The National Authority for Technological Innovation (“the Innovation Authority“) works tirelessly to promote technological innovation among Israeli industry. The Authority operates a wide range of aid routes, tools and activities, both directly and indirectly, to support and drive innovation in Israel, in order to ensure Israel’s status as a world leader in technology and innovation.
The Innovation Authority’s “Tnufa” route (also known as Benefit Route No. 9) is a unique opportunity for high-tech entrepreneurs and start-ups at the beginning of their careers. The route offers significant financial support of up to 200,000 NIS per project, as well as close professional guidance, in order to help entrepreneurs prove the technological and business feasibility of their innovative ideas.
In this article we will review the advantages of the route, the threshold conditions and the method of submission.
What is the “Tnufa” Route?
The “Tnufa” route is intended for private entrepreneurs, groups of entrepreneurs and young technology companies that are in the initial stages of developing an innovative idea. The route is designed to support the early stages of development of high-tech ventures, including prototyping, proof of technological feasibility, intellectual property protection and formulation of an initial business strategy.
The goal of the route is to bridge the “valley of death” encountered by many entrepreneurs, who find it difficult to raise capital in the initial stages of the venture prior to proving its potential. In this way, the route allows entrepreneurs to focus exclusively on R&D, without worrying about financing at this stage.
Although the amount of funding offered in the “Tnufa” route does not seem high, and there are quite a few segments in the industry that require high investments in development, such as medical devices, chips or the pharmaceutical industry. However, for other segments, such as software and cyber, this amount can provide significant support and enable significant progress in product or service development at the initial stage of the venture. Moreover, the “Tnufa” route offers great flexibility in utilizing grant funds and enables entrepreneurs to invest them in a (relatively) wide range of needs and activities related to promoting the venture/start-up and the product or service it offers.
Advantages of the Route
The route provides a number of significant advantages to entrepreneurs, including:
- Funding of up to 200,000 NIS per venture at a rate of 80% of the approved budget, for 12 months.
- Full flexibility in utilizing the grant – it can be invested in development, prototyping, patent registration and more.
- There is no need to establish a company or leave a previous job at that stage.
- The venture receives recognition and a seal of quality from the Innovation Authority, which makes it easier to raise capital in the future.
- Receiving ongoing professional guidance from the Innovation Authority’s team of experts.
- Continuity – After completing the route, additional assistance can be received within the framework of other routes in the Authority.
- Ability to reach a future financing round with money in your pockets, which optimizes and streamlines negotiations on raising initial capital.
Who Is the Route Intended For?
The route is open to individuals, groups of entrepreneurs and young companies who meet all of the following criteria:[1]
- The entrepreneurs are citizens or residents of Israel.
- For companies – revenues of less than 200,000 NIS in the previous calendar year, and previous capital raised of up to 500,000 NIS in total (i.e., you do not have to show a fundraising history at all).
- The enterprise did not receive previous financial assistance from a government entity or the Innovation Authority.
- The protection of the enterprise’s intellectual property is reserved by the entrepreneurs.
The Submission Procedure
Applications for the route are submitted through the Innovation Authority’s website, using designated online forms. The submission process includes presenting the project, the team, the business plan and the budget for the realization of the project. A professional committee examines applications according to criteria such as the degree of innovation, the growth potential of the venture, the entrepreneurs’ capabilities and the feasibility of the program. After approving the application, the entrepreneurs must sign a commitment that includes the obligation to regularly report to the Authority on the progress of the project, registration and preservation of intellectual property in Israel, and payment of royalties in case of future commercialization.[2]
Conclusion
The “Tnufa” route is an excellent tool for young high-tech entrepreneurs who wish to give momentum to the venture in its early stages. The route provides a solution to the funding and knowledge barriers faced by many entrepreneurs and provides a generous and flexible assistance package that includes a significant financial grant and close professional guidance. For early-stage entrepreneurs who have not yet found their first investor, the “Tnufa” route offers a real opportunity to realize their entrepreneurial dream and most importantly, it allows them to consider investment proposals in depth and optimally, while minimizing “background noise”.
[1] These are only key threshold conditions. For full criteria and additional details, please visit the Innovation Authority website.
[2] These are partial criteria and commitments. For more information, visit the Israel Innovation Authority website.
For further information, please contact us:
Hanan Efraim, Adv. Ofer Inbar, Adv.
Office: 03-691-6600 Office: 03-691-6600
Email: hanan@ekw.co.il Email: ofer@ekw.co.il