Over the last 25+ years that I have been investing in Israeli startups, Israeli entrepreneurs have faced a dilemma from the moment they start their company: Should I incorporate in Israel, or in Delaware?

Sometimes the decision is influenced by well-meaning accountants and lawyers, either based on the latest developments in tax regulations, or other legal minutiae in Israel or the US. Six years ago, President Donald Trump’s tax policies caused many investors and advisors to push Israeli entrepreneurs to incorporate in the US. Oftentimes, they ask the entrepreneur where the company’s critical mass of management and decision making will sit. Recently, the now-halted judicial reform in Israel caused some entrepreneurs to do a tax inversion and re-incorporate the parent company in the USA, and others to decide categorically to incorporate in the US and specifically in Delaware.

I have always been a proponent of incorporating in Israel. I think it is simpler from an operational perspective. I think it helps you focus on your business and not the need to do things for tax or permanent status reasons. Moreover, Israel’s 102 plan for stock options is best in class on a global basis and, candidly, I think entrepreneurs should incorporate in their home market for patriotic reasons, if all other issues are roughly equal.

However, there are now even more reasons to incorporate in Israel. Tesla founder and CEO Elon Musk recently had his pay package stripped by the Delaware court. Court overreach years in arrears to strip an executive of his compensation that was legally approved by a company’s board of directors is, candidly, astonishing. While one should question whether Israel needed the Judicial Reform the politicians put forward, it is now clear that Delaware needs some judicial reform. Why would you want to incorporate in a state where the court can just overturn a decision of the board of directors with no rhyme or reason?

I think entrepreneurs should prefer the friendliness of Israel’s legal system, especially given the influence some untoward actors are exerting on the American political system. Moreover, large international markets such as India and the GCC are opening up to Israeli innovation, and Israel’s direct trade deals with these partners could become an advantage for Israeli domiciled companies.

Lastly, the Israeli government is about to enable $1B in institutional investments in startups and venture capital in Israel. Personally, I am not in favor of this particular policy initiative. I think all of the incentives to Israeli institutional investors to participate in venture capital have failed in the past, and furthermore it has anti-Darwinian effects, which will cause the Israeli institutional investors to invest our hard earned pension money in less-than-stellar companies and funds.

However, given that the government has decided to create this incentive, I think this $1,000,000,000 investment matching incentive should be conditioned on this money being invested in companies that are registered in Israel. My personal view, which I conveyed to the Ministry of Finance, is that the benchmark should be that 90% of the money goes to companies incorporated in Israel because Israeli incorporated companies pay more taxes in Israel and keeping the IP in Israel is essential. Even if this incentive won’t convince Elon Musk to incorporate in Israel and leave his new home in Texas, this $1,000,000,000 matching grant should give Israeli entrepreneurs extra incentive to incorporate in Israel.

So unless you have a regulatory reason to incorporate in the US, I highly recommend you incorporate your company here in Israel. This will be good for business, good for the founder and good for our country. Be Long Israel!