Ministry of Industry, Trade & Labor Office of The Chief Scientist

TECHNOLOGICAL INCUBATORS PROGRAM

By: Yossi Smoler Program Director

[email protected]

Government Involvement

• • Market Failure

:

• Early stage, high risk, innovative technological enterprises, can not raise money from the private sector.

Government response : • Technological Incubators Program

What is a Technological Incubator?

Organization that support early stage, 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?

• • • • • • • 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

• • • • • Average budget of project: $500K • 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

• Franchise Term : 8 years with performance based milestones • Tender : 1 year before Franchise end date

Technological Incubators Program

Technological Incubators Program (Cont.)

Program Milestones

• • • • • • •

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

• • • • • • • 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

• • • 24 incubators • distributed across Israel: 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 Hadera : Yozmot Netanya : Targetech Tel Aviv : Lab-One & Rad biomed Ashqelon : ATI Kiryat Gat : Xenia Ofakim : OHV Beersheba : Ma’ayan Ventures (Omer Park) Dimona : Rotem Ventures Sde Boker : Iris Ventures

Tel-Chai Haifa Tsemach Gush Segev Hadera Netanya Katzrin Nazareth Migdal Ha’emek Tsemach Yoq’neam Tel Aviv Ariel Ashqelon Jerusalem Kiryat Gat Kiryat Arba Ofakim Beersheba Arad Dimona Sde Boker

Upper Galilee : Meytav (Tel-Chai) Golan Heights : Meytag (Katzrin) Kinneret : Kinrot (Tsemach) Gush Segev : Misgav Nazareth : NGT Migdal Ha’Emek : Ofek Yoq’neam : Naiot Ariel: Incentive Kiryat Arba : Mofet B’Yehuda Jerusalem : JVP, Van-Leer & Bioline Arad : Meizam Arad

Electronics 4% Incubated Companies - Fields of Activity December 2011 Cleantech 14% 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 5,100 0 1992 21,600 100 1993 44,980 7,950 1994 68,560 19,045 1995 99,560 52,026 1996 130,660 90,580 1997 162,160 152,652 1998 192,760 248,729 1999 222,591 342,260 2000 254,158 645,705 2001 286,308 762,910 2002 313,440 847,140 2003 339,460 932,903 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

• • • 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.)

• • • 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