Another step on the way to the establishment of investment funds in the field of life sciences - the tender documents were published:
The four groups that passed the early screening stage for the establishment of life sciences investment funds will begin fundraising today
If all four funds are established, they will be poured into the biotech market
At least 400 million dollars (about NIS 1.5 billion)
The minister of the TMT, Binyamin (Fouad) Ben-Eliezer He welcomed the progress of establishing the funds in accordance with the schedules, and noted that this serves as proof of the commitment of the government, and of the ministry he heads, to the correction of market failures that hinder the development of the knowledge-rich industry in Israel. "The specific assistance given to the young companies in the fields of pharma, biotechnology and medical equipment, in fact the establishment and existence of the funds, is another link in the set of actions taken by the ministry to fulfill its vision to establish the future industries of the State of Israel in the fields of life sciences, nanotechnology and cleantech".
Minister of Finance, Dr. Yuval Steinitz, said "Today we are advancing another significant step in the biotech funds project. This is a major move within the policy of promoting knowledge-intensive industries. These industries are the engine of Israeli growth, and we as a government must strengthen it in order to exhaust the relative advantage of our economy. We identified the field of biotechnology - in all its components - as having tremendous potential and we will use the optimal policy tools to advance it."
Dr. Eli Ofer, the chief scientist at the Ministry of Science and Technology, noted that the response of the investment companies and the global capital market to the move announced by the government last year and the fact that no fewer than four management groups were found to be qualified to establish funds according to the specifications established by the government testify to the great business potential that investors attribute to the Israeli biotechnology industry. It must be assumed that now, when the investors see that the government is willing to participate with them in the high risk usually involved in investments in the field, this industry will receive the financial push it needs to establish itself and expand.
If all four funds meet their fundraising goals and are established, the life sciences market will receive at least 400 million dollars (about NIS 1.5 billion) through them and after leveraging the government's investment, with the expectation being that the groups will leverage the government's amount even beyond this amount.
The establishment of the investment funds is part of the promotion of the growth policy by the Ministry of Finance and the Ministry of Science and Technology (the chief scientist). The funds are expected to preserve Israel's position as a technological powerhouse and help increase GDP. The government and the market are pinning their hopes on the process and expect that it will lead to the growth of the biotechnology market in Israel.
The task before the elected managers is not easy, especially in light of the recent economic crisis - each management group is required to raise at least 76 million dollars, in order to receive a government investment in the amount of 24 million dollars each. The managers were given a year to raise the money, and at the end of this period, the group that raises the highest amount will receive a bonus of an additional government investment of 8 million dollars. Due to the great importance that the government sees in this project, as well as the understanding that the establishment of the funds has a significant impact on the start-up companies in the field, the beginning of the activity of each of the funds will be possible with the completion of the minimum investment fundraising by the management groups even before the 12 months of fundraising have passed.
As you may recall, in November 2009, the Ministry of Finance and the Office of the Chief Scientist at the Ministry of the Treasury published a call for managers of large venture capital funds to propose their candidacy to lead investment funds in the field of life sciences, in which the government will be an anchor investor. In order to continue to compete in the tender, the management groups had to go through the early screening stage in which high threshold conditions were set for the managers, in order to ensure that the best managers would reach the next stage. Happily for everyone, the early screening phase ended with great success when the tender committee decided to expand the tender and allow four management groups, who have international experience that combines knowledge and familiarity with the Israeli market and are led by senior industry leaders in Israel and abroad, to continue the process.
