Ministry of Industry, Trade & Labor
Office of The Chief Scientist
TECHNOLOGICAL
INCUBATORS
PROGRAM
By: Yossi Smoler
Program Director
Yossi.Smoler@ocs.moital.gov.il
Government Involvement
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Market Failure:
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Early stage, high risk, innovative technological
enterprises, can not raise money from the
private sector.
Government response:
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Technological Incubators Program
What is a Technological Incubator?
Organization that support earlystage, highly-innovative projects,
that are too risky for the private
sector investments
Incubator’s Goal
Developing innovative
technological ideas into start-ups
and leading them towards first
round investment.
What does an Incubator offer to entrepreneurs?
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Appropriate facilities and infra-structure
for R&D.
Financing.
Central administrative services (secretarial,
accounting, legal, commercialization).
Management & Technical assistance.
Professional & Business guidance.
Connectivity to potential customers,
partners and investors
Inter-tenant synergism.
Government Support
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Average budget of project: $500K
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Government grant: 85% of budget
Incubator’s investment: 15% of budget
Payback: 3% royalties from revenue
Support duration: 2 years
Extended support to Biotech/Pharma &
Clean-Tech projects
Annual Government Budget to the Program:
~$50M
The Incubators Franchise Model
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Franchise Term: 8 years with performance
based milestones
Tender: 1 year before Franchise end date
Technological Incubators Program
Technological Incubators Program (Cont.)
Program Milestones
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1991: Establishment of program
2002: Initiating the Privatization Process
2005: Establishing a designated biotech incubator in
Jerusalem
2008: Establishing 2 technology based industrial incubators
in Haifa and Arad
2010: End of Privatization Process
2011: Reforms in the basic models of the Incubators Program
2012: Implementation of the tendering process for selecting
new licensees.
Project Criteria
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Innovation and uniqueness.
Early stage, high risk.
Market potential.
IP protection
Management team
Feasible with available resources.
Individual initiative.
Projects Acceptance Process
1. Approaching an incubator.
2. Incubator’s assessment.
3. Approaching the Technological Incubators
Program.
4. Program’s evaluation.
5. Decision of the Incubators Committee.
6. Initiating the project.
Volume of operation
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24 incubators distributed across Israel:
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22 technological incubators
1 technology based industrial incubators
1 biotech designated incubator
Approximately 8 projects per incubator
Every year 70 – 80 new start-up companies
are established in the incubators, ~90% of
them complete the incubator term
Incubators Location
Haifa: Technion, LN &
HiCenter
Tel-Chai
Tsemach
Katzrin
Gush Segev
Haifa
Nazareth Migdal Tsemach
Ha’emek
Hadera Yoq’neam
Netanya
Hadera: Yozmot
Netanya: Targetech
Tel Aviv: Lab-One & Radbiomed
Ashqelon: ATI
Kiryat Gat: Xenia
Ofakim: OHV
Beersheba: Ma’ayan
Ventures (Omer Park)
Dimona: Rotem
Ventures
Sde Boker: Iris Ventures
Tel Aviv
Ariel
Upper Galilee: Meytav
(Tel-Chai)
Golan Heights: Meytag
(Katzrin)
Kinneret: Kinrot
(Tsemach)
Gush Segev: Misgav
Ashqelon
Jerusalem
Kiryat GatKiryat Arba
Nazareth: NGT
Migdal Ha’Emek: Ofek
Ofakim
Beersheba
Arad
Dimona
Sde Boker
Yoq’neam: Naiot
Ariel: Incentive
Kiryat Arba: Mofet
B’Yehuda
Jerusalem: JVP, Van-Leer
& Bioline
Arad: Meizam Arad
Incubated Companies - Fields of Activity
December 2011
Cleantech
14%
Electronics
4%
Medical Devices
39%
ICT
31%
Biotech & Pharma
12%
Government Investments VS. Private Funds
Invested in Incubator Companies (Aggregate)
1991 - 2012
Thousand Dollars
3,750,000
3,500,000
3,250,000
3,000,000
2,750,000
2,500,000
2,250,000
2,000,000
1,750,000
1,500,000
1,250,000
1,000,000
750,000
500,000
250,000
0
Cumulative Government Invesments
Cumulative Private Funds
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
5,100
21,600
44,980
68,560
99,560
130,660
162,160
192,760
222,591
254,158
286,308
313,440
339,460
0
100
7,950
19,045
52,026
90,580
152,652
248,729
342,260
645,705
762,910
847,140
932,903
2004
2005
2006
2007
2008
2009
2010
2011
2012
364,673
396,126
428,915
461,760
509,389
556,419
600,803
643,980
690,508
1,127,845 1,303,012 1,741,701 2,174,698 2,544,406 2,867,147 3,154,910 3,432,141 3,564,567
Highlights
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The incubators program is the primary
“Manufacturer” of start-ups in Israel
The incubators program is the only
opportunity for early-stage, high-risk
innovative projects that are not yet able to
raise money from the private sector
The incubators program is an important
source of deal-flow for the venture capital
industry
Highlights (Cont.)
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The incubators program is especially
important in times of economic crisis
The incubators program has a significant
impact on the life-science industry in Israel
The incubators program has a crucial role in
developing an entrepreneurship culture in
Israel