The government of Israel, in collaboration with the Israeli Innovation Authority, approved a new stimulus package that it said aims to elevate Israel’s standing as a global high-tech hub.
Israel’s government said that this new stimulus plan comes as the result of what it described as “exhaustive deliberations” by the Budget Division in its Ministry of Finance and the Israel Innovation Authority. It will include several key initiatives aimed at bolstering Israel’s high-tech ecosystem.
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Revolutionary Startup Fund: A new startup fund will be launched that will collaborate with private investors to inject over half a billion shekels annually into seed, pre-seed, and Series A rounds for startups with limited access to capital. This fund will strategically focus on startups exhibiting technological depth and breakthrough innovation.
New YOZMA (Hebrew for initiative) Fund (Institutional Investment Catalyst): An investment fund will be established to encourage Israeli institutional entities to invest in Israeli venture capital funds, utilizing a Fund of Funds model. Over 4 billion shekels will be invested jointly over a 5-year period, bolstering the high-tech ecosystem.
New Venture Creation Incubators’ Fund: An innovation fund will be set up with an advanced investment model, featuring a tender process that allows international companies to participate. This includes the establishment of innovation incubator hubs in a venture creation model providing financial backing, enhancing global collaboration in deep-tech technological vectors.
The stimulus package is builds on recent initiatives such as the Fast Track investment program, angel investor clubs, regional-technological innovation hubs, and the doubling of grants for the Ideation program (Tnufa Fund), and more.
Israel’s Minister of Innovation Science and Technology Ofir Akunis called the new plan a “monumental milestone” for the Israeli high-tech sector.
“The decision to increase the budget of the Innovation Authority,” he said, “aimed at encouraging investments in Israeli high-tech, is crucial beyond measure. It sends a message to the Israeli industry and foreign investors worldwide that we are committed to fostering the Israeli tech sector.”
Dror Bin, CEO of the Innovation Authority, said that this is “the plan that the Israeli economy needs!”
He called the high-tech sector Israel’s natural resource and said, “We are determined to do whatever is necessary to ensure its strength.”
“The ability of the Israeli economy to emerge from the crisis largely depends on the establishment of more startups, the continuous growth and sales of tech companies, ongoing investment attraction, and the solid foundation of the Israeli economy continuing to provide support and a leap forward in the future,” added Bin.
He also explained that over the years the Israeli economy “dramatically” relied on this growth engine, which is both an advantage and a disadvantage for it: If the high-tech sector flourishes, the country thrives, and if it contracts, the entire Israeli economy will follow suit.
“The decision made this morning to embark on this ‘boost program’ is a strategic decision that will bear fruit for the next decade,” he said. “We have identified two key challenges for the high-tech sector today: first, a consistent decline in the number of new startups opening each year in Israel and a decrease in their diversity (focusing on software domains); and second, a sharp decline in investments in the last quarters and a high dependence on foreign capital.”
The Fund includes three main investment programs:
Pre-Seed Program: Israel Innovation Authority grant covering 60% of the total funding round, capped at NIS 1.5 million, with a budget ceiling of NIS 2.5 million.
Seed Program: Israel Innovation Authority grant covering 50% of the total investment round, up to a grant cap of NIS 5 million, and a budget ceiling of NIS 10 million.
Round A Program: Israel Innovation Authority grant covering 30% of the total investment round, with a grant cap of NIS 15 million, and a budget ceiling of NIS 50 million.
Companies with founders from underrepresented populations or predominantly operating in Priority Area A will receive an enhanced grant in various programs.
