Venture Incubators Funding Program

Program's Description

Venture Creation and Early-Stage Capital Investments in Technological Startups – The incubator’s role is to invest in companies in their early stages and to provide a framework that supports the establishment of the company and the development of the idea into a commercial product. The Venture Incubators are chosen in a competitive procedure for a concession period of 5 years and are deployed around the country.

Goal of the incentive program

To boost entrepreneurship, venture creation and the establishment of new startup companies, developing groundbreaking technologies, with high economic potential in technological areas with little expert investors in Israel. The selected Venture Incubators will create an infrastructure for venture creation and early-stage capital investments. The incubators, established by experienced financial and strategic partners will offer its incubated companies high added value ranging in technological, business, financial and operational guidance, and support, directed at enabling the startup companies’ greater efficiency and focus on creating their proof of concept, reaching their next fundable milestone, and ultimately gaining market access.

Who is the incentive program for?

Israeli and foreign entities such as venture capital firms, multinational companies, experienced investors – interested in funding new startup companies within the framework of the Venture Incubator.

What do you get?

  • Israel Innovation Authority will provide a cumulative grant of up to NIS 40 million for a 5-year concession period as participation in the Venture Incubator’s management fees and capital expenses of a central lab equipment.
  • In the first two concession years, the grant will be 70% of the approved expenses for the period.
  • In the third and fourth concession years, the grant will be 60% of the approved expenses for the period.
  • In the fifth concession year, the grant will be 50% of the approved expenses for the period.

Why should I join this incentive program?

  • Reduced financial risk: The Authority’s grant leverages a considerable part of the Venture Incubators OPEX and CAPEX for the first five years of operation
  • An opprtunity to establish a new Venture Incubator focused on venture creation and early-stage capital investment thus position onself as an expert and a leading investor in their respective domain
  • Expanding technological portfolio – An opportunity to build a portfolio of new groundbreaking technological startup companies while leveraging the investments with additional grants from the Israel Innovation Authority
  • Quality Hallmark – Innovation Authority’s support presents an objective vote of confidence both in the quality of the Incubator itself as well as in its startup companies that can help them later on, when attempting to raise additional capital from the private sector.

Program's terms and conditions

Threshold conditions:

  • The Respondent is lawfully incorporated entity that registered in Israel and operates pursuant to the laws of the State of Israel for profit purposes.
  • The Respondent has financial resources and commitments vis-a-vis the Innovation Authority in the scope of at least NIS 120 million for the benefit of the incubator and the Incubator’s Companies, for the length of the concession period.
  • The Respondent has a professional team designated for the Incubator’s management that includes a Chief Executive Officer, a Chief Technology Officer, and a Chief Business Officer – all in full-time positions.
  • The total scope of direct or indirect holdings, in the Respondent, by shareholders that are non-profit entities, local authorities, and academic or non-academic research institutions, will not exceed 20% (fully diluted). They will not be controlling shareholders of the Respondent, either together or separately.
  • A shareholder of the Respondent, the Respondent itself or a subsidiary/related company/associated company/owned company of a company controlled by the Respondent or the Respondent’s shareholder, will be a controlling shareholder in not more than two incubators operating by force of this Incentive Program and/or Incentive Program No. 3 of the Innovation Authority – Venture Incubators and/or Incentive Program No. 4 of the Innovation Authority – Venture Incubators 2020 and/or Incentive Program No. 29 of the Innovation Authority – Technological Innovation Labs and/or Incentive Program No. 39 of the Innovation Authority – Entrepreneurship Incubators in the Periphery.
  • The Respondent or any of its shareholders are not the owner of restricted accounts and are not in the process of receivership, freezing of proceedings, liquidation, etc.
  • The Respondent and its controlling shareholders comply with the Industrial Research and Development Regulations (Conditioning of Approvals – Minimum Wage), 2011.
  • No financial support was received from a governmental entity or the Innovation Authority to execute the proposed activities, directly or indirectly, that is not according to this Incentive Program’s provisions.

Criteria for evaluation

  • Scope and quality of the Respondent and/or of its shareholders’s experience (15%)
    The score for this criteria will be given according to the shareholding partners’ experience in venture creation, in tech due diligence, and early-stage investments in tech startups in the technological domain of expertise.
  • Added value of the Respondent and its shareholders (15%)
    The score for this criterion will be given according to the expected added value provided by the Respondent and its shareholding partners to the incubator and its portfolio companies. Shareholding partners with synergistic capabilities and high added value will be given preference. Priority will be given to a broader scope and a higher quality of business and strategic partnerships. Priority will be given to higher quality of the members in the board of directors, investment committee and advisory board. Priority will be giver to a diversified and higher quality of support programs offered to portfolio companies, including offices with sufficient space and a central laboratory for the startups to use, in a suitable geographic location in Israel.
  • Respondent management team’s scope and experience quality (20%)
    Priority will be given to a larger professional team with a broader functionality scope, encompassing more aspects relevant for venture creation, due diligence, technology-transfer from research institutions, capital investments, guidance and support for early-stage startup companies.
  • Respondent’s funding sources (15%)
  • Priority will be given to bigger the more available funding sources for the activity of the incubator and for investments in portfolio companies. A Respondent presenting funding resources and commitments of at least NIS 400 million, for the benefit of the incubator’s activities and investments in portfolio companies, as well as the highest level of funding liquidity, will receive a maximum score for this section.
  • Priority will be given to Respondents with finalized Limited Partner agreements (first closing). The research committee will also consider LIOs with potential Limited Partners, if the latter materializes before the concession becomes effective (second closing).
  • General impression of the Evaluating Committee members (10%) –
    The scoring for this criteria will be given according to the Evaluating Committee members’ general impression of the Respondent and the proposal. The Committee is permitted, upon its discretion, to invite the Respondents to present the proposal before its members.
  • Respondent’s business plan (25%)
    Priority will be given to Respondents that feature the following:
    • A broader, qualitative, and applicable business plan.
    • A well-defined technological domain of expertise, characterized with high-risk and few expert investors in Israel.
    • A plan to establish and invest in a higher number of portfolio companies.
    • A more diverse and creative plan for ideation, venture creation, sources of innovative ideas, including technology-transfer from research institutions into new portfolio companies.
    • A professional due-diligence, follow-up and control process over portfolio companies.
    • A plan to build and improve the ecosystem in Israel in the technological domain and become a dominant player within it.
    • A policy designed to facilitate the participation in more follow-on investments in portfolio companies as well as a sustainable business plan that supports the operation of the Venture Incubator after the concession period.

Calls for Proposals for this program

Currently a Call for proposals for this program is
open for submissions 

Israeli Companies

  • For further information on the requirements and application process to this program, please refer to the Israel Innovation Authority’s Hebrew site