Israel Innovation Authority: The Future Starts Now

It is well known that Israel’s economy relies heavily on the high-tech sector’s remarkable accomplishments. Indeed, despite its tiny population, Israel is a world leader in many high-tech industries and has the highest number of start-ups per capita. But the 21st century is extremely dynamic, and in order for Israel to continue to flourish, the local ecosystem cannot rest on its laurels.

“Israel is the world’s innovation lab and technological innovation is the key to our future economy's growth. Our job at the Israel Innovation Authority is to create the conditions that will allow Israel to continue to be a global leader,” asserts Dror Bin, CEO of the Israel Innovation Authority.

Founded in 2016 as an updated incarnation of the Office of the Chief Scientist in the Ministry of Economy and Industry, the Innovation Authority is an independent, statutory public agency whose mission is based on over 50 years of experience. Funded from Israel’s national budget, it is managed by a Board of Directors that consists of representatives from both government and the private sector. The Authority’s work is premised on the belief that economic robustness prevents national vulnerability.

Focusing on high-risk sectors

First and foremost, the Innovation Authority is tasked with investing approximately NIS 2 billion annually to support the research and development of around 1,600 technologically promising projects. Moreover, it constantly monitors and analyzes the innovation ecosystems both in Israel and abroad and takes proactive measures to strengthen Israel’s high-tech industry. All these activities have a common goal: taking steps today so that Israel will be well prepared to face the challenges that are expected to surface five, ten and 20 years from now.

One of the important ways the Authority is safeguarding Israel’s economy is by supporting local start-ups that are deemed high-risk and are therefore overlooked by investors. “We invest directly in industry and research, in fields which lack support from private investors. Often, these are early-stage initiatives with long time-to-markets,” notes Bin. Israeli start-ups in fields where Israelis have an established reputation – such as cyber or FinTech – usually don’t have a problem raising seed funding in the private market.

The Israel Innovation Authority focuses on sectors that tend to be neglected by investors and are therefore also a low priority for researchers and entrepreneurs. Its analysts constantly seek out these low-profile, high-potential sectors and allocate funding according to a strategic plan. The Israeli FoodTech industry is a good example: it was practically non-existent until the Authority decided to take it under its wings. “We saw the potential, opened FoodTech incubators and invested in research, especially in the area of alternative proteins. Not long ago there was no Israeli FoodTech industry at all, and today Israeli companies are global leaders in this field. There are now hundreds of FoodTech start-ups and entrepreneurs,” says Bin.

Technologies of tomorrow

The Innovation Authority’s CEO explains that they are busy setting the stage so that novel disruptive technologies will have the opportunity to come to life in Israel. “We look ten years in the future and prepare the infrastructure for emerging technologies,” he discloses. Based on extensive analysis of both the global and local markets, the Innovation Authority has made a strategic decision to focus on three technology platforms which it believes are poised to change the world: Artificial Intelligence, Quantum Computing and Bio-convergence. The Authority has launched a detailed five-year program for each of these areas, involving extensive investments aimed at developing their potential in Israel.

Artificial Intelligence (AI) is widely predicted to be a major disruptive force that will impact many sectors on a global scale. The Authority is partnering with several government ministries, the Council for Higher Education of Israel and others to implement a national strategic plan to boost the field of AI in Israel. In addition to substantial investments in relevant research and start-ups, the Authority is helping to fund an expensive super-computer and is supporting the development of Natural Language Processing in Hebrew and Arabic, so that AI software will be able to access data in those languages.

Although Quantum Computing is still considered an embryonic discipline, experts estimate that the global quantum computing market will reach $3.7 billion by 2030. The Innovation Authority believes that Israel can be a leader in this field. To this end, the Authority and Israel’s Defense Ministry have committed to spending approximately NIS 200 million ($62 million) to develop Israel’s first quantum computer and lay the foundations for Israel’s prominence in this high-potential area.

The third platform which the Innovation Authority is spearheading, Bio-convergence, is a holistic, multi-disciplinary approach to healthcare that is on track to revolutionize the healthtech industry, as well as many other fields. By harnessing aspects of biology, computer science, big data and engineering, Bio-convergence is paving a path to remarkable innovations in treatment, discovery and delivery, regenerative medicine, and diagnostics. The Israeli start-up ecosystem is in an advantageous position to become a world leader in this new category and the Authority is investing considerable resources so that this potential can be attained.

Tackling the labor gap

In addition to identifying which technologies are expected to be disruptive in the future, the Innovation Authority’s mission is to ensure that the proper infrastructure will be in place to accommodate these novel technologies. ‘Infrastructure’ includes favorable regulatory and tax requirements, as well as suitable facilities for basic research and – no less importantly – sufficient human capital. Indeed, in order to develop breakthrough technologies, researchers in academia as well as in industry must have the proper conditions for conducting their R&D and this includes access to skilled researchers and workers.

“There are currently approximately 350,000 people employed in Israel’s high-tech sector, but the demand for workers is growing fast. We estimate that within five years, we will need 200,000 more high-tech workers. That’s a big challenge,” says Bin. To that effect, the Innovation Authority has recently granted NIS 54 million to dozens of programs in order to increase the overall number of employees in the high-tech industry. These include programs to attract previously untapped sectors of the population, such as the Arab and ultra-Orthodox (Haredi) communities. A five-year plan was launched in order to increase the number of Arab students in technological tracks and Arab entrepreneurs. Other programs encourage both Haredi men and women to be trained in fields that will enable them to find jobs in high-tech.

One of the groups that is underrepresented in the high-tech sector is women – they now account for 35% of the workers and an even smaller share of management roles. The Authority prepared a thorough report on women in high-tech, which highlighted the necessity to encourage more girls to study tech and science subjects in high school, since that will enable them to take on technological roles in the army and, later, to pursue related academic degrees. The Authority is working with the Ministry of Education and with the Army to encourage women to choose these fields so that they will have the skills and aspiration to join the high-tech sector and help reduce the labor gap.

Another new initiative involves tapping into the global workforce and bringing people to Israel from abroad in order to work in high-tech. “We want to compete on international talent. In addition to trying to bring back Israelis from overseas, we are inaugurating a program to enable tech workers from around the world to come to Israel for several years,” explains Bin. The foreigners will have the opportunity to experience the Start-Up Nation first-hand, while helping local companies meet their staffing challenges.

Regulating futuristic industries

One of the Israel Innovation Authority’s most important tasks is to advise the government on all matters involving Israel’s innovation hub. Furthermore, it works closely with the various ministries and government agencies on the implementation of relevant policies. In particular, the subject of regulations is critically important; the Authority is committed to helping create a regulatory environment that will strengthen the local high-tech sector.

“Regulations can be a catalyst or an inhibitor. We want Israel to be a place where novel technologies are used, not just developed,” notes Bin. As an example, he mentions the autonomous car industry – the Knesset recently passed a groundbreaking resolution whereby Israel will be one of the first countries in the world to allow self-driving cars without a driver. This regulation, along with others that are friendly towards the autonomous car industry, are meant to encourage companies to choose the Israeli market for their pilot projects and product rollouts.

Facilitating local pilot projects is in fact a high priority for the Innovation Authority. For many industries, this issue is closely tied to the regulatory environment. Dror Bin mentions the drone industry as a case in point: “We identified a cluster of Israeli drone start-ups that were looking to test their products abroad because it was too difficult here,” he recalls. “We created a paradigm-shifting initiative – a ‘sandbox’ for testing drones. This is win-win, since local and foreign drone companies are now focusing on the Israeli market, and it also benefits the local economy.”

Ultimately, Bin hopes that Israel’s high-tech sector will indeed boost the entire economy and that a much larger share of the country will enjoy high revenues and high income levels – and not just the 10% currently employed in high-tech industries. “We want the whole economy to develop,” he concludes. Thanks to the Israel Innovation Authority’s intensive efforts on behalf of Israel’s future, there is every reason to be optimistic.

For more information about the Israel Innovation Authority, click here