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  1. Technology
March 1, 1994


By CBR Staff Writer

The architecture of Tel Aviv is a tribute to the speed of immigration with which Israel has had to cope during its history: at times the city seems a patchwork of gantry cranes, piles of sand and that curious, crumbling concrete that is more usually associated with Moscow. But if it has adopted some of the ropier Soviet building techniques, Israel has also over managed to attract some of Russia’s most active minds. A flood of immigration from the former Soviet Union, three years ago, saw the Israel’s 5m population balloon by 10% in two years, and the proportion of newcomers with academic or technical training was such that the number of medical doctors in the country, for example, is said to have doubled.


To exploit this wealth of talent, the government adopted the kind of hands-on interventionist approach currently unthinkable in Britain or the US. For the last 20 years the Ministry of Trade & Industry’s Office of the Chief Scientist has been jointly funding research and development on a 50:50 basis with established Israeli companies. The funding takes the form of a loan, paid back at the rate of 2% of the firm’s turnover each year and last year the total budget for the whole effort came to around $250m. Overseas companies can also take advantage of the largesse, but the pay-off its that the resulting intellectual know-how and patents must remain within Israel – owned by, perhaps an Israeli subsidiary, as in the case of Motorola Inc. A trip around Israel’s largest data communications companies shows that most if not all have taken advantage of the scheme. Unfortunately for the new wave of immigrants, the existing scheme mainly funds well established firms; acceptance for funding requires market visibility and the ability to get a product out. Moreover 50% funding is frequently simply not enough. The question then was, what to do with this new talent? One option examined, but swiftly discarded was ‘featherbedding’ or giving companies money to employ the extra staff. Dumping them in universities was similarly ruled out: the government was keen to inculcate business acumen into the new arrivals. And so technology incubators were born. Each incubator is a small, autonomous not-for-profit organisation designed to provide life-support for between 10 and 20 projects. Each project is set up as a separate business from day one.

By Chris Rose

The incubator provides centralised administration services, a place to work and advice on formal research and development as well as Western business practice. They don’t ask for business plans, marketing plans or business searches, instead projects get approved at the ‘I’ve got an idea’ stage and money comes from the Chief Scientist’s Office straight to the incubators. We will pay up to $120,000 a year for two years, we will support 100% of the salaries and 75% of all the rest says Rina Pridor, programme manager for the incubators at the Israeli Ministry of Industry & Trade. This equates to around 85% to 95% funding, with the remainder coming from the incubator’s own funds. There are 28 incubators now, funded through a combination of industry consortia, local authorities and research institutes. Each is vetted by the Office of the Chief Scientist and is administered by volunteers from the Great & The Good of industry, academia or commerce. So, for a relatively small investment, industry gets a possible introduction to some innovative technology, the local authority gets some potential jobs and the research institute gets innovative thinkers. The number of current projects across the incubators has now stabilised at between 230 and 240, employing between them 1,000 researchers, a full 800 of which are new immigrants. Two years on and the first fruits are emerging – 21 projects have finished, with, Ms Pridor says, a gratifying level of success. Some have gone on to apply for further venture investment, either going back to the Chief Scientist or making approaches to venture capital firms. One has signed a research and development project with the Pratt & Whitney arm of Unit

ed Technologies Inc on special ceramics for jet engines, another has picked up $5m over three years for building very accurate nano-millimetric stepper motors. And only two of the 21 produced nothing worthwhile, Ms Pridor says.

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Scattered among the ongoing projects, there is a fair spread of information technology-related work, from neural networks and handwriting recognition algorithms – Apple Computer Inc’s much-maligned handwriting recognition in the Newton came from Russia – to high-speed optical switching and high speed disk duplication – a full and updated list is due to be published by the Ministry this month. The question now is whether the perennially stretched government will keep funding the programme. Within the Office of the Chief Scientist, the programme is generally seen as a success, somewhat to its own surprise, you feel. No surprise though that Ms Pridor is particularly enthusiastic about the programme’s benefits recently compiled research has been positive: I hope it will be a long term project, she says with a smile that suggests that the debate in the Office is by no means over yet.

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