Incubating innovation in Israel’s periphery

What is the extent to which the innovation-based success truly extends beyond Tel Aviv and its surrounding cities where more than three-quarters of start-ups are currently located.

Entrepreneurs at Yokneam Illit-based TerraLab Ventures incubator (photo credit: MAX FRIND)
Entrepreneurs at Yokneam Illit-based TerraLab Ventures incubator
(photo credit: MAX FRIND)
Israel is often described as the “Start-Up Nation,” hailed for its entrepreneurial spirit and pioneering role in numerous hi-tech sectors.
Questions remain, however, regarding the extent to which that innovation-based success truly extends beyond Tel Aviv and its surrounding cities where more than three-quarters of start-ups are currently located.
Leading the effort to justify the state’s claim as a true start-up nation, rather than central Israel region, has been the Israel Innovation Authority (IIA), the independent public entity tasked with planning and executing the country’s innovation policy.
The IIA’s Incubators Incentive Program is one of its flagship initiatives seeking to expand Israel’s entrepreneurial scene across the periphery. The program offers incentives for entities interested in establishing technological incubators and for private entrepreneurs interested in establishing start-ups in favorable conditions.
Among the nearly two dozen entities to take advantage of the IIA’s support is Yokneam Illit-based TerraLab Ventures, an incubator established by early-stage venture fund Terra Venture Partners.
Supported by governmental support valued at 85% of each start-up’s research and development expenditure, TerraLab invests in three to five companies every year, welcoming them to their incubator for an 18-month period of mentorship and growth. To date, 25 companies have joined TerraLab’s incubation community.
“Yokneam is already a hub of technology but we really want to make it a hub for the whole North, not just a bridge between Israel’s center and the North,” Dr. Astorre Modena, managing partner at Terra Venture Partners, told The Jerusalem Post.
“Even if some of the entrepreneurs come from the center, when they finish the incubator, they choose to open the company in the North because have recruited a lot of the people from the area.”
Terra Venture Partners, established almost a decade ago as a cleantech investment fund, invests in companies from a range of industries with a positive impact on society, including in agriculture, construction, manufacturing, transportation and healthcare.
“The importance of strengthening hi-tech in the periphery is critical for the country. The Israeli population involved in hi-tech stands at only 8% and it’s not growing. It’s critical that we’re able to access populations that are not currently in hi-tech, and many of these groups are in the periphery,” said Modena.
“Of course, in the North specifically, there is a large Arab population, which is a huge potential pool of talent that we are trying to access. I believe there’s a huge potential and the government is working hard to bring Arabs and the ultra-Orthodox population into the workforce, which is a must.”
With a critical mass of companies, TerraLab’s 10-strong team takes care of the accounting, legal, human resources and logistics matters for its incubator start-ups, so entrepreneurs can dedicate their time to building their products.
Promising start-ups that have benefited from TerraLab’s assistance include augmented-reality surgical navigation system developer Augmedics, neuro-modulation migraine relief device Neurolief and intelligent agricultural data software service FieldIn.
“We host delegations from all over the world, almost on a weekly basis, because this model of incubation is very interesting for a lot of countries,” said Modena.
“They come to see how the model works and, most importantly, they come to visit our technology.”
Aiming to further strengthen hi-tech in Israel’s North specifically and peripheral regions in general, the IIA launched a national pilot program last week to create thousands of new engineering jobs outside the center of the country.
As part of the pilot, hi-tech companies opting to open R&D centers in the periphery will receive NIS 10 million in incentives over three years, so long as the company conducts 80% of its activity in the periphery and 60% of its employees reside there.