2018 was a productive year for the Innovation Authority, marking the outset of the implementation of the Authority’s five-year strategic program, which was granted approval by the Authority’s Council over the course of the year. The Council is comprised of representatives of the Ministry of Economy and Industry, the Ministry of Finance, and of the industry and the public, under the leadership of Dr. Ami Appelbaum, Chief Scientist for the Ministry of Economy and Industry and Chairman of the Board of the Innovation Authority. The program is centered on ten primary strategic goals:

In this chapter, we will present the salient features of the Innovation Authority’s activity in 2018, and will then present the issues that are slated to be the focal point of the Authority’s activity in 2019. The implementation of the Authority’s policy on the ground is primarily assigned to its innovation divisions – mission and client-oriented divisions, each offering a unique toolbox for the various challenges posed in the technological innovation cycles. A variety of Authority division activities performed over the past year will be reviewed in the context of each of their sectors. A key trait shared by all divisions over the past year is increased collaboration with all branches of government. The synergy of the various government entities’ knowledge, experience, and regulatory authorities with the Authority’s expertise in supporting technological innovation lies at the core of a range of collaborative incentive programs launched this year. This synergy bolsters the government’s ability to propel the Israeli economy forward. In this chapter, in addition to reviewing activities in the various divisions, we will present a critical issue that extends beyond the confines of the Authority: the Innovation Authority’s new outlook on serving its clients – entrepreneurs, companies, and researchers – that is currently being formulated.

Technological infrastructure Division

The Technological Infrastructure Division is responsible for Research and Development infrastructures, development of applicable knowledge, transfer of knowledge from academia to industry, and the development of generic technologies.

Division programs include: MAGNET consortiums, Programs for knowledge transfer (KAMIN, NOFAR, MAGNETON), Research Institutes

In 2018:

• Total support approx 300 million NIS was provided for 290 projects
• 160 million NIS invested in MAGNET consortiums (joint academic-industrial generic-technological R&D)
• Approx. 200 research groups were supported in applied research and industrial collaborations
• Support of approx. 20 million NIS for 17 international collaboration projects for transfer of knowledge to Israeli companies

The primary incentive program operated by the division of technological infrastructure is MAGNET consortiums (Generic Technologies R&D Consortiums), a program designed to foster the development of generic technologies by groups of companies from the industry and researchers from academia. see:

The program has undergone several changes over the past year in an effort to adapt it to shorter development times and to fierce global competition over leadership in future technologies. The time period offered for the support of the program is now only three years (previously, most consortiums were given support for five years); incentive has been added to integrate global players into the consortium who are at the forefront of technological development; and an additional tool has been launched for the continued funding of select technologies emerging from the consortium. Several new consortiums were granted approval in 2018: an IoT consortium in the field of food products, a space communications consortium, a generic processor consortium for electronic components, and a consortium for quantum sensing.

In 2018, the technological infrastructure division also eased threshold conditions and operating procedures in the NOFAR and KAMIN incentive programs, aimed at directing and transferring knowledge from academia to industry to support applied research in academia, and the MAGNETON program that supports collaborations between an Israeli company and an academic research group. The objective of these changes is to focus the programs on effective and applied collaborations with the industry. The KAMIN program, for example, is currently offering unique conditions, a pilot program in the field of drug development, offering three years of support in order to bridge gaps in the translational research stage.
Over the course of 2018, the division also advanced a variety of international collaborations in an effort to accelerate the development of future industry technologies in Israel. The division launched a collaboration with particle accelerator CERN to transfer knowledge to companies in Israel, it began to support the commercialization of academic knowledge in the field of quantum technologies through the European collaboration program Quantera, and it contributed to project funding for Israeli companies collaborating with German companies and research institutes in the field of nanotechnology.

Lastly, in 2018, the division was marked by widespread activity in the field of advanced manufacturing, which is taking center stage in the Innovation Authority’s strategy. In addition to the consortium established in the food industry, the division of technology infrastructure, in collaboration with the division of advanced manufacturing, is currently working on a strategic plan to increase the efficacy of applied research institutes that serve the manufacturing industry. In this past year, several changes were implemented to support these institutes in order to ensure their technological excellence and to increase the incentive for them to collaborate with industrial companies. At the same time, the two divisions are working together with the Ministry of Economy to establish new applied institutes in the fields of food technology and advanced manufacturing – both of which will operate in Northern Israel. The advanced manufacturing institute will be based on a partnership between the business sector and academia, and will work to improve productivity and competitiveness in the manufacturing industry by integrating advanced methods and technologies, with an emphasis on industries characterized by a medium or low rate of innovation. The establishment of the food institute is currently at the stage of identifying industry needs.

Startup Division

The Startup Division provides a range of tools that support technological enterprises in their initial stages and assists them in product development, raising initial capital and advancing to sales. The Division is also active in strengthening the Israeli technological entrepreneurial ecosystem, especially in emerging fields.

Division programs include: Tnufa, Incubators Incentive Program, Early Stage Companies, Innovation Labs

In 2018:

• 213 startup companies received total support of approx. 400 million NIS
• The average grant awarded to startup companies was 1.9 million NIS
• 19 technology incubators operated throughout the country, 12 of which supported life science companies
• 73 entrepreneurs received support as part of the Tnufa Program
• 5 innovation labs began operating in the fields of advanced manufacturing, transportation, construction, food-tech and advanced materials

Over the course of 2018, the startup division launched several new incentive programs and expanded its support of existing programs. Firstly, the innovation labs incentive program – connecting entrepreneurs seeking unique technological infrastructure with experts in order to prove feasibility, and connecting corporations seeking collaborations with startup companies that operate with an open innovation model – commenced operations in 2018 following its launch in 2017. The five labs selected through competitive procedures in the fields of advanced manufacturing, smart transportation, construction and infrastructure, food tech, and advanced materials, began to adopt innovative initiatives over the course of the year. Furthermore, in 2019, a new cyber security and fintech innovation lab will be established in Be’er Sheva in collaboration with the National Cyber Security Authority and the Ministry of Finance, which will leverage national assets to promote startups in the field.

The lab in Be’er Sheva will join other programs launched in 2018 aimed at fostering technological entrepreneurship in the periphery and in large cities outside of central Israel. Over the course of 2018, a competitive procedure was announced for the establishment of a food tech incubator in the sub-district of Tzfat, whose results will be released in 2019, and a program for fostering entrepreneurship in the periphery was approved in association with regional anchors. For additional information on the Authority’s policy for encouraging technological entrepreneurship in the periphery and for further details about these programs, see the chapter in this report titled Innovation-Driven Economy in the Periphery.

At the same time, this year saw the expansion of one of the the division’s key programs– the early stage companies incentive program designed for 

Growth Division

The Growth Division encourages startup companies reach the stage of sustainable growth and provides growth companies and mature companies with tools to develop technological engines

Division programs include: R&D Fund, Generic R&D, Pilots Fund

In 2018:

• 177 companies received total grants of approx. 430 million NIS from the R&D Fund. The average grant was 2.1 million NIS
• 22 large companies received total support of 85 million NIS in the Generic R&D Program
• 60 companies received 70 million NIS to conduct pilots for innovative technologies at a range of trial sites in Israel with the cooperation of different government ministries.
• 30 million NIS were invested in the establishment of multinational corporations’ R&D centers in the fields of medical devices digital healthcare

Over the course of 2018, a new incentive program for supporting technological pilots conducted in Israel commenced operations in the growth division (it is formally named “incentive program for innovation with government entities”). The program is designed to encourage innovative companies to advance from the R&D stage to the scale-up and commercialization stage in order to progress to a growth track. The program operates in collaboration with a range of government entities, which enables greater support of companies and ensures that pilots can operate in accordance with regulation requirements or under a targeted regulatory draft as needed. In the program’s first year, dozens of applications were submitted for the support of pilots at a variety of sites in the fields of 

, environmental protection, energy, smart transportation, cyber security, agriculture, and government-owned companies, and the program is expected to expand in the coming years to include more fields and collaborations with additional government entities. The program has strategic significance for the Innovation Authority because it encourages companies to grow as full companies in Israel, and it bridges between the high- tech industry and other sectors of the Israeli economy. For further detail, see the chapter in this report titled From the High-Tech Industry to a Smart Technology Economy.

Another new program that commenced operations in 2018 in the growth division is the incentive program to encourage the establishment of multinational companies’ R&D centers in the fields of biotechnology and health. In a competitive procedure, three leading multinational companies were selected to participate in the program – Change Healthcare, which operates in the field of digital healthcare, and Medtronic and GE Health, which operate in the field of medical devices. Through this program, these companies are slated to establish significant local anchors of activity, knowledge and expertise, and to create new intellectual property in Israel.

In 2018, the division also worked to expand the generic R&D incentive program for large companies. The program, which works with large, mature companies, supports long- term R&D of groundbreaking technologies that companies will be able to leverage in the future for a range of products. In order to expand the circle of large companies investing in groundbreaking technological developments in Israel, in this past year, the division encouraged companies at advanced growth stages to join the program. The total sum invested in the program grew from NIS 60 million in 2017 to NIS 85 million in 2018.

Societal Challenges Division

The Societal Challenges Division focuses on two fields: the development of skilled human capital for high-tech and the encouragement of technological entrepreneurship and R&D directed at solving societal challenges.

Division programs include:

Human Capital: Coding Bootcamps, Back to Tech, Early Stage Companies – Ultra-Orthodox and Minorities

R&D for Societal Challenges: Public Sector Innovation, Grand Challenges, EzerTech

In 2018:

• 7 training programs, that were chosen as part of the Coding Bootcamp Incentive Program to train approx. 250 graduates, received more than 10 million NIS in their first year of operation
• A pilot model of a new program – “Back to tech” – was launched and assisted approx. 100 Israelis living abroad to connect to high-tech employment opportunities in Israel
• 17 startup companies led by Ultra-Orthodox and Arab entrepreneurs received total support of approx. 30 million NIS as part of a special sub-program
• 57 innovative projects received total support of 35 million NIS as part of the Public sector challenges Program operated jointly by the Innovation Authority and the Digital Israel Project
• 16 innovative projects received total support of 10 million NIS as part of the Assistive technology for the Disabled R&D Incentive Program (Ezertech)

Development of skilled human capital for high-tech

The societal challenges division is working to expand the supply of human capital skilled in high-tech professions by removing obstacles and developing suitable infrastructure. Among other activities, it is advancing the integration of underrepresented populations in the industry. A key channel the division is promoting to make these objectives a reality is elite extra-academic training – coding bootcamps – designed to train or retrain highly skilled individuals (such as graduates with degrees in the sciences) for development positions in high-tech. Over the course of 2018, the division began to operate coding bootcamps to support this type of training. The program’s compensation model is contingent on the successful integration of bootcamp graduates in the industry in high-paying development positions, and incentivizes the integration of women and underrepresented populations in high-tech. In 2018, at the end of a business development process and a competitive procedure, seven high-quality extra-academic training settings for development professions in high-tech, which opened by the end of the year, were selected. The program launch and the comprehensive industry consultation that had preceded it for the previous two years began to propel a conceptual shift in the high-tech industry, and spurred momentum in the elite extra-academic coding training market.

Additional channels of division operations in 2018 for boosting the supply of human capital in high-tech include obstacle removal for integrating foreign experts in industry, connecting returning residents in tech professions with high-tech companies, and fostering technological entrepreneurship among underrepresented populations in the industry. In order to enable Israeli high-tech companies to hire foreign experts with unique knowledge, the Population and Immigration Authority, the Foreign Trade Administration at the Ministry of Economy and Industry, the Ministry of Labor, Social Affairs and Social Services, the Ministry of Foreign Affairs, and the National Economic Council at the Prime Minister’s Office in collaboration with the Innovation Authority, created a new category of work visas for foreign experts designed solely for high-tech experts. This channel offers many benefits, including electronic access, a fast work visa approval process, and work visas for partners. The pilot program ״returning to high-tech״ was launched to reintegrate Israelis living overseas with knowledge and experience in high-tech into Israel’s high-tech industry by connecting them with employers and with relevant employment opportunities. Lastly, the incentive program for ultra-orthodox and minorities operated by the societal challenges division with the startup division was updated with the objective of increasing the number and the quality of the backed initiatives. This action followed an in-depth analysis of program outcomes conducted by the Authority’s Strategy Division. In the context of the updated program, comprehensive marketing was performed in an effort to reach relevant target audiences. As a result, the number of initiatives supported through the program grew by 20% in 2018 in comparison to 2017.

The division also gathers data and analyzes obstacles in the ecosystem, and participated in the publishing of the report on human capital in high-tech led by Start-Up Nation Central, which gave a situation report on the current shortage and possible future solutions.

Encouraging R&D to meet social and public challenges

In 2018, the division assembled all of the incentive programs in these fields under one strategic umbrella of impact investments. The programs were updated accordingly, and comprehensive marketing activities were performed together with an array of partners from across the ecosystem in order to expand the target audience, to increase the scope and quality of the initiatives requesting backing, and to focus the entrepreneurs in the field on significant challenges outlined in calls for proposals. The Digital Innovation for Public Sector Challenges Program, working in collaboration with the National Digital Israel Initiative in the Ministry of Social Equality, 

 were operated through focused calls for proposals. The method for evaluating submitted projects was also improved. At the same time, the GCI – Grand Challenges Israel incentive program, which operates in collaboration with the Ministry of Foreign Affairs and has been inactive since 2015, was updated and relaunched in 2018.

Advanced Manufacturing Division

The Advanced Manufacturing Division strives to strengthen the manufacturing industry and enhance its competitiveness in Israel and the global arena by encouraging R&D processes and technological innovation.

Division programs include: R&D Preparatory incentive Program, MOFET (R&D in the Manufacturing Industry)

In 2018:

• 246 R&D projects received total funding of 125 million NIS, half of which was
• invested in the periphery
• The average grant in the MOFET Program was 660,000 NIS
• About half of the manufacturing companies that submitted a request for assistance as part of the MOFET Program made their initial approach to the Authority this year
• 23 companies progressed from the R&D Preparatory Incentive Program to the MOFET Program and advance their level of technological innovation

The primary program operating in the advanced manufacturing division is the MOFET – R&D in the manufacturing industry incentive program. The objective of the program is to encourage manufacturing-driven industrial factories to advance and assimilate technological innovation processes by running R&D programs aimed at developing innovative products, improving existing products, or developing and improving manufacturing processes. In 2018, the division conducted intensive groundwork to make the program accessible to industrial companies, particularly in the periphery. The division’s team made dozens of visits to companies and participated in professional conventions in the periphery. Roughly half of the industrial companies that submitted an application for support through the program in 2018 were first-time applicants. At the same time, over half the companies backed in the division operate in northern and southern Israel.

The MOFET program is complemented by the

An additional channel of division activity in 2018 for fostering R&D in the manufacturing industry was targeted calls for proposals for submissions for various industries. Calls for proposals were sent to textile companies, plastics and polymer companies, electricity and metal companies, and suppliers for the Merkava and AFV (Armored Fighting Vehicle) projects. Another exclusive call for proposals was circulated, in collaboration with the Ministry of Health, for Efsharibari, the National Program for Active and Healthy Living. The appeal was designed to encourage R&D targeted at improving the nutritional value of food, improving people’s nutrition security and promoting public health.

Lastly, this year, the division held a first-ever ‘speed dating’ event at Kinneret College in northern Israel, between startups developing solutions in the field of manufacturing, and industrial companies. Following the success of the event, which included 160 attendees and many connections were made, a second similar conference is planned for early 2019 in the south.

In addition to its activity targeting manufacturing companies, the division is also developing support tools for innovative companies seeking to advance to the manufacturing stage. In late 2018, the division launched a support for examining feasibility for small-scale manufacturing incentive program, in collaboration with the Israel Investment Center at the Ministry of Economy. The objective of the program is to bridge the ‘valley of death’ between R&D stages for small-scale manufacturing, and to create a continuum of government support of technological development – from the research stage, until the establishment of an industrial factory in Israel.

International Collaboration

The International Collaboration Division acts to create a competitive advantage for Israeli companied and entities by coordinating international collaboration in innovative R&D.

Division Programs include: bilateral collaborations in innovation with dozens of countries, facilitating access to the EU Horizon 2020 Program for industry and academia in Israel.

In 2018:

• 7 new agreements for R&D collaboration were signed with various countries,
• bringing the total of active agreements to approx. 70
• 90 Israeli companies received grants to conduct joint R&D projects with companies from other countries. The average grant awarded to these companies was approx. 500,000 NiS
• 92 Israeli companies received total financing of approx. 40 million Euros as part of the prestigious European SME Instrument European R&D Program
• 9 Israeli companies received approx. 11 million Euros as part of the European Ecsel R&D Program

A key channel for the International Collaboration Division activity is advancing and enacting bilateral agreements for technological collaborations. In 2018, seven new bilateral agreements were signed between Israel and other countries: Britain, Thailand, Argentina, and four US states, and the India-Israel Industrial R&D and Technological Innovation Fund commenced operations. These agreements create a supportive setting that enables Israeli tech companies to collaborate with companies from these countries. Moreover, in these new agreements and through existing agreements, this year, the Division established a series of points of agreement that pave the way for Israeli companies to conduct pilots overseas in the fields of healthcare, agriculture, energy, and water.

Another vital channel for Division activity through ISERD (the Israel-Europe R&D Directorate) is making

The directorate operates under an inter-administrational steering committee whose members include the Innovation Authority, the Ministry of Science and Technology, the Planning and Budgeting Committee of the Council for Higher Education, the Ministry of Finance, and the Ministry of Foreign Affairs.

In 2018, the directorate operated to increase participation of Israeli companies in various programs offered by Horizon 2020. This activity was reflected in the extraordinary involvement of Israeli industry in the flagship SME Instrument program offering funding for excelling innovative companies (92 Israeli companies received funding valued at €40 million), and the Ecsel program that funds projects in the field electronic components and systems (9 companies were granted roughly €11 million). These results were achieved through a concentrated effort of the ISERD Directorate for increasing the number of applicants and for improved application quality. This activity, among others, is offered by the new program aimed at bolstering the participation of Israeli corporations in the European framework program. The program backs expenses for overseas travel, participation in conferences for seeking partnerships, and an approved grant writing advisor. The total participation of Israeli industry in the European framework program since its inception is currently valued at over €200 million, with 2017-2018 demonstrating increased participation.

 

Working for the industry – improving interfaces with Authority clients

The Innovation Authority sees its clients as an important innovation resource for Israel, and is constantly working to make the incentive programs and the work processes accessible for them. To this end, the Authority is currently establishing a comprehensive service outlook whose principles will be based on mapping and locating the needs of the Authority’s clients, and will treat all stakeholders in the ecosystem in which the Authority operates: entrepreneurs, companies in Industry, investors, academic researchers, governmental entities and others. 

A central aspect where the Authority operated to establish and implement new service in 2018 is shorter response times through the cycle of support in the initiative or in the company. This endeavor began as a pilot in 2017 in the startup division, and in 2018, it was assimilated throughout the entire Authority. The results were evident on the ground: 90% of entrepreneurs and startup companies that that submitted an application for funding in the startup division were granted the committee’s decision within nine weeks, and 83% of companies in other divisions responded within 12 weeks.

Another aspect that the Authority examined in 2018 regarding its work processes against clients is reporting requirements applied to companies that have received funding from the Authority. In late 2018, the Authority’s Council approved easing royalties reporting requirements for companies owing royalties of up to $5,000 per half-year – from submitting two royalties reports a year, to the submission requirement of only one report.
At the same time, the Authority took several steps to improve the technological examination process of R&D support applications submitted to it, which is performed by 180 professional, experienced evaluators, managed by the technology and market sectors division in the Authority. Firstly, computerized knowledge tools were developed that are used in the professional examination and the entire Authority. One key tool is the scouting system, which is linked to a wide range of commercial information sources and to the Innovation Authority’s main database, enabling the location of companies and projects in any technological field. Another key tool is the knowledge building center, which serves to collect and distribute technological, business, and administrative information critical to the procedure of technological examination.

2019 – Looking ahead

In conclusion, 2018 was marked by a great deal of activity in the Innovation Authority – new programs were launched, existing programs were updated in order to improve their response to the industry, new bridges were built with world countries, and collaborations were reinforced within the government for the advancement of innovation in Israel. In 2019, which has just begun, the Authority will continue its implementation of the strategic plan it approved this year, with several issues derived from the plan which are discussed at length in this report expected to be at the heart of Authority activity.

The first issue is advancing technological innovation in the periphery. In this report, in the chapter Innovation-Driven Economy in the Periphery, we review the challenges that lie at the core of technological innovation activity in metropolitan Tel Aviv area, and we propose an action plan that will be implemented over the course of 2019. The second issue is the development of skilled human capital for the high-tech industry. In 2019, in addition to the programs that were launched in 2018, greater emphasis will be placed on the integration of skilled human capital from the periphery in industry, and on the development of targeted human capital for AI. AI and other future technologies are a third issue that will play a key role in Innovation activity in 2019, with an emphasis on advancing a national strategy on AI (for further details, see the chapter The Race for Technological Power) with extensive government cooperation. A fourth issue is the development of additional innovation systems alongside Israel’s ICT ecosystem. In this field, the Authority will highlight the development of a biopharma ecosystem while leveraging global trends in the field of personalized medicine, as detailed in the Personalized Medicine chapter of this report. A fifth issue is advancing collaborations between the manufacturing industry and high-tech companies and applied research facilities.

Secondly, in 2018, the Division assimilated a new recruiting model for professional testers, to enable the recruiting and ongoing refreshing of professional testers in accordance with the changing needs of technological and business trends in the markets. Furthermore, over the course of the past year, the Division has assimilated an innovative methodology for examining R&D projects of startups, including several key aspects in the Lean Startup approach. Market validity is tested, as is understanding the unmet need and the required response (for example, using the Minimum Viable Product method) and there is increasing openness in the testing phase for changes (Pivot) that the company performs on its products according to an evolving understanding of the target market.