Anytime there is a war, a lot of peoples lives are put on hold when they are called out to fight. Tech startups will take longer to get on the ground due to the people who create them having to stop what they are doing so they can join the fight.
When people who would otherwise have been making a start in the technology industry are called up to fight instead, of course it will affect startups. However, we're talking about Israel here. It might very well have a permanent effect on the Israeli industry, but in other countries there are other people who will step up to the plate.
While you may agree or disagree with the concept of military service, there is scant evidence showing that it harms economic development. In many cases the discipline and experience that reservists gain during service provides a strong platform for success in the business world. Tel Aviv was also recently named by Startup Genome as the 2nd best start-up "ecosystem" in the world, after Silicon Valley, showing that military service has not damaged this sector. Also, tech industries increasingly have close links to the military in many different countries, so this may actually help.
All Israelis are required to spend three years serving in the army. A large number of these individuals have experience working in technology. Although they remain in the army reserves, this action does not prevent them from starting tech start-ups in other countries. Those with nationalist sentiments are then free to return to Israel to fight after founding their business ventures.