Over the past few years, many Israeli startups have raised venture capital in U.S. dollars while continuing to operate primarily in Israeli shekels. This structure creates a hidden financial exposure that founders don’t always consider: foreign exchange volatility.
When the shekel strengthens, each dollar raised converts into fewer shekels. That means a startup’s runway can shrink even if spending remains exactly the same.
For example:
If a startup raised $10M when USD/NIS was 3.8, the company expected approximately ₪38M to fund operations. If the rate later drops to 3.1, that same funding converts to only ₪31M.
That’s roughly a 20% difference in operational runway without hiring a single additional employee.
Since most Israeli startups pay engineering salaries, rent, and operating expenses in ILS, exchange rate movements can materially impact burn rate and financial planning.
Practical CFO Tips to Manage FX Volatility:
1. Budget in both USD and ILS.
Funding is typically in dollars, but expenses are largely in shekels. Financial models should track runway in both currencies.
2. Avoid converting the entire funding round immediately.
Staggering conversions over time can reduce exposure to short-term exchange-rate movements.
3. Monitor runway sensitivity to FX movements.
Even small changes in the exchange rate can affect hiring plans and operating runway.
4. Consider treasury and hedging strategies as the company scales.
Forward contracts or basic hedging can help stabilize payroll exposure.
5. Align financial reporting and operational planning so investor reporting, budgeting, and treasury strategy reflect currency realities.
Why This Matters:
Currency volatility is not the biggest risk startups face, but it is one of the most predictable financial variables.
Companies that implement basic treasury discipline early can avoid unexpected pressure on runway and maintain better financial control as they scale globally.
At ERB Proximo, we work closely with international startups expanding into the U.S., helping them build the financial infrastructure required to manage cross-border operations, multi-entity financial reporting, FX exposure, treasury planning, and global tax compliance.
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