Israel to fund angel investor clubs to boost hi-tech amid the war

The Israel Innovation Authority has announced that it will allocate around NIS 9 million to establish three ‘angel clubs’ dedicated to investing in start-ups to help fortify Israel’s hi-tech sector during war.

Under the new scheme, private investors both in Israel and abroad are invited to form groups wishing to fund young Israeli tech startups, known as angel investor clubs. Individual clubs will be able to apply for the grant, and successful applicants will each receive 900,000 shekels per year for three years.

The investors will also be encouraged to offer the startups their expertise on such legal and financial matters.

According to the IIA, angel investors play a crucial role in bringing on new startups and advancing Israel’s renowned high-tech sector, which has seen a decline in angel activity in pre-seed and seed stage investments in Israel of late. Presently, individual angel investors dominate the Israeli landscape, and the formation of organised angel clubs is a rarity.

While geopolitical uncertainties may increase investment risks, the IIA notes that historical analyses of the ecosystem after past conflicts reveal significant growth and success in the aftermath.

Ofir Akunis, Israel’s Minister of Science and Technology said: “Israeli high-tech industry is the main growth engine of the Israeli economy for the past three decades. As such, it is imperative, even in times of war, to continuously promote and develop this industry at all costs. Government support is needed in order to sustain our leading position at the top of the international high-tech market. We ensure this by first, infusing NIS 400 million and now by budgeting the operation of the Angels’ Clubs.”

The initiative is the latest in a series of financial steps taken by the IIA since the start of the war with Hamas to help shore up the high-tech sector. Last month, Finance Minister Bezalel Smotrich announced a substantial expansion of the budget allocated to the Israel Innovation Authority’s Fast-Track program, increasing it fourfold from NIS 100 million up to NIS 400 million, to provide support to startups facing financial difficulties as a result of the ongoing hostilities.

Dror Bin, CEO of the Israel Innovation Authority said: “Following the plans that the Innovation Authority is leading these days for emergency aid to existing companies through the Fast-Track program, there is also a need for additional tools aimed at investments in ventures in their early stages, stages in which the role of private investors is critical for the establishment of companies in Israel, both in terms of financing and in terms of the great added value that many of these investors can provide to entrepreneurs at the beginning of their journey.

“We witness the need to strengthen the issue of investments at these stages in ventures that have technological depth and high innovation. This is a complementary tool in a comprehensive tool-set that we have been upgrading in recent months. Among them is a law to encourage a knowledge-intensive industry, doubling the grant amount provided through the Tnufa fund; the Fast-Track and other new programs that will be launched in the near future, which aim at private/public risk sharing in the early stages of start-up companies with high technological innovation.

“The Innovation Authority will continue to provide solutions for the high-tech industry in routine and emergency situations to help entrepreneurs establish and grow ground-breaking companies that will form the backbone of the future of Israeli high-tech.”