New NIS 80m. program to encourage seed-stage startup investment
Under the program, grants will be given to startups that join up with veteran seed-stage investors interested in initial investment in these companies.
By ZEV STUBChairman of the Israel Innovation Authority Dr. Ami Appelbaum(photo credit: Courtesy)
The Israel Innovation Authority has launched its NIS 80 million Hybrid Seed Incentive Program to encourage investments in seed-stage start-ups, it said Wednesday.Under the program, grants will be given to start-ups that join up with veteran seed-stage investors interested in initial investment in these companies.The program is a response to the ongoing slowdown in seed-stage funding, the authority said. Since 2017, there has been an average annual decrease of about 25% in the number of start-ups being formed in Israel, a negative trend that has intensified against the backdrop of the coronavirus crisis.Companies that take part in the program will be able to receive a grant worth 40% of the investment round of up to NIS 3.5 million, and 50% of the total investment round for those start-ups located in Israel’s geographical periphery or whose founders come from populations underrepresented in the hi-tech industry.The program is intended for seed-stage start-ups that have raised less than NIS 3.5m. To apply for a grant, the companies must provide a signed term sheet with a potential investor regarding capital investment. An investment in this program will provide investors with a three-year option to acquire shares in the company. Once the investor realizes the option, the authority will be reimbursed for the grant amount it initially provided.“New start-ups are the future of the Israeli innovation ecosystem, and supporting them during their early stages is critical for their progress,” said Israel Innovation Authority chairman Dr. Ami Appelbaum. “The Hybrid Seed Incentive Program will amplify the success rate of Israeli start-ups, will stimulate the creation of new seed-stage start-ups that are so critical for the innovation ecosystem, and will encourage experienced investors to invest in early-stage start-ups.”
