In response to the economic challenges that Israel’s hi-tech industry is facing due to tensions emanating from the Israel-Hamas war, Google has pledged a $4 million support fund for AI startup companies in Israel. The announcement was made today as part of Google’s ongoing commitment to support the innovation ecosystem in the region.
The $4 million grant will be provided as complementary support to the Israeli Innovation Authority’s emergency fund, which established a fast-track grant channel to assist companies with a short runway, particularly those facing financial strain brought on by the war.
Approximately 20 startups specializing in AI solutions and services have been selected to receive immediate funding from Google.
To maximize the potential success of these startups, Google will not only offer financial assistance but also provide mentorship and support. The selected companies will gain access to Google’s experts in various fields, including development, strategy, marketing, and more.
The distribution of the grant will be influenced by the budgets requested by the startups themselves. These companies are required to present matching funding in relation to the grant from the Innovation Authority. The $4 million grant will be given as a capital grant with no demands in return.
The move comes as a response to the challenging conditions the Israeli hi-tech industry was met with in 2023. The global recession and local instability, compounded by the impact of the Israel-Hamas war, led to a significant decrease of about 60% in venture capital investments in Israel, compared to the previous year, totaling $7.3 billion.
End of 2023 sees low volume of investments
The last quarter of 2023 saw the lowest quarterly figure since 2017, with Israeli startups raising $1.3 billion in 78 fundraising rounds.
Many startups in Israel are currently grappling with difficulties in securing capital from investors, necessitating urgent financial bridging to sustain their operations. The hope is that Google’s investment will not only help these startups maintain liquidity, but also incentivize further financing, strengthen the startup ecosystem, and contribute to the growth of the Israeli AI industry.
This grant is part of Google’s sustained commitment to support the notion of Israel as the startup nation. Over the past decade, Google has operated the Google for Startups Campus in Tel Aviv, offering various programs for early-stage entrepreneurs. In 2022, Google’s president, Ruth Porat, pledged a long-term support of $25 million for the Israeli hi-tech industry, leading to the establishment of several initiatives, including the Google and Reichman Tech School and the strategic partnership with Place IL.
Since the Hamas terror attack on Israel on October 7, Google has demonstrated its commitment in assisting emergency efforts in the region. CEO Sundar Pichai announced a $3 million donation to the Natal organization, providing support and mental health assistance to trauma victims, and an additional $1 million in search ads for Israeli nonprofits. Google employees worldwide also participated in a fundraising campaign, raising millions of shekels for Magen David Adom, United Hatzalah, and ERAN NGOs.
The grant to Israeli startups is part of an $8 million Google fund established to address the effects wrought by the war, specifically earmarked to cater to Israeli and Palestinian initiatives. Google continues to play a pivotal role in supporting the region’s recovery and growth in the face of challenging circumstances.