Government to help Israeli start-ups looking for seed funding
The Chief Scientist Office in the Israeli Ministry of Economy has long been seen as a model of success. Aiming to foster economic growth through technological breakthroughs, cutting-edge research, innovations and entrepreneurship, the office regularly gives out grants in the form of low-risk loans, only demanding the investment money back if the project is successful and financially viable.
But according to Amit Lang, CEO in the Office of the Chief Scientist, if the institution wants to remain relevant it will have to change its scope and methods. Minister of Economy, Naftali Bennett, is leading a organizational reshuffle to create a new semi-independent statutory body which will perform a similar function to the Chief Scientist Office, but also be able to invest in non-technological innovations. The body, as yet unnamed, will be able to hold a small percentage of shares in the company in return for the seed investment. In an interview to The Marker, Lang said that “we are creating a new creature, the like of which does not yet exist.”
In order to create the fundamental changes, a team from the justice, finance, and economy ministries will work together to pass a new version of the Research and Development Law in the Israeli Knesset. The amended bill is expected to be ready in the next few weeks, and the new institution could be active by early 2015.
The new institution will still be funded by public money, and core positions will be held by the Ministry. However, key decisions such as grant allocation will be performed independently, allowing more flexibility and speed which governmental organisations often lack. According to reports, the institution will also act as a ‘fund of funds’, investing in venture capital funds and holding equity in return for grants.
Despite impressive achievements in technology, Israel is still behind many developed countries in the share of R&D costs invested by the government. Germany, Britain and the USA all invest about double as much as Israel in research.