The title of Israel’s “Entrepreneurship Nation” is probably nothing new in the entrepreneurial circle. An intuitive set of data can illustrate this better. The Israeli IVC Research Institute released data this year showing that the number of startups established in Israel every year has increased sharply since 2009. For a country with a population of only eight million, which is only equivalent to the population of Nanjing, China, it is astonishing that more than 700 startups are established every year. At the same time, the number of startups closing every year in Israel has been decreasing since 2011, and a greater proportion of startups are thriving.
The Israeli government believes that any young startup company faces various difficulties in the seed and early stages, and the funding problem is particularly severe. As a member of the OECD, Israel formulates and implements relevant entrepreneurial policies based on Israel's entrepreneurial ecosystem from three perspectives, and vigorously provides financial support to create the brand of "Entrepreneurship Nation".
Policy intervention of "supporters"
The so-called "supporters" refer to the party in the entrepreneurial ecosystem that can provide funds, mainly targeting investors. Government intervention policies range from government funding, loans and guarantee projects to tax incentives. The Israeli Ministry of Economy plays an important role in policy formulation and has launched several projects to provide financial support.
In the context of the current global economic slowdown, investment funds for startups have tightened, further leading to a decline in the number of startups. Therefore, Israel enacted the "Angel Law" (angel
law) in 2011 with the purpose of encouraging investment in early-stage high-tech companies.
Under the Angel Law, qualified investors who invest in Israeli high-tech private companies are able to subtract the amount of their investment from taxable income from all sources. For example, if you invest one million shekels in a company, the investor can subtract one million shekels from your taxable income, thus placing yourself in a lower tax bracket and saving a lot of money. According to the Ministry of Economy, although investors need to pay capital gains tax when selling investments, the tax rate on those gains is much lower than ordinary income, so they can also save a lot of money. The maximum amount of this offer is five million shekels and is applicable for three tax years.
The Israeli Ministry of Economy has also launched a series of government-led funding projects. For example, Heznek
Program is a government seed fund project. This project requires investors to have basic venture capital qualifications. The startup companies they invest in are technology-led enterprises that have been established for less than half a year and have not received any investment. The government and the investor *** jointly set up a matching fund. The government's investment will be rewarded with company shares, and the investor will have the right to purchase the government's equity at the initial price plus a certain interest within the first five years. The Israeli government believes that these policies can make investments in early-stage start-ups more attractive by making it clear to investors that they will receive many benefits after investing.
Policy intervention on the "demand side"
The "demand side" refers to the main body of entrepreneurship, that is, the entrepreneurs and their startup companies who actually carry out entrepreneurial activities. Effective government policies play a crucial role in the success or failure of startup companies in their seed and early stages. The Office of the Chief Scientist (OCS) under the Israeli Ministry of Economy is dedicated to the support and services of Israeli high-tech startups and the implementation of policies. For the "demand side", the Israeli government devotes most of its energy and funds to scientific and technological research and development in order to transform any possible scientific and technological ideas into practical and feasible commercial products.
For high-tech companies that meet the requirements, the government will fund 1/2 of the R&D funds, and for start-up companies, the government will fund 2/3 of the funds. Thereafter, the company will repay 3% of the sales profits in the first cycle, 4% of the sales profits in the second cycle, and 5% of the sales profits in the third cycle and thereafter in a three-year cycle.
In addition, due to Israel's small geographical location and limited market, the government is also vigorously helping high-tech companies conduct cross-border research and development and help establish joint ventures. Matimop is a non-profit organization established under this purpose. It is affiliated with OCS and helps Israeli companies of any size to conduct cross-border cooperation. Whether they are giant companies or start-ups, they are qualified to find suitable foreign companies to connect with.
Currently, our country also has similar cooperation projects with Israel. For example, Jiangsu Province solicits cooperation projects every year, requiring Chinese companies to find Israeli companies that can cooperate in technology and products. Both parties must apply together and receive financial support from their respective governments. Under such a policy, once Israeli startups have recognized technology, they can quickly find a wider global market without worrying about being restricted by the local market.
In addition, the Israeli government has established 24 incubators, which can provide 85% of the research and development expenses for start-up companies, and the rest is raised by the entrepreneurs themselves. At present, the Israeli government has also introduced some new policies. One project being experimented with is to privatize some government incubators. Authorized incubation parks will bear the operating expenses of the incubator themselves, and entrepreneurs will have the opportunity to receive more funding. In addition, the Israeli government is also specifically planning to establish an incubator park for biotechnology. Due to the special reason of long biological research and development cycle, the government will provide special policies.
Comprehensive auxiliary policy
The Israeli government believes that the development of human capital directly affects the successful operation and development of a company. The most effective way to develop human capital is education, training and professional experience.
In terms of education, Israel focuses on cultivating the entrepreneurial and innovative abilities of college students, encouraging each university to establish its own incubator and providing financial support, and establishing a commercialization center for university scientific research results. The Magnet
Program began operations as early as 1993. The government plans to invest US$60 million in the Magnet
Program every year. Its model is the "university-university-research" model that has emerged in China in recent years. project". University institutions also play an active role in the business world. Like enterprises, they sell or commercialize technological achievements and knowledge patents developed in laboratories.
In terms of training, the government strengthens re-education of talents outside of universities. According to data from the Israeli Ministry of Education, with the continuous rise of high-tech startups in Israel, about 7,000 new jobs are created in the high-tech industry every year, but only less than 6,600 graduates can meet the demand. This phenomenon has been going on for at least five years. That's why the government's new program provides older workers with free training in the latest technology courses to equip them to fill high-tech job openings.
In terms of professional experience, many successful entrepreneurs in Israel are serial entrepreneurs (serial
entrepreneurs) who have founded more than one company. With the establishment of new companies, entrepreneurs share their entrepreneurial experiences and experiences and expand their personal relationships. Therefore, the government is also constantly promoting the establishment of private entrepreneurial service organizations, such as clubs and accelerators among entrepreneurs, so that the experience of continuous entrepreneurship can improve the overall entrepreneurial level and thereby increase the success rate of entrepreneurship. At Tel Aviv University in Israel, the Israeli Ministry of Commerce and Trade will sponsor and support its Entrepreneurship Open Day. Startup companies settled in the university incubator will participate in the exhibition. At the same time, the organizer invites well-known entrepreneurs in the entrepreneurial circle to conduct talk show exchanges. Young people are talking about the achievements of their predecessors. Story, but also a kind of self-accumulation.
It can be seen that these policies in Israel are interconnected, thus forming a complete set of government entrepreneurship support systems, effectively improving the entrepreneurial ecosystem of the "Entrepreneurship Nation", and can be seen in various countries around the world. Israeli high-tech startups are active.
Editor in charge: Magina