Innovation Authority CEO: "The government needs to reduce regulation so that deep-tech develops in Israel"
Innovation Authority CEO: "The government needs to reduce regulation so that deep-tech develops in Israel"
"If we want Israeli high-tech to be at the forefront of the world,” said Dror Bin, CEO of the Israel Innovation Authority, “we need to promote the deep-tech industry and meet global demand”
"The developed countries of the world have realized that technological innovation is the key to the economy of the future. We must understand that Israel has competition," said Dror Bin, CEO of the Israel Innovation Authority, speaking at the Calcalist Forecasts conference. "If in the past, startups would only get started in Israel and Silicon Valley, today it happens in all kinds of places. Entrepreneurs move to places where the conditions are optimal, workers also move from place to place. There is a very big competition between innovation centers in the world."
Bin noted that Israel is in first place in the world in research and development investments. Moreover, "Approximately 11% of the salaried workforce works in high-tech; 15% of the Israeli GDP also comes from the high-tech industry; 25% of the income tax comes from high-tech workers. Everyone understands the centrality and importance of high-tech. Damage to high-tech in the medium and long term could harm the Israeli economy,” he explained.
"You can see that we are in the second best year ever in the high-tech industry. The year 2021 was exceptional. However, even this past October there was an increase in the number of people employed in high-tech compared to the end of 2021, despite everything you hear about the layoffs in high-tech. At first glance, everything sounds fine. But In 2022, we see a dramatic decrease in capital raising in the second half of the year. Apparently, in the first half there was a continuation of the trend from 2021. The decrease in the volume of fundraising is not something to worry about, but it should be monitored. If government intervention is necessary, we will intervene. At the beginning of the pandemic, in 2020, we saw companies that failed to raise capital, so we poured hundreds of millions of shekels into entrepreneurs to get investors off the fence."
Bin spoke about the importance of Israel remaining at the cutting-edge of innovation. "It is important to see what will happen in high-tech in 2023 and 2024, but it is more important that Israel remains on the global innovation map. Israeli high-tech is very successful in fintech and cyber, but the forefront innovation is changing and the needs of humanity are changing. In the next three decades, the world's population will increase by 25%; Lifespan is increasing; density is increasing; the number of cars on the road will increase by 70%. How do you accomplish all this growth? More than two billion people will be over the age of 60, mainly in China, Japan and Korea. How do you provide health services to such a population, how do you manage transportation - and all this while lowering greenhouse gasses? The answer is technological innovation.
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"If we want Israeli high-tech to be at the forefront of the world, we need to enter these fields and meet the global demand. You can see all kinds of sectors that are related to these global forecasts. For this, we need government involvement. These ventures are at a very high level of risk, because they are deep-tech. These ventures require a long development time before entering the markets - sometimes five to ten years. There are very few expert investors in these fields. Moreover, it is difficult to obtain running sites for such technologies in Israel. The government needs to step in here and reduce regulation so that entrepreneurs can run forward.
"The world is in a technological arms race," Bin noted. "Israel ranks first in investment in research and development as part of GDP. But this figure mainly addresses the private market. Most of the money goes to software and communication. In contrast, government funding is only 9.6% of R&D investments in Israel, compared to the OECD average of 23.8%. The government must come in and invest. Here is what I think the new government should do to ensure the competitiveness of Israeli high-tech: investment in research and development should be increased; they must enable technological experimentation to increase productivity; open pilot sites; and foster a competitive environment in terms of taxation and business."
