Grants for Israeli Startup Companies from the Israeli Innovation Authority
Do you have a startup company that needs financing? You should get to know the grants offered by the Israeli Innovation Authority, which provides startup companies with grants for R&D of technological products and services. In this article we will explain about the Innovation Authority’s grants, how to apply for those grants and how the applications are processed.
The Cohen, Decker, Pex & Brosh law offices in Jerusalem and Tel Aviv specialize in corporate and hi-tech law. The firm provides comprehensive legal services for start-ups, which includes consultation and representation in issues such as founders agreements, company registration, rights and duties of officeholders and assistance with applications for state loans and grants.
Why Does the Innovation Authority Offer Grants to Startup Companies?
Israel is known to be a “startup nation”, thanks to the many successful Israeli innovations that were introduced over the years, like Waze and Mobileye. Both were sold to international companies in the most profitable transactions that ever took place in Israel. Startup companies have different ways to raise capital which will help them to develop, such as private investment funds or technology business incubators (TBI).
Besides private sources of capital, the Israeli Innovation Authority also invests in the Israeli hi-tech industry, and especially in startup companies, in order to increase industry productivity. In fact, Israel is currently ranked first among the OECD countries in terms of country investment in research and development (R&D).
What Grants are Available for Startup Companies?
There are several programs available for Israeli startups throughout the year. The first is the ideation (tnufa) incentive program. It is designed for entrepreneurs and new companies that haven’t had sales yet, and need financing for the initial development of their projects. In general, the program enables grants of up to 100,000 ILS (approx. 29,600 USD). However, for developments in fields that combine biology or other certain fields of engineering, the grants could be even higher.
There is also the “preferential path“, which attempts to incentivize innovation among startups that exist for up to 5 years (as of the date of submission), and develop products and technology with development risks in various fields, such as: medical equipment, cyber, software, hardware, communication, etc. This program is available under the R&D fund of the Innovation Authority.
This program’s grants can reach up to 50% of the companies’ authorized budget, which must be in the sum of no more than 5 million ILS (approx. 1.48 million USD) per year. In order to meet the application’s requirements, the company should act in accordance with obligations stated in the Israeli Innovation Law and the program’s protocol. Priority is given to startups owned by women, minorities or hassidic Jews.
Another program is designed for Israeli tech companies in the cyber field, that develop innovative products and services, in rather initial stages of development. The program offers grants of up to 60% of the R&D expenses of the authorized budget, which must be in the sum of up to 2 million ILS (approx. 592,600 USD). The applying company needs to be registered in Israel and to act in accordance with obligations stated in the Israeli Innovation Law and the program’s protocol.
The Application’s Examination
After filling the application forms and submitting them to the Innovation Authority, the application is being recorded and transferred to the relevant head of the professional department. Then, the appointed examiners are reviewing the application. The review stage includes, besides reviewing the application, meetings with the company for the purpose of clarifications, writing a statement of opinion and forwarding it to the head of the professional department for further examination. In some cases there is also a financial examination, conducted by a CPA.
After the examination, the application is forwarded to discussion in a designated research committee, which decides under different criteria whether to approve funding, in which sum and under what conditions. If the application is denied, it is possible to file an appeal or to request reconsideration of the application, within 30 days from the date of decision.
Apart from the aforementioned programs, there are additional temporary programs, available for short periods of time. Most of the programs are designed for specific fields. For instance, due to the Covid-19 crisis, a new program was announced in order to give rapid aid to startups who were harmed because of the crisis.
Grants from the Israeli Innovation Authority are available for Israeli startup companies that develop new products and services, in order to help them reach their desired breakthrough. If you have questions or need assistance with applying for a grant, you may contact us. Our firm, Cohen, Decker, Pex & Brosh, specializes in corporate and hi-tech law. We accompany startups throughout the process of applying for grants from the Innovation Authority.