Israel has launched a 25.1 million dollar (80-million-shekel) plan to encourage investments in seed-stage hi-tech companies that develop innovative products, the Israel Innovation Authority (IIA) said on Wednesday
In the seed stage, young startup companies, usually only a few months old, are mainly working on proof of concept, product development and business model formation.
The objective of the new programme is to help seed-stage startups in high-risk fields attract value-added investors.
It is a response to the ongoing slowdown in seed-stage funding, along with the average annual decrease of about 25 per cent since 2017 in the number of startups being formed in Israel, the IIA noted.
This negative trend has intensified against the backdrop of the coronavirus crisis, it added.
As part of the plan, grants will be given to startups that join up with veteran seed-stage investors interested in initial investment in these companies.
Thus, companies that take part in the programme will be able to receive a grant worth 40 per cent of the investment round of up to 3.5 million shekels.
Higher grants worth 50 per cent will be offered to startups located in Israel’s geographical periphery or whose founders come from populations under-represented in the hi-tech industry.
This way, the investors will have to invest only 50 or 60 per cent and will be given an option to purchase the remaining shares within three years.