Israel innovation authority launches new incubators programme

Announcing the winners for the operation of five new technology incubators in the following fields: Health with an emphasis on Bio-Convergence, Climate, Foodtech, and Space

The incubators are expected to support the establishment of about 150 innovative and disruptive startup companies in sectors that will further develop Israel's innovation ecosystem, at a total budget of about NIS 500 million.

The technology incubators provide assistance and support to startups in their initial stages; they are established and operated by both experienced venture capital firms and local and international corporations, which provide significant added value and support for the startup companies and budding entrepreneurs.

13 groups took part in a competitive process, in which the Israel Innovation Authority selected five groups to operate new technology incubators within a year. The winning groups include global corporations such as pharma companies, Bristol Myers Squibb, Becton Dickinson, Kyocera, Corning, CBG group, Eren Industries, and more.

The submitted proposals focused on a variety of areas with high risk such as: climate, health-tech, foodtech, space and deep tech. The selected incubators are expected to establish about 150 new innovative technology companies within the next five years.
In order to meet their obligations, the incubator franchisees, will provide funding and investment pledges for the incubator that exceed NIS 150 million.

Orit Farkash-Hacohen, Minister for Innovation, Science and Technology: “The Israeli high-tech industry is thriving and breaking records. The role of the government is focused on two issues: to be a catalyst for innovation and for the economy as a whole and to focus on areas in which the risk is high and the innovation is ground-breaking. This morning the Israel Innovation Authority selected five outstanding groups who will bring welcome progress in developing areas that constitute the future of Israeli high-tech. The spread of Israeli government's investments in a wide range of technological areas will expand the solid foundation of high-tech in the long run and will allow the Israeli economy to grow and expand to additional important directions. I am pleased that the final selection ranges over multiple and diversified fields starting with climate all the way to space and other important sectors, therefore resulting in the growth of numerous new companies for the benefit of the entire economy.” 

Dr. Ami Appelbaum, Chairman, Israel Innovation Authority: "The proposals presented by the various bidding groups were excellent and varied. The groups included global corporations and leading local players, who can bring extensive added value to the new startup companies, and which include an impressive number of representatives from Israeli academia. The sectors in which the incubators will operate cover fields highlighted by the Authority's strategy, in a way that will expand Israeli high-tech's diversification. This is highly significant for increasing the number of new startups and creating additional growth engines for the local economy. These sectors still lack a substantial deal flow and therefore the expectation is that the incubators will be proactive in establishing companies, which will mostly be based on the commercialization of knowhow from academia, and which will be able to develop and expand with the help of the incubator, thus creating a supportive ecosystem for these sectors."

Dr. Appelbaum further added: "A large number of the proposals focused on sustainability areas – climate, food-tech and health-tech with an emphasis on bio-convergence, where there is a need to create a supportive ecosystem, by incorporating needed knowhow and expertise, and by bringing venture capital investors to further support the companies, and most importantly in strong human capital."

The goal of the new technology incubators is to promote investment in the early stages of technological projects by creating a support and assistance infrastructure that will enable turning innovative technological ideas, which are in their initial stages, into advanced startup companies that will be able to raise additional funding. Furthermore, they are intended to promote technological entrepreneurship and the commercialization and transfer of disruptive and innovative technologies from academia to industry in areas that are both complex and pose high risk factors; to strengthen Israel's technologically innovative ecosystem in seed investments and to assist startups working in unique and complex technological industries; to create and test their products, perform technological feasibility tests, pilots and more.

The startup companies that will be established by the incubators will be entitled to a budget of up to NIS6.5 million per project. This includes a 60-85% grant from the Israel Innovation Authority as well as complementary funding from the incubator's operating companies. Moreover, the companies will benefit from the incubator's support in early stages as well as continued investment via dedicated investment funds established by the incubators and made available for the incubated companies. Furthermore, the companies will benefit from the incubator’s teams as well as their shareholders, who will provide technological and business guidance, connection to experts from the entire value chain and additional strategic local and international investors, as well as access to lab infrastructures.

The Israel Innovation Authority selected five franchisees to establish five incubators. Some of the franchisees include shareholders who operated the Authority's technology incubators in the past and are expected to operate the new incubators using a somewhat different shareholder composition and with a specific focus within the specific area of operation:

1. The Kitchen Hub 2 – was selected to operate a foodtech incubator, with an emphasis on alternative proteins, fermentation, and cellular agriculture. It aims to establish a designated laboratory's infrastructure for fermentation in order to promote innovative companies in this segment. The incubator is owned by the Strauss group in collaboration with global strategic partners and leading investment funds, such as Unilever, Givaudan, Ambrosia Novozymes, and Temasek. The Strauss Group, through The Kitchen Hub 1 incubator, has operated extensively in food-tech and is planning to expand its operation in this sector by joining forces with new partners to strengthen and promote the ecosystem in these areas and by investing in the establishment of innovative and disruptive companies.
2. Netzero Ventures – Selected to operate a climate incubator with an emphasis on hydrogen, reducing emissions in transportation and construction, in energy creation, and water treatment. The incubator features a highly effective synergy between venture capital firms and leading global corporations: DK Innovation, Total Energies Carbon Solutions, Eren Industries, IP Innovative Power, Blue Minds, BGV, OSEG Group. The climate sector is of high importance and the  incubator goal is to establish innovative startup companies that will be based on the commercialization of knowledge gained in the academia, and which will have access to the expertise and knowhow of the incubator's shareholders,  as well as to further investments aimed at creating successful companies and strengthen the Israeli climate ecosystem.
3. Incentive Incubator NG – Selected to operate an incubator in the fields of health-tech as well as precise and personalized medicine. The incubator consists of a consortium with high synergy among its partners, led by Peregrine Ventures VC, and leading global pharmaceutical and medical devices companies, Bristol Myers Squibb, Becton Dickinson, Elbit, Israeli medical centers and academia. The incubator aims to establish companies that will develop disruptive and groundbreaking technologies for future medicines that combine engineering and biology that will help identify, monitor and treat various health challenges.
4. Space & Earth – Selected to operate a space and deep tech incubator with an emphasis on applications in space as well as on earth. The incubator consists of a consortium characterized by highly effective synergy among the leading companies specializing in this segment and investment funds such as Croning, Blue Sky Capital (Samtec), Kyocera, Oceancap, Rhodium, Moon2Mars Ventures and SpaceCom. The incubator will promote the establishment of new companies with dual use technologies and will work to make the knowhow, expertise, and further investments accessible to the incubated companies as well as to establish Israel as a world leader in this sector.
5. NGT Healthcare 2 – Selected to operate a health-tech incubator with an emphasis on Bio-Convergence. The incubator includes an excellent consortium of venture capital firms and leading investors, such as Falcon Group, Arkin, and IBI, as well as representatives from academia. This incubator continues the operation of NGT Healthcare 1, and now the focus will be on companies that develop technology for the future of medicine and that combine biology and engineering with breakthrough solutions for forecasting, identification, and treatment. Moreover, the incubator, which did a lot to promote the entrepreneurial ecosystem in the Arab sector, plans to focus at least 50 percent of its operation in promoting innovative technological projects by Arab sector entrepreneurs, and because of this Arab sector investors are among the new incubator's shareholders.

The winning groups will enjoy a five-year franchise (with an option to extend for an additional three years) in which they will establish high-risk and disruptive startups and provide financial and significant added value to them. The Innovation Authority will help lower the risk by providing grants to the established startup companies. The winning groups will also be able to establish an R&D infrastructure with a budget of up to NIS 4 million, with the Authority funding 50 percent of the investment. This infrastructure will be put to the free use of the incubated companies and additional companies within the ecosystem.

This article was first published on 22 February by ISERD.