State to grant large high-tech cos NIS 70m for crazy R&D

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The Israel Innovation Authority aims to encourage high-risk investment in developing technologies.

The Israeli Innovation Authority is developing a new track for supporting high-risk research and development ventures led by large high-tech companies, defined as companies with annual turnover of over $100 million.

The Innovation Authority plans to allocate NIS 70 million for supporting long-term ventures for developing innovative generic technologies on which future lines of products in various sectors can be based.

The track is intended for the 20 Israeli high-tech companies with sales turnover of over $100 million a year and R&D investment of at least $20 million, or which employ at least 200 workers directly in R&D.

Companies that fulfill the requirements set by the Innovation Authority can submit a request for financing and receive up to 50% of the proposed venture's expenses. The Innovation Authority made it clear that a company receiving such support will not be obligated to pay the state royalties on any new technology developed in the plan, and can develop a product from the technology. At the same time, the law requires that the know-how obtained from this program be registered in Israel, so that the state can profit in the long term from the resulting tax revenues.

Innovation Authority growth division acting director Sagi Dagan told "Globes" that the new program reflected the Innovation Authority's wish to encourage the continued growth of Israeli high-tech companies. She said, "In contrast to the assistance tracks granted by the Innovation Authority to small high-tech companies or startups, this program focuses on ventures that are smaller, but which have very high risk, and we know that a large proportion of them will fail, despite the assistance. Were ventures with no possibility of failure involved, the companies would not need us. This type of R&D is therefore called "crazy R&D." Even if a venture is unsuccessful, know-how will be accumulated and will stay within the company, which will apply it in the future."

Innovation Authority CEO Aharon Aharon said, "The maturing of the industry and the growing aspiration towards independent growth are increasing the need for a change in the paradigm for financing high-tech activity in Israel. We are now providing new financing tools designed to solicit technologies likely to bring us tomorrow's products. Cooperation between government and the high-tech industry at this stage is essential in order to fully utilize the assets accumulated by the industry, expedite its maturation trends, and leverage the benefits for the good of the Israeli economy."

Aharon believes that the assistance plan for high-risk generic R&D will give companies a future technological and competitive advantage that will make it easier for them to penetrate new markets.

Innovation Authority figures show that 20 high-tech companies in Israel have a sales turnover of at least $100 million, and at least 50 have turnover of $50 million or more. The Innovation Authority's new track is aimed at companies the size of Verint Systems Inc. (Nasdaq: VRNT), Mobileye(NYSE: MBLY), Wix.com Ltd. (Nasdaq: WIX), SolarEdge Technologies Inc.(Nasdaq:SEDG), Taboola, Outbrain Inc., Celeno, and others. "The bottom line of such companies will not be changed by the grant they get from the Innovation Authority, Dagan says. "Nevertheless, we are allowing companies to take a big risk in a specific laboratory with a selected and focused group of researchers in order to develop future technologies that will mature, even if only after a decade. It will make it easier for high-tech companies to look at a distant strategic horizon."

Israel Association of Electronics & Software Industries director general Doron Kurtz told "Globes," "Only an emphasis on innovation will maintain Israel as a real high-tech country, and this innovation can be brought about only through academic research and long-term research within the companies themselves."

Published by Globes [online], Israel Business News - www.globes-online.com - on July 11, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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IT  image: Shutterstock
IT image: Shutterstock
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