THE NATIONAL POLICY
FOR ENCOURAGING
ISRAELI HIGH-TECH
THE NATIONAL POLICY
FOR ENCOURAGING
ISRAELI HIGH-TECH
Yair Amitay
Managing Director
Jaffa Oranges vs. SoftwareJaffa Oranges vs. Software(1992-2001)(1992-2001)
0
500
1000
1500
2000
2500
3000
3500
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
exports ($millions)
CitrusSoftware
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
200220012000199919981997199619951994199319921991199019891988
Industrial Export by technological Industrial Export by technological intensityintensity(In million $)(In million $)
Low-tech Med-tech High-tech
Why Israeli High-tech?
• High-Tech is over 50% of industrial production.
• Over 50% of industrial export are High-Tech.
• World highest per-capita science graduates and scientific workforce: 140 per 10,000
• R&D spending 4.5% of GNP - among the world’s highest.
• Civilian spin-offs of defense technologies.
• Global JV’s takeovers and international alliances.
00.5
11.5
22.5
33.5
44.5
5
Expenditure on Civilian R&D as a percent of the
GDP in Israel and in OECD Countries(2001)
OCS Industrial R&D Programs
Generic R&D
Magnet
Magneton
ISERD(Eu FP6)
Na t
ion
alIn
tern
atio
nal
Pre-Seed
Technological Incubators
Nofar
Tnufa
Eureka
Bi-national Funds
Bi-national Agreements
Seed Fund
IndustrialR&D Fund
Competitive R&D
MATIMOP
OCS Support Programs Along theInnovation Process
International
programs
INCUBATORS
Nofar
EU FP6
Applied academic research
MARKET PROXIMITY
RISK
MAGNET
Competitive R&D
Seed Fund
Tnufa
14
Technological Incubators
• 23 Incubators • Grants are 85% of the approved expenses,
up to 350,000$.
• Duration: up to 3 years.
MAGNET - Generic R&D and Technology Transfer Support
• Collaborative pre competitive generic technologies.
• Grants: 66% of approved budget.
• Over 5 participants per project )Industry &
Academia(
16
International Technological Cooperation - Why
• Sharing the risk of R&D.
• Strategic partnerships for
mutual benefit.
• Access to new technologies.
International Cooperation in R&D
KORIL - with KOREA
CIIRD - with Canada
SIIRD - with Singapore
Bi-national FundsBi-national Funds::
BRITECH - with the UK
BIRD - with the U.S.A
International Cooperation in R&D
BI-national R&D Support Agreements:
The Netherlands
Spain
BelgiumFrance
Portugal
Italy
IrelandSweden
Finland
Germany
China
India
International Cooperation in R&D
• European Commission Sixth Framework
RTD Program
• EUREKA
Multinational AgreementsMultinational Agreements::
Bi-National and Multi-NationalIndustrial R&D Projects
0
5
10
15
20
25
30
35 Total 65 Total 102 Total 152
No. projects
EurekaBi-nat’-Europe
Bi-nat’ FundsAsia
Bi-nat’Asia
New New New New
Ongoing Ongoing Ongoing Ongoing
2002
2003
2004 Plan
National and International programmes Yearly Funds Available
• Industrial R&D Projects $300M
• Magnet $40M
• Technology Incubators $30M
• Tnufa $ 3M
• EUREKA $16M
• Israel – Sweden )SIBED( $1.5M
• Israel-Italy $1.5M
National and International programmes )cont.( Yearly Funds Available
• BIRD-USA-Israel Bi-National R&D Foundation 14 $M
• CIIRDF-Canada- Israel Industrial R&D Fund 1 $M
• Britech-United Kingdom- Israel Industrial R&D Fund 2 $
M
• SIIRD-Singapore -Israel Industrial R&D Fund 2 $M
• KORIL – Korea-Israel Industrial R&D Fund 2
$MEuropean 6th Framework programme $4000M
OCS Grants by Technological Sectors
Other: 4%
Communications:
36.5%Software:
17.3%
Chemicals: 2.6%
Electro-Optics: 8.1%
Electronics: 9.1%Life Sciences:
22%
20030320
VC INDUSTRY in ISRAEL
• Highest VC investments as share of GNP:1.3% during 1998-2000 (5.4 $B)
• High Share invested in early stage firms (over 0.6%
against 0.1% in most OECD countries).
• Large Pool of SU; highest number of IPOs in Nasdaq
after the US & Canada
• Strong participation of foreign (limited) partners
• A distinctive targeted VC industry policy was adopted
(Yozma Program, 1993-8)
YOZMA: Objectives and Targets
•Objective: Creation of a VC ‘Industry’ rather than stimulating a pool of VC.
•Specific Design targets
1. Attracting high quality foreign & domestic agents;
2. Strengthen collective learning mechanisms;
3. Triggering evolutionary selection processes
)strategies, organization; etc(
YOZMA: Objectives and Targets (cont).
4. Lead Coordination among agents;
5. Send a strong coherent signal about the potential of the cluster and of the commitment of the Israeli Government;
6. Achieving critical mass of capital and capabilities;
THE YOZMA PROGRAMSpecific Design Features-1
•A Government Venture Investment Component-100M$
• 80% Fund of Funds investment:10 private/hybrid daughter “Yozma Funds” typically
with a 40% Government Share in each fund (8M$)
• 20% direct investments in SU•Limited Partnership form of VC organization;
•Incentives to the Upside(call option on Govern. Shares)
THE YOZMA PROGRAMSpecific Design Features-2
• Selection of management teams • Collective Learning: reputable foreign limited
partners; links among Yozma Funds, Interactive processes, etc.;
Notes on Government Venture Contribution• Scope leading to Critical Mass: triggered a self-
sustaining cumulative process engulfing the entire cluster;
• Catalytic Program: limited period of incentives; privatized in 98;