Seed Program of the IIA

Startup Fund – Seed Track

1. About the Program

The Seed Incentive Program in the Startup Fund aims to encourage the growth of high-risk, early-stage R&D-intensive startups in Israel by expanding their available funding sources. The Israel Innovation Authority (IIA) will co-invest in Seed stage companies along with private investors, reducing risk for investors and encouraging investment realization.

2. Goal of the Program

• Promote and encourage the growth of startups with deep technological innovation in Israel
• Expand the funding sources available for Israeli Seed stage startups in high-risk, R&D-intensive fields
• Encourage private investor Seed investments in Israeli startups
• Increase investor activity, especially in areas with relatively few specialized investors and low availability of private capital

3. Who is the Program for

The Seed track is designed for Israeli Seed stage startups developing high-risk, R&D-intensive products. The Israel Innovation Authority will co-invest in Seed stage investment rounds for companies that have raised no more than 7.5 million ILS since their incorporation until three months before the application month, and whose total revenue does not exceed 3 million ILS in the last calendar year before application.

The Seed track is intended for Israeli companies developing innovative technologies to continue the development of a new technological product after initial techno-economic feasibility has been proven, to build an advanced prototype including testing in pilot facilities and initial trials, with the goal of reducing major risks and achieving milestones that will enable the next investment round.

4. What Do You Get

• The Israel Innovation Authority will co-invest in Seed track investment rounds with a grant covering 50% of the investment round up to a grant ceiling of 5 million ILS. Preferred companies (where at least 33% of the entrepreneurs are from underrepresented groups in high-tech such as Arabs, ultra-Orthodox, and women, or operating in development areas) will receive an additional 10% on the grant, raising the ceiling to 5.5 million ILS.

5. Why Should You Join the Program

• Pre-Approval for Multi-Year Grant – Fixed-rate grant for multiple years
• Synchronization – Aligns the startup’s capital raising with the grant acquisition from the Israel Innovation Authority
• Risk Reduction for Private Investors – Helps startups secure the necessary capital by reducing risk for private investors
• Certainty – Fixed amount and duration of the investment round as required for the company to reach the next financial milestone (no need to reapply annually to the Israel Innovation Authority)
• Support for the Entire Company’s Activities – Non-dilutive funding where the Israel Innovation Authority does not take equity in return for its investment share
• Participation in Development Risks – The authority participates in the development risks, independent of profits or future successes. Supported companies repay the Israel Innovation Authority through royalty payments from sales only if the project reaches the sales stage
• Quality Seal of the Israel Innovation Authority – Attracts private investor investments

6. Seed Program’s Terms and Conditions

• The company must be legally incorporated in Israel and operate according to Israeli law, primarily engaging in commercial R&D
• The total funding raised by the company from its establishment until three months before the application month must not exceed 7.5 million ILS
• The company’s total revenue in the last calendar year before the application must not exceed 3 million ILS
• The requested investment round must not exceed 15,000,000 ILS in total for a period of up to 36 months, with at least 75% of the investment round dedicated to R&D

7. Application Evaluation Criteria for Seed Grant

• Technological Aspect – Level of technological and functional innovation of the product, including complexity and depth. Technological challenges of the R&D plan and its feasibility
• Business Aspect – Economic growth potential of the company following the program’s success, including business potential, market size and/or growth rate, competitive advantage (including intellectual property strength), and market validation
• Economic and Capital Availability Aspect – Additional economic benefits to the Israeli economy, including activities in areas with low availability of specialized capital, high market entry challenges, and potential for whole-company development
• Company Capabilities – Company’s ability to successfully complete the plan and reach financial milestones, including managerial, technological/engineering, business/marketing capabilities, achievements to date, program feasibility, completeness of the requested investment round until application submission, investor experience in technology company investments, and the investor’s added value in the company’s activity field

8. Submitting an Application to the Israel Innovation Authority

Submitting an application to the Israel Innovation Authority requires careful planning and professional expertise. Professional assistance in the submission process can enhance your chances of securing a grant and help your company meet the track’s requirements. Professional and precise preparation of grant applications is a crucial part of the process. If you are uncertain about how to apply for the Seed grant, need assistance in preparing the materials, or require guidance in the submission process, we invite you to contact us. Our professional team specializes in assisting startups through the process, including writing the application in a way that improves the likelihood of receiving the grant.

9. Comprehensive Fundraising Support

Companies must complete the investment round and present final agreements with investors within a time frame set by the committee (up to 6 months). We, at Outstand Consulting, offer comprehensive fundraising services to support you through every step of the process. We will work with you to develop all the necessary investor materials, prepare you for investor pitching, and lead the fundraising efforts on your behalf. Our expertise will increase your chances of meeting the committee’s deadlines and securing the necessary funding for your startup.