Main terms:
As part of the Track, VCs will be able to invest in target companies alongside the Innovation Authority at a ratio of 4:6 (1:1 in certain cases), with the VC investing 50%-60% of the round and the Innovation Authority providing 40%-50% of the round, up to a maximum IIA grant of NIS 3.5 million (the amount to be provided by the Innovation Authority, the "Grant").
In consideration for the Grant, the target company will issue the VC a 3 year warrant, allowing the VC to invest in the target company an additional amount equal to the Grant (plus 5% annual interest), at a price per share determined in advance by the VC and the target company (the "Warrant").
Upon exercise of the Warrant by the VC, the target company will issue shares to the VC and the target company will return the Warrant exercise price to the Innovation Authority and will be exempt from the obligation to pay royalties to the Innovation Authority.
If the VC does not exercise the Warrant, the target company will return the Grant to the Innovation Authority by paying royalties (in accordance with the R&D law and the Innovation Authority's procedures).
The VCs and the target companies are free to set the terms of the investment round between themselves, including the PPS of the Warrant.
The Innovation Authority will bear a significant part of the risk involved in such investments, further allowing the VCs to leverage the Grant provided by the Innovation Authority in order to increase the VC’s profits in case of an increase in the valuation of the target company.
Details regarding the call for applications:
Target companies can submit requests as part of the call until April 11, 2021 at 12 noon (the "Application Due Date").
As part of the application review process, the Innovation Authority will hold a (virtual) meeting with the VC and the target company.
Responses from the Innovation Authority are expected to be received within 4 weeks from the date of the Application Due Date.
VC criteria:
The VCs must show that they are experienced in seed stage investments and have the ability to bring significant added value to the target company. The Track will also allow newly formed seed stage investment funds to take part.
Relevant target companies:
Early stage companies, which have raised no more than an aggregate of NIS 3.5 million (including by way of loans and convertible securities).
Companies operating in high-risk areas (clean-tech, agro and food-tech, life sciences, bio-convergence, artificial intelligence (AI), industry 4.0, etc.) that face regulatory challenges in addition to long implementation times, new markets and lack of seed investors.
It should be noted that the above does not constitute a complete summary of all the details of the Track. We will be happy to be at your service and assist with any questions regarding this Track.
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