Israel’s government has initiated a novel fund to incentivize institutional investors to escalate investments in technology enterprises, as announced by the Israel Innovation Authority on Sunday.
The technology sector stands as a pivotal driver of Israel’s economy, contributing nearly 20% of its output, employing 12% of its workforce, generating over 50% of its exports, and supplying 25% of its tax revenue.
Finance Minister Bezalel Smotrich emphasized, “The high-tech sector is a central and significant pillar of the Israeli economy, and we must ensure diversity in its sources of funding.”
The newly introduced Yozma 2.0 fund aims to diversify funding sources by enticing insurance companies, pension funds, and other institutional investors to bolster their investments in Israeli tech-focused venture capital funds over the next 20 months.
With a collaboration between the innovation authority and finance ministry, the fund will allocate $160 million of public funds to support venture capital funds that back Israeli tech enterprises.
As part of the program, the Israel Innovation Authority pledges to contribute 30 cents for every dollar of institutional investment and may waive its share of returns to boost returns for participating institutions.
Alon Stopel, chairman of the authority, highlighted the initiative’s focus on nurturing early-stage Israeli tech firms, particularly those in deep technology sectors, ensuring a thriving funding ecosystem for startups in the years ahead.
