ISRAEL AT WAR
Israel Innovation Authority launching $25 million grant fund to support 100 startups
The program is aimed at Israeli startups with a limited future capital runway who are facing difficulties in raising the necessary capital
The Israel Innovation Authority will launch a fast-track grant channel with an initial allocation of approximately NIS 100 million (approximately $25 million) for around 100 Israeli startup companies with significant technological assets, and short runways for companies struggling to raise funds from their existing investors during these challenging times. The matching process will include contributions from private investors, which are expected to total more than NIS 200 million ($50 million). The channel, operating under the R&D fund program, is designed for Israeli companies who need additional funds to extend their runway, giving them more time to fully utilize their available resources.
Application for this program will open in November 2023.
In a conversation with Calcalist, Dror Bin, CEO of the Innovation Authority, said, "We were busy last week, talking to the industry and assessing its needs. We received 1,000 responses within a few hours, which is quite rare. The survey we did with Start-Up Nation Policy Institute (SNPI) revealed several challenges that many companies currently face, including that many of them have only a few months of runway. They are struggling to complete funding rounds, either due to the fact that investors aren’t interested or because the entrepreneurs are serving in the reserves and are occupied at home. Other problems include difficulties with recruiting employees, employees working from home, and an inability to send people abroad to meet with clients. We have established this emergency funding channel, and it may not end there. I am confident that these companies have the potential to secure additional capital because many organizations are looking to invest at this stage. These companies are solid and can quickly raise smaller amounts of capital. It worked well during the COVID-19 pandemic."
According to Bin, companies can expect to receive money during December. "The Israeli high-tech sector has weathered numerous economic crises and emerged stronger each time. This time will be no different,” added Bin. “We need to invest significantly in Israeli high-tech, both from the government and the private sector. There will be a rebound after the war, enabling us to further strengthen the high-tech sector. This is our working assumption and plan for the future," Bin added.
"I don't sense a real existential crisis among entrepreneurs. Everyone seems committed to continuing business as usual and is eager to work. We are accustomed to working as a nation during emergency situations," Bin said.
The total investment by the Authority, including matching investments from private investors, is expected to exceed NIS 200 million ($50 million). This program, which will be part of the R&D fund route, will assess applications quickly, considering various criteria, including the company's technological assets, runway, availability of investment capital from existing investors, and the extent of damage to employees and infrastructure.
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Bin also emphasized, "Based on our assessment of the needs of Israeli startup companies, we understand that some of them are experiencing difficulties related to cash flow, delays and cancellations in securing investments, and postponed significant projects and technological developments. We will work diligently to approve these applications. This program is designed to provide certainty and financial support to help these companies survive the crisis and contribute to economic growth upon recovery."
In addition, in response to the challenges posed by the war, the Innovation Authority approved a series of relief measures and support for high-tech companies. These concessions have been approved with immediate effect and will be in effect for 90 days.
Offir Akunis, Minister of Innovation, Science and Technology: "Much like the entire Israeli economy, our high-tech sector was significantly harmed by the crisis. In such times, we are all joining the collective efforts, each in their areas of responsibilities, including the Ministry of Science and the Israel Innovation Authority. Our policy of providing rapid support, in collaboration with the Ministry of Finance, will prevent critical damage to the high-tech industry. This policy will be the central tier in the ability of the Israeli economy and its growth engine to quickly return to a path of growth at the end of the war."
