The Israeli government has decided to establish four funds for investment in high-tech companies, in an effort to wrest the benefits of locally developed products from the dominance of foreign investors, Globes reported on Sunday.
Currently, most of the capital invested in Israeli high-tech start-ups comes from foreign sources; 96 percent of the money flowing into the Israel venture capital industry derives from overseas. As a result, some of the most successful companies, Mobileye and NeuroDerm for two recent examples, are acquired by foreign entities.
To begin to reverse the trend, the Ministry of Finance, the Israel Securities Authority, the Tel Aviv Stock Exchange (TASE), the Ministry of Justice, and other agencies have worked together to draft legislation to create a framework for local investment.
The funds will be traded on the TASE, and will be granted limited state protection against losses and guarantees for raising credit.
Partners in the fund include Eldad Tamir from the Tamir Fishman investment house, former Intel executive and high-tech entrepreneur David Perlmutter, Infinity Private Equity founder and managing partner Amir Gal-Or, and Evergreen Venture Partners general partner Adi Gan.
Perlmutter described it as “a real revolution. In effect, the new plan will develop a new investment instrument for each and every one of us, for any amount we want, whether directly at our discretion, or through managed portfolios, mutual funds, pension funds, provident funds, and so on. This measure will also constitute a new resource for the Israeli high-tech industry, which currently relies to a large extent on foreign resources.”
The new system will offer an unprecedented opportunity for Israeli’s to share in the success and profits of home-grown industry. According to Tamir:
“Through this plan, people are getting an opportunity to benefit from Israeli high tech’s prosperity, with partial support and backing from the state. Up until now, after holding an IPO on Nasdaq, successful Israeli technology companies, and there are plenty of examples, provided no opportunity for the broad swathe of investors from Israel, who were prevented by bureaucratic reasons from investing on Nasdaq. Now, with the new program, these companies will also have an opportunity to be listed on the TASE, and as a direct result, a good option is also being opened for both companies and investors in Israel.”