"Israel's incubator is the most advanced in the world." Arnon Perlman, Consul General of Israel in Shanghai, said in a recent event.
The government firmly supports the “Death Valley†in the early days of entrepreneurial enterprises, and bears the greatest risks without sharing the benefits. This is one of the most indispensable essentials of Israeli innovation. It makes high-tech incubators and venture capital itself become the two major Israelis. The pillar industries have further promoted the development of other industries, making the small-scale country of 8 million people on the NASDAQ company second only to the United States.
“When I came to China, I found that I didn’t really need to use the old path of Israel to innovate. Now everyone says that the government does not need to interfere too much with the company and want to market. Israel certainly needs marketization, especially For start-ups, Israel’s first venture capital is government, and the government must innovate. If innovation fails, what to do, we talk about failure before, this balance is also very important.†SIT system innovation thinking company's joint founding Mann and global president Amnon Levav said this in a forum called "Dialogue Israel: Decoding Innovation Genes."
Government pushes angel financing
When the Israeli government hoped to develop through high-tech transformation in the 1980s, many Israeli officials visited the United States. But they found that Silicon Valley's successful experience is hard to replicate in Israel. The biggest problem is that Silicon Valley's high-tech industry can achieve great development. There are four major investment banks in Silicon Valley and a developed private investment market. At the time, there was no venture capital industry in Israel.
Today, Israeli incubators receive more than twice as much private investment as the government's initial investment. Israel's venture capital investment exceeds the sum of Europe, France and Germany.
To achieve this change, Israel's first step is to help companies survive the “Death Valley†of entrepreneurship – according to international statistics, more than 95% of high-tech innovative companies will die in the first three years.
Wang Qi, chief operating officer of Israel's Schlatt, told reporters that the Israeli government has done two things: a technology incubator project was established in 1991, and a venture capital fund project was established in 1992.
The first project has a principle of “risk sharing, revenue not sharingâ€. The government provides two years of soft loans for companies that enter the incubator. If the company fails, it will not need to repay it. It has succeeded in bringing interest and returning the government loan with very low interest. The government can use the money at this time. To support new businesses.
“Soft loans actually account for 85% of the operating expenses of these start-up companies. They have done accounting. In about two years, a high-tech enterprise will need about 800,000 US dollars from creation to incubation, of which 100,000 private capital will be invested. ~150,000 US dollars, and the government will provide more than 600,000 US dollars in soft loans." Wang Qi said.
The founder of an Israeli venture capital fund said that Israeli incubators are not for profit, they are usually affiliated with famous universities, local administrative regions or industrial groups. Their office space and administrative expenses are paid by the government through the Office of the Chief Scientist (OCS), and each incubator receives an annual US$200,000 grant from OCS to support its operations.
“The unique thing about Israel is that we are more about those crazy ideas. We are helping them turn this ideal into reality and let them grow through a government-funded platform.†Israeli Consul General in Shanghai Arnon Perlman told reporters that China The startup incubator should go back to the front end and return to the stage where the enterprise product may not be formed but only a new idea or concept. "What I have seen in China at the moment is more of an incubator than an incubator."
The founders of the above-mentioned funds said that in the past fifteen years, the number of Israeli venture capital funds has shrunk from hundreds to 20, and most of these funds have preferentially invested in companies in the seed period, and Israeli venture capitalists have invested in the initial stage. Equivalent to half of all investments. “A large number of investors are only targeting the initial stage of R&D, in order to create not only an accomplished company, but also a technology platform that other high-tech companies can acquire in a few years. This is limited to the initial stage of financing. Ways are becoming more common, raising funds to angel investors or people through incubators."
Encourage incubator privatization
However, the government's soft loans can only help companies solve the funding problems of the first two years of the start-up period. The sustainable development of start-ups also benefits from the privatization of Israeli incubators.
The Israeli government launched the Yozma plan: state funds are allocated by private venture capitalists, and decisions are not interfered by the state – equivalent to the role of the government as a “parent fund†and the seed stage of direct investment in technology startups.
"The Yozma fund and the soft loan mechanism are the same, sharing risks, but not sharing revenue." Wang Qi said that the Israeli government has probably spent $32 million, and he has attracted some large funds from Europe and the United States to come to Israel.
"If you have $12 million, I will match you. If the investment is successful, the company will go public, just buy the dividends and buy them. All the hundreds of times will be returned to you. If the investment fails, I will help you share the risks and not hold you accountable." Wang Qi said that through such an approach, many well-known funds, including the United States, have been attracted to Israel for gold mining, and more than 100 venture capital funds have been established. Formed more than 10 billion venture capital industry.
Since then, incubators have been privatized and turned into support by experienced professional investors who have the ability to provide “incubating†companies with strong connections in the business world.
“It is far from being able to replace private financing, but it can stimulate these investments, organize them rationally, and then withdraw from them. The plan is to attract capital, never compete with private companies, but facilitate them in taxation. "The above-mentioned Israeli venture capital fund founder said.
This kind of innovation does not even rule out cooperation with large multinational companies. As an Israeli innovation company, SIT has been helping companies to leverage their core competencies and existing resources to grow their businesses internally, the so-called “in-box innovationâ€. Amnon Levav believes: “When it comes to innovation, they refer to researchers who are wearing white coats. In addition to technology, there are innovations in business models and processes. Innovation is a way of thinking. It doesn't need to be deliberate."
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