Launching A Competitive Proceeding to Establish New Technological Incubators with up to NIS 40 Million per Incubator
As part of the Israel Innovation Authority’s program, funding will be provided to cover management fees over a five-year period, support the establishment of a central laboratory, in addition, the Authority also offers non-dilutive investments from the Startup Fund at a total of approximately NIS 100 million over the course of the franchise period, as well as providing support that will enable startups incubated within the program to receive grants of up to NIS 21 million, from Pre-Seed stage through Round A financing.
Dror Bin, CEO of the Israel Innovation Authority:
“The call for proposals we are launching today is part of a broader, strategic move to strengthen the deep-tech ecosystem in Israel, in parallel with the Startup Fund and the Yozma 2.0 Fund. From research and development to the global market, technological incubators have always been the starting line for Israeli deep-tech and have been accompanied all the way by risk sharing and state-backed financial support. We expect the selected new entities not only to establish breakthrough companies but also to attract strategic partners from Israel and abroad who will bring capital, networks, and long-term investment to turn the incubated startups into leading and impactful companies worldwide. In doing so, we will ensure that Israel remains at the forefront of competition with the world’s leading innovation hubs.”
The Israel Innovation Authority announces today the launch of a competitive proceeding to establish up to three new technological incubators, as part of a broad benefits package aimed at addressing challenges faced by the Israeli High-Tech sector, creating new startups, promoting High-Tech diversification, and strengthening Israel’s position relative to other global innovation hubs.
The Incubators will focus on high-risk, innovation-intensive Deep-Tech fields such as: semiconductors, bio-convergence, agri-food tech, robotics, defense tech, or other domains characterized by high technological complexity, significant risk, and a lack of specialized investors in Israel.
The competitive proceedings will select up to three new investment entities to be established by multinational corporations offering added value, venture capital funds, and specialized financial investors from Israel and abroad. These entities will provide financial backing and a supportive framework for establishing companies under Venture Creation (creation of startups from scratch, typically around a technology or initial idea) and Venture Building (building companies with deep and ongoing support) models. The Incubators will support projects from ideation or technology transfer from research institutions through Round A funding, aiming to establish unique and complex technological industries in Israel in which the country has global leadership potential.
The competitive proceedings are expected to remain open for approximately nine months. Applicants must demonstrate available funding of at least NIS 120 million, to be used both for the operation of the Incubator and for investment in companies that will operate within it throughout the franchise period.
Applications will be evaluated by the Israel Innovation Authority based on a set of criteria, including the cumulative experience of the proposers and their shareholders, the quality of the proposed team, business and strategic partnerships formed, the robustness of the financial sources, and the overall business plan.
Each proposal must also include a detailed plan demonstrating expertise in specific focus areas, as well as innovative mechanisms for identifying and creating new projects. Emphasis will also be placed on original ideation programs, structured process of transferring knowledge from Israeli and international research institutions, a clear policy for follow-on investments in Incubator’s graduate companies, and initiatives that contribute to Israel’s innovation environment, as well as position the Incubator as a globally recognized entity. A sustainable business plan will also be required to ensure continued activity and expansion of the Incubator beyond the five-year franchise term.
Each selected Incubator will receive a grant of up to NIS 40 million (over USD 10 million) for a five-year period to finance management fees and the establishment of a central laboratory that will support the research and development of breakthrough products. In addition, any startup selected by the Incubator may receive non-dilutive investments totaling tens of millions of shekels through the Israel Innovation Authority’s programs, especially from the new Startup Fund, which invests over NIS 500 million annually.
Startups operating within the Incubators will be eligible for government matching grants at various stages of development, depending on their investment phase:
- Ideation stage: NIS 250,000 with an 80% participation rate
- Pre-Seed stage: up to NIS 1.5 million with a 60% participation rate
- Seed stage: up to NIS 5 million with a 50% participation rate
- Round A: up to NIS 15 million with a 30% participation rate.
Startups meeting preferred conditions (e.g., led by entrepreneurs from under-represented populations in High-Tech or operating in development areas such as Sderot and the Gaza Envelope communities) may be eligible for even higher grants.
Therefore, in addition to funding the operation of the Incubator, each startup within it may compete for grants from the Startup Fund, with a cumulative total of up to NIS 21 million per company, with support and investment from the Incubator and its shareholders, from the ideation stage or the process of academic knowledge commercialization to early growth stages, with the government also sharing the risk.
Hanan Brand, VP and Head of the Startup Division at the Israel Innovation Authority:
“The Incubators’ Fund recently marked its 30th anniversary. Together with the Yozma 2.0 Fund, they laid the foundation that turned Israel into the Startup Nation. Over 2,500 companies have been established through the Technological Incubators, and hundreds of exits have attracted multinational companies that today employ tens of thousands in Israel. The program has been and remains a primary engine for establishing Deep-Tech companies at early stages, with the government participating in the associated risk. This new competitive proceeding will give rise to a new generation of Incubators backed by strong financial and strategic investors, some of whom are operating in Israel for the first time, alongside top-tier management and technological teams, to build breakthrough companies that will form the future backbone of Israeli High-Tech.”