Israeli Incubators and Accelerators explained

Israeli Incubators and Accelerators explained 17.03.2017

Israel

The Israeli ecosystem is flourishing in recent years thanks to creative entrepreneurs that dare to think outside the box and come up with innovative technological solutions, where others find it too difficult and give up. But, a good idea doesn’t always cut it. Sure, Israel's ecosystem equips entrepreneurs with many supportive tools, such as massive VC availability, impressive network of connections (based on Israel’s unique dominance when it comes to MNC presence), and a renowned academic infrastructure of research in multiple fields; but in a place where everyone thinks they just thought of the Next Best Thing, standing out is quite a difficult task to master.

That’s where incubators and accelerators come in: they don’t only deal with the financial aspects of startups, but rather they provide startups with a complete framework that includes training and transfer of knowledge and experience, in order to increase the chances of startups to succeed.

In Israel, incubators are funded with the help of the State of Israel, that sees entrepreneurship and innovation as one of the most important catalyst for the growth of the economy. The Israel Innovation Authority operates several incubator programs together with major companies, that provide startups with the complete infrastructure needed to develop their product, including office space, laboratory, scientific and technological guidance as well as business, legal and marketing consulting. Apart from financial investments (total investment of up to $3.5 million), the incubator mentors the startups in its process of product development. The incubators are scattered throughout Israel and some focus on a specific field, such as aerospace, cybersecurity, biotechnology, etc.

Accelerators are another kind of a support program. Unlike incubators, who enjoy state funding, accelerators are operated by companies or NGOs, both Israeli and foreign. These programs are designed to bring innovation into the corporations, but not from within the established method of R&D centers. Companies are looking for new, fresh technologies that don’t follow formal rules, and that bring innovative thinking to already existing products and technologies. Over 90 accelerators operate in Israel today, and counting. The main difference between accelerators and incubators (other than funding) is that accelerators are designed to, well, accelerate the progress of the startup within a short, specified time. The classic structure of an accelerator is a relatively low amount of investment (between 5-25 thousand dollars), in addition to about 4 months of guidance and support, in exchange for a percentage of the shares in the company.

One of the largest accelerators in Israel belongs to Microsoft, which was also Microsoft’s first accelerator in the world. Based on its success, Microsoft decided to expand its accelerator program to other around the world. Another successful accelerator is 8200 EISP, which belongs to veterans of the 8200 military intelligence unit; 75% of companies participating in this accelerator managed to raise funds.

The State of Israel is world-known to be a source of creativity and innovation. 280 multinational companies have already established R&D centers in Israel, and representatives from the public and business sectors from many countries regularly come to Israel to see how innovation-as-a-policy is done.

Invest in Israel is here to help you, investors, find the startups that develop the Next Big Thing.

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