situation continues, it is like someone trying to drown you and not letting you lift your head for 10 minutes. Then the damage is already long term and perhaps even irreversible.”
Ronen Nir, managing partner at the international venture capital fund PSG and a researcher at the Aaron Institute for Economic Policy, speaks of the threats posed by the shekel-dollar exchange rate and fears this is not a passing situation but the “new normal.”
“Over the past decade, fluctuations in the shekel exchange rate stemmed from geopolitical events connected to Israel, but this time the reasons are different and are also tied to the behavior of institutional bodies in the pension market and to the Trump administration’s desire to weaken the dollar in order to reduce the U.S. debt,” he said.
According to an examination he conducted, the additional cost to high-tech of Israeli employees, as a result of the dollar’s weakening from a historical average rate of 3.53 shekels to 3 shekels, is 21 billion shekels. That cost reflects the employment of 40,000 high-tech workers, assuming an average salary of about 30,000 shekels a month. In other words, that is the number of jobs that could move from Israel abroad. Data published last week by the Aaron Institute already reflected this trend, showing the first-ever decline in the number of development workers in Israel’s high-tech industry.
“These are big numbers, and all sectors of the industry will be affected by them, perhaps except for areas with unique know-how, such as hardware or missile development. But even the giant international companies are beginning to think about whether to hire workers here. In the end, it hurts profitability and hits everyone in the pocket, both private and public companies,” Nir said.
Historically, high-tech has disliked government involvement, and its usual refrain has been “do not interfere.” But this time, even the independent-minded industry feels the event is bigger than it can handle.
“High-tech does not shout and does not cry out because it can deal with anything, but only with the tools available to it, meaning moving manpower abroad to lower costs,” Nir said. “But if high-tech is important to the state as a growth engine, then the state is the one that needs to think about what to do to prevent this move. This is not my field of expertise, but there are solutions such as addressing interest rate gaps, moderating institutional investors’ activity and lowering import barriers to ease the export surplus.”
In industry discussions, regardless of political opinion, there is an understanding that the solutions are not simple, mainly because the forces driving foreign exchange markets are enormous and powerful. Actions taken by a particular country cannot always have an effect. Solutions whose impact is seemingly guaranteed quickly enter the realm of controlling exchange rates in a way that is not typical of developed Western economies and is immediately associated with centralized regimes.
“You cannot come and say there is nothing to be done,” Nir said. “Because if a dollar below 3 shekels is the new normal, the free market will find a new equilibrium for itself, but it is not certain that this equilibrium is good for the State of Israel.”