Startup Fund

Israel is widely regarded as a haven for entrepreneurs, innovators, and investors. With over 500 multinational companies actively present in the ecosystem, Israel is ranked third in the world in the number of active high-tech companies. The Israeli tech hub owes much of its success to a supportive regulatory environment and government initiatives aimed at nurturing the high-tech sector. The mission of the Israel Innovation Authority is to strengthen and ensure the competitiveness of the Israeli Innovation hub by providing direct non-dilutive investments in ground–breaking, high-risk, tech-based ventures, supporting deep-tech and emerging technologies through Applied research, R&D labs and national tech infrastructure, increasing the pool of local tech talent and coping with growth barriers, such as Regulation, Taxation and more.

When contemplating the future, it becomes evident that many of humanity’s challenges extend beyond the realm of software alone, encompassing tangible products and deeper technology.
When considering issues such as climate change and the imperative development of climate technologies, addressing the healthcare needs of a growing and aging population, and ensuring food security, it’s clear that software-based solutions alone are insufficient. These challenges demand deeper technologies characterized by strong IP, higher risk, longer time to market, and adherence to more stringent regulations. This is precisely the arena where this fund aims to make a meaningful difference.

Despite the ongoing downturn in both global and local markets, the Innovation Authority has launched a new fund – namely – the Startup Fund – aimed at bolstering Israel’s start-up community and plan for the “day after.”

The fund provides non-dilutive investment and requires matching funds from private investors. By investing in companies selected to receive funding from the Innovation Authority, the fund aims to mitigate the private sector’s inherent risk associated with investing in early-stage, deep-tech, and R&D-intensive technological ventures.

The incentive program is addressing Israeli startup companies in their PRE-SEED, SEED, and ROUND A stages.

Companies that submit their applications to one of the Fund’s three programs will undergo a robust due diligence process conducted by the Authority’s team of technology experts. This process aims to provide private investors considering investing matching funds with both risk mitigation for their investment and assurance of the selected companies’ technology quality and leadership team’s capability to successfully execute their proposed ventures.

Israeli companies:

• Pre-Seed companies – The Innovation Authority will participate in the Pre-Seed investment round with a grant covering 60% of the investment round amount, up to a total grant of NIS 1.5 million.
• Seed companies – The Innovation Authority will participate in the Seed investment round with a grant covering 50% of the investment round amount, up to a total grant of NIS 5 million.
• Round A companies – The Innovation Authority will participate in the Round A investment round with a grant covering 30% of the investment round amount, up to a total grant of NIS 15 million.
• Companies meeting the conditions of a preferred company (where at least one of the main entrepreneurs is from an underrepresented populations in high-tech, such as Arabs, Ultra-Orthodox, and Women, or whose main activity is based in Israel’s periphery) will receive an additional 10% on the grant, raising the maximum grant amount to NIS 1.65 million, NIS 5.5 million, NIS16.5 million, respectively.
• Non-dilutive funding – the Innovation Authority will not take equity or any voting rights in the company.
• One application for multi-year programs with a fixed funding rate
• Ensuring synchronization between the Startup’s capital raising efforts and the submission to the Innovation Authority
• The funding round amount and requested investment from the Israel Innovation Authority will be determined by the company itself, , to ensure the right financial runway and that the company successfully reaches the next fundable milestone

Private Market Investors:

• Exposure to cutting-edge, disruptive technologies.
• Pre-selection of the best deep-tech companies in various technology verticals.
• Mitigated risks designed to increase the company’s chances of closing the respective funding round.
• Quality Hallmark – the support of the Innovation Authority is an objective vote of confidence that can help companies when attempting to raise additional capital from the private sector.

• The Israeli company is legally incorporated in the state of Israel and operates according to the laws of the state of Israel and most of its activities are for industrial research & development.
• The total funding raised by the company from the day of incorporation to three months before applying to the Israel Innovation Authority does not exceed:
  • In the case of Pre-Seed companies NIS 1.5 million.
  • In the case of Seed companies NIS 7.5 million.
  • In the case of Round A companies NIS 50 million.
• The company’s total income in the calendar year before the application submission year does not exceed:
  • In the case of Pre-Seed companies NIS 300 thousand.
  • In the case of Seed companies NIS 3 million.
  • In the case of Round A companies NIS 30 million.
• The total funding round does not exceed:
  • In the case of Pre-Seed company – NIS 4.5 million, and at least 80% of it will be for research & development purposes.
  • In the case of Seed company – NIS 15 million, and at least 75% of it will be for research & development purposes.
  • In the case of Round A company – NIS 25 million, and at least 50% of it will be for research & development purposes.

Complete Startup Fund Legal Document and Provisions.

Israeli companies seeking further information on the requirements and application process to this program, should refer to the Israel Innovation Authority’s Hebrew site.