Over the past few weeks, the U.S. dollar has regained strength, bringing back one of the questions that weighs most heavily on Israeli tech CEOs: Is this the right time to hedge foreign exchange exposure, or is it better to remain exposed and hope the dollar continues to appreciate?
A few weeks ago, I met a serial entrepreneur who had raised a substantial funding round about a year earlier, when the dollar traded at around NIS 3.50. As the currency weakened, the shekel purchasing power of his funding declined significantly. Looking back, he told me: "It was probably the biggest financial mistake I've ever made - I didn't hedge."
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His story reflects a broader reality. Most Israeli startups raise capital in U.S. dollars, while much of their spending - especially salaries - is paid in shekels. When the dollar weakens, runway shrinks. When it strengthens again, the dilemma simply changes: should companies lock in certainty, or stay exposed in the hope of further gains?
The Finance Ministry's recent efforts to support the tech sector illustrate this challenge. Grants and incentives may provide temporary relief, but they do not solve the structural problem of companies earning and raising dollars while paying costs in shekels. Every appreciation of the shekel erodes profitability, and every hedging decision risks looking wrong in hindsight. If Israel wants to preserve its position as a global innovation hub, it must address not only temporary support measures but also the underlying cost structure.
Even now, after the dollar's recovery, the decision remains difficult. Companies that stayed unhedged worry about chasing the market, while those that hedge today may find the dollar climbing even higher. Every choice carries uncertainty - but avoiding a decision is also a decision.
The reality is that startup CEOs are not supposed to be currency traders. They are supposed to build companies. Yet many startups carefully measure nearly every business metric while overlooking one of the most fundamental questions: at what exchange rate does the business remain financially sustainable?
Moran ChamsiPhoto: Merav Ben LoulouThat is where hedging becomes valuable. It is not about predicting where currencies will move. It is about replacing uncertainty with a manageable framework. Just as companies buy cyber insurance not because they expect an attack tomorrow but because they want to understand their maximum exposure, currency hedging is about reducing financial surprises.
Companies with meaningful dollar exposure should regularly review their hedging strategy. That does not necessarily mean hedging their entire position or acting all at once. It means defining clear scenarios: what happens if the dollar weakens again, remains volatile or continues to strengthen? And how much runway exists under each outcome?
Ultimately, risk management is not measured by whether you correctly predicted the direction of the dollar. It is measured by whether your company can continue growing when the market behaves differently than expected.
- The writer is a managing partner at Amplefields Investments.
The views expressed are those of the author and are provided for informational purposes only. They do not constitute investment or financial advice.