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

CO-OPERATION

Why?

How?

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;

Thank Thank You for You for Your Your AttentioAttentionn