JERUSALEM, July 16 Israel's government plans to
expand tax breaks to investors funding early stage start-ups as
part of its strategy of promoting economic growth through
innovation, the finance and economy ministries said on
The state in 2011 started offering tax incentives to
so-called angel investors who invest in seed companies but the
criteria has been deemed complicated and investors need to
monitor a company for three years. As a result, investments
under this programme were made in about 60 companies, which
raised only 100 million shekels ($29 million), according to the
To encourage more seed stage investment in the wake of a
lack of funding from venture capital funds, the ministries have
proposed simpler criteria for tax incentives such as deducting
the amount invested from taxes owed.
Under the new track, investment would need to be in
start-ups that are less than three years old, earn no more than
1.5 million shekels in annual revenue and incur expenses up to 3
The plan, which would come into effect in 2015, still needs
approval from the socio-economic cabinet.
Israeli high-tech companies raised $1.6 billion in the first
half of 2014, an increase of 81 percent from a year earlier,
making it the strongest capital raising period on record for
Israel's high-tech industry, according to the Israel Venture
Capital (IVC) Research Center.
But seed companies only accounted for 5 percent of that
amount, down from 7 percent in the first half of 2013.
($1 = 3.4077 Israeli Shekels)
(Reporting by Steven Scheer)