The Innovation Authority (IIA) approved on Wednesday that it would allow up to 40% of state backing to a list of 10 large pension funds, banks and insurance agencies – provided they invest in Israeli start-ups, the Finance Ministry reported.The state agreed to offer NIS 2 billion to ten such groups after being asked to provide NIS 3.5b. The decision is meant to encourage such large institutional investors to risk investing in hi-tech as they are now offered assurances by the State of Israel that even if they fail to make good on their investment, the loss won’t be total.This is due to the fact that hi-tech is seen as the national growth engine – and with the COVID-19 financial crisis, the ecosystem is in need to secure investors should foreign capital not be as available.A recent OECD report went as far as to call Israel a two-speed economy, distinguishing between the hi-tech sector and all others.The list includes Clal – which in 2017 managed NIS 182b. worth of assets – Bank Mizrahi-Tefahot, Menora Mivtachim Group, Migdal, Psagot Investment House, Bank Leumi, Discount Capital, Phoenix Insurance, More Investment House and Bank Hapoalim.In exchange for this support, the recipients agreed to invest in Israeli hi-tech groups during the next year and a half and to keep the investment in place for a seven-year period. Many of the funding requests submitted to the IIA dealt with healthcare hi-tech, where there is a lack of Israeli investors, and InsureTech.Finance Minister Israel Katz stressed that this move was done while “protecting the insurance-buying and money-saving public,” adding that this change will “build up the status of the Israeli hi-tech industry in the entire world.”Katz said that he intends to make sure that vocational training will be offered to allow those now out of work to gain the skills they need to work in that field.The finance minister is currently attempting to re-create the vocational training service under his own ministry, taking it away from the Welfare Ministry under Minister Itzik Shmuli. Economy Minister Amir Peretz suggested that hi-tech investments might place the pension funds of Israelis “at a lower risk,” lauding the move as “thinking outside the box.”This is not the first move taken in Israel to encourage further investments in hi-tech. In August, the Tel Aviv Stock Exchange released TASE UP, a platform meant to make it easier to invest in hi-tech at the stock market.As the companies on the platform are just starting out, they are not yet public, so they can’t sell shares on the stock market to raise money. This means that during the COVID-19 pandemic, firms with good ideas might not be able to raise enough capital to achieve their goals and will therefore need to close.TASE UP allows institutional and accredited investors to invest in these companies right now, bypassing the formal vetting process required to get into the stock exchange.