Finance Minister Bezalel Smotrich has unveiled a substantial funding expansion for the Israel Innovation Authority’s Fast-Track program in a strategic move aimed at shoring up the country’s hi-tech sector during a period of uncertainty caused by ongoing hostilities. The budget allocation for the program will be quadrupled, soaring from NIS 100 million to a robust NIS 400 million. This injection of capital is expected to provide much-needed assistance to start-ups grappling with financial challenges brought about by the current state of affairs.Earlier this week Smotrich met with key stakeholders from the Finance Ministry, the Israel Innovation Authority, and other influential figures in the hi-tech industry in order to assess the impact of the ongoing conflict on Israel’s high-tech sector and to chart a course for both immediate crisis response and long-term strategies to support the industry post-war. This meeting was attended by a diverse group of participants, including representatives from Israeli and foreign venture capital funds, institutional investors, corporate delegates, and other pivotal entities within the tech ecosystem. These stakeholders presented the Finance Minister with up-to-date information and data concerning local tech companies and their current circumstances, emphasizing the urgency for a swift response. This information supplemented the data that had been presented to the Minister in recent days, including insights gleaned from a survey conducted among hundreds of local companies, revealing the specific challenges they are facing in the current climate. Armed with this data, financial analysis, and professional recommendations from the meeting, Smotrich embraced the proposal to promptly increase funding resources for the tech industry. Consequently, he has announced a budget increase for the Innovation Authority’s Fast-Track program, escalating it from NIS 100 million to NIS 400 million. The primary objective of this move is to provide immediate relief to Israeli startups that are currently encountering difficulties in securing capital from their existing investors during this wartime period.
This decision is the first in a series of short-term and long-term measures that the Finance Ministry’s professional leadership is diligently working on in conjunction with the Israel Innovation Authority. Collaboration and coordination with the high-tech industry remain pivotal in ensuring the sector’s stability and growth during these challenging times.
The IIA’s hi-tech booster shot
The Israel Innovation Authority announced earlier this week that it will introduce a fast-track grant program to support approximately 100 Israeli start-ups facing funding challenges due to the ongoing conflict in Gaza. The goal is to extend the financial runway for these startups, giving them more time to leverage their existing resources and pursue their tech innovation endeavors. Eligible companies can begin applying for this program starting in November 2023.
Prior to the conflict, Israel’s hi-tech sector was already grappling with a decline in investment and a decrease in foreign investors’ interest, resulting in reduced funding for startups and a drop in the creation of unicorns within the ecosystem. However, the outbreak of the war added further challenges, making it a turbulent period for one of Israel’s vital economic engines. The Israel Innovation Authority’s program is aimed at alleviating some of the pressure on the struggling hi-tech sector.
Dror Bin, CEO of the Israel Innovation Authority, emphasized that the hi-tech sector, which had been experiencing diminishing investment volumes for the past 18 months, is particularly affected by the ongoing crisis. “This impact is more pronounced in start-up companies that urgently need funding, especially during a challenging period when it is difficult to conduct new financing rounds,” he said.
“From mapping the needs of start-up companies in Israel, we understand that most of them are experiencing cash flow difficulties, delays and cancellations with potential investors, and the delay of significant projects and technological developments,” he added. “The channel is designed to provide certainty and cash flow that will help companies overcome the crisis and be an economic growth engine upon exiting it.”