Israel grants 2 billion shekel safety net to institutions' tech investments

JERUSALEM (Reuters) - Israel’s Innovation Authority has granted 2 billion shekels ($585 million) in protection to 10 institutions that invest in the country’s high-tech startups.

Burned by the tech bubble that burst in 2000 and hampered by regulatory constraints, Israeli pension funds and other institutions have since shied away from high-tech, during which billions of dollars have been generated by high-profile takeovers or flotations.

Israel in May said it would to provide a safety net for institutional investors taking part in growth-stage funding rounds by high-tech companies, seeking to encourage them back into a sector vital to the economy.

The Finance Ministry said in a statement that applications totalling requests for 3.25 billion shekels were received and that the Innovation Authority’s investment committee approved 2 billion.

The winning entities included insurance companies Clal Insurance and Finance, Menora Mivtachim, Phoenix and Migdal, investment arms at banks Hapoalim, Leumi, Mizrahi Tefahot and Discount and brokerages Psagot and More.

They will receive state protection of 40% of their investments in high-tech firms made in the next 18 months.

Reporting by Steven Scheer; Editing by Tova Cohen