The Information Technology Landscape in Israel

 

 

IT Financing

 

As noted in the Government Policies section, the active support from the Israeli government to the R&D for IT industries has been paramount in the success and vast growth of the Information Technology environment in the nation. Please refer to the Government Policies sections for details on government programs supporting development.

Venture Capital

    In the late 1970’s Israeli firms began t o look to US firms for funds to begin new ventures in high technology businesses. This led to a new wave of venture capital flows beginning in the late 1980’s. The venture capital industry provided enormous financial support for the Information Technology environment. The following chart indicates the areas in which investors have heavily contributed to the development of the IT industry.

 

Source: (50)

 

    Israel now has  over 80 companies, most of them in high technology, Israel ranks third behind the U.S. and Canada in number of listings on American stock exchanges. The following link is a list of Venture Capital Firms that are currently investors in the Industry, the list has been comprised by Wireless, "Israel's leading wireless information portal." (51)

    The Venture Capital industry has grown rapidly in the past decade in 1991 Israel claimed only one venture capital fund, while today there are more than 75 funds investing over $2.8 billion. (49). There is extensive interest from both  US- and European-based investors which can be attributed to the growth.

        In recent news, after experiencing a recent steep decline in investor funds in the region, 3Q01 venture capital funds increase 24% with a US$265.9M quarterly total. (50)

    There are several U.S.-Israeli Government funded organizations which provide financing for joint U.S.-Israeli R&D and research projects which finance R&D projects in selected high-tech areas Direct loans are available to projects sponsored by U.S. small businesses.(26)

U.S.-Israel Science and Technology Commission

 

    Established in March 1993 to encourage high-tech industries in both countries to engage in joint projects; foster scientific exchanges between universities and research institutions; promote development of agricultural and environmental technologies and assist in the adaptation of military technology to civilian production.

 

    In 1993, the United States and Israel each committed $5 million annually for three years, for a total of $30 million. The American contribution was made without requiring additional appropriations. Approximately half of the U.S. money comes from the Department of Commerce, with the other half coming from the Departments of Agriculture, Energy, Defense, State, Health and Human Services, and the Environmental Protection Agency.

 

    The Commission is co-chaired by the U.S. Secretary of Commerce and Israel's Minister of Industry and Trade. The Commission includes representatives from U.S. and Israeli government agencies and ministries (the Environmental Protection Agency, the Departments of Agriculture, Energy, Health and Human Services, State and Defense and their counterpart Israeli Ministries). The Commission also has a joint high-level advisory panel comprising private sector representatives from both countries, including leaders from academia and industry. The commission meets twice a year, once in the United States and once in Israel. It is administered on a day-to-day basis by the Commission's Executive Director at the U.S. Commerce Department's Technology Administration.

 

    The Commission has established the U.S.-Israel Science and Technology Foundation, a nongovernmental organization to disburse grants funded jointly by the U.S. and Israeli governments and following a single set of rules and regulations—agreed upon by both countries—for making grants.

Source: U.S.-Israel Science and Technology Commission

BIRD Foundation

    Another key financial contributor to the Israeli IT Industry has been the BIRD Foundation. The BIRD foundation pairs up US and Israeli firms in order create joint projects in IT development, manufacturing, marketing and support projects for innovative projects.

    Projects are classified into two different levels “mini” and full scale projects funding is distributed appropriately for both.

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Mini Projects are those with budgets less than US$ 200,000, the BIRD foundation grants these projects with up to US$100,000  or a 50% cost share of the entire projects. These mini projects are general for small innovations and require a proposal for review in order to receive funding. Consideration for mini projects is much less stringent than the larger full scale projects.

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Full Scale Projects have average budgets of  US$ 1.2M and last an average of 12-15 months. In order to receive BIRD funding innovators must submit detail proposal to the foundation, which is then individually evaluated, and when approved BIRD provides 50% of the budget. In some cases more funding is granted for innovations in areas that have demonstrated that larger budgets are needed.

BIRD is funded by a large private endowment as well as receives substantial support from both the United States and Israeli governments. (46)

 
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