The Israel Innovation Authority (IIA) announced on Sunday a raise of up to NIS 1 million in its Start Up Fund, with the aim of providing deep tech startups in the early stages of development companies a capital runway to reach commercial viability.

The new funding limits will offer companies sponsored by the Authority up to NIS 2 million for startups in the pre-Seed stage (which is when companies have yet to receive their initial investment), and up to NIS 6 million for companies in the Seed stage (which is the first investment round a company goes through).

“Our objective is to enable more Israeli companies to reach their next milestones, attract investment, and become the growth engines of Israel's economy over the coming decade," said Gila Gamliel, Innovation, Science and Technology Minister.

The new ceilings represent a 33% increase over previous limits, which were set at NIS 1,5 million and NIS 5 million, respectively, while the authority also stated that no changes are expected to the NIS 15 million fund offer to startups at the Series A stage.

"Israeli innovation begins with young companies that are willing to tackle major challenges and develop new technologies. This is especially true at the Pre-Seed and Seed stages, where deep-tech companies are at the very beginning of their journey and technological risk is at its highest,” said Dror Bin, CEO of the Israel Innovation Authority.

Deep tech startups are among the priorities of the current government and have been among the most heavily promoted projects over the last decade, with these companies needing more development time, larger investments, and usually more hardware-centered applications.

“This measure is designed to strengthen Israel's next generation of startups, encourage technological entrepreneurship, and ensure that tomorrow's breakthrough ideas have a genuine opportunity to grow and succeed," Bin added.

Or Haviv, head of innovation at Arieli Group, told The Jerusalem Post that a key challenge for the authority in the coming years will be investing in more complex, science- and engineering-driven fields such as semiconductors, hardware, energy, biotech, and life sciences.

“Around the world, we are seeing an accelerating shift toward deep-tech investment, driven by the understanding that these are the sectors that will generate competitive advantage and economic value in the decades ahead,” he said.

The current program, while aiming to provide these types of companies with capital, also prioritizes companies operating in National Priority Area A or led by entrepreneurs from under-represented populations.

The authority revealed that companies led by entrepreneurs from these populations will have up to NIS 2.2 million at the Pre-Seed stage and NIS 6.6 million at the Seed stage.

It's important to note that the IIA’s funds are granted relative to already acquired funding, matching up to 60% at the pre-Seed stage, 50% at the Seed stage, and 30% at the Series A stage.

Additionally, the Authority offers investment opportunities for companies at different stages, with up to NIS 6 million for pre-Seed companies and NIS 30 million for companies in their Seed round.

Finally, the IIA revealed that the new funding mechanisms allow up to 6 months to complete the financing round and raise the remaining private investment, with only 15% of the requested investment round required to be covered by the time of applying to the fund.