Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), one of Israel's two biggest defense companies, will inaugurate its technology incubator in Beersheva on Thursday. The incubator, Incubit, will over the next eight years support more than 20 companies in fields synergetic with Elbit Systems' businesses.
Since winning the Office of the Chief Scientist tender to establish the incubator, Elbit Systems examined at least 50 proposals and concepts from entrepreneurs seeking to join Incubit.
"People with a dream are coming to us, and you see the light in their eyes. For them, this is not just work. We listen, we study the ideas, and we try to link up with them and their passion," Incubit CEO Ran Ben-Sela told "Globes". "All the ideas submitted to us can be characterized by the technological depth. Some are filled out and others are PowerPoint presentations. Nonetheless, there is impressive and serious technological potential here, and it's a great challenge as well as a great risk."
Most of the technologies proposed by the entrepreneurs for inclusion in Incubit are related to Elbit Systems' core businesses, including electro-optics; cyber; and nanotechnology. "There are scary things in terms of the technology, but alongside the fear there is also a chance," says Ben-Sela.
Elbit Systems' products include helicopter pilot helmets, special gun sights, and cyber warfare simulators.
Some of the proposals submitted to Incubit are undergoing advanced feasibility tests, and Elbit Systems believes that, by the end of the year, Incubit will have its first two portfolio companies, which will be sponsored for two years. Under the business plan, Incubit will accept 4-5 new companies a year and support 12 companies simultaneously. "We'll begin with one or two companies by the end of this year. In the second or third year, there will be a jump in the number of portfolio companies. These companies will receive infrastructures, relevant human capital, engineering knowledge, and later, Elbit Systems' marketing capabilities," says Ben-Sela.
$12 million investment in Incubit
Elbit Systems will invest $12 million in Incubit during the franchise period. Each portfolio company will receive NIS 2.5 million, 85% of which will be a Chief Scientist grant. Elbit Systems invests $250 million a year in R&D, 9% of its domestic and foreign sales.
Elbit Systems EVP engineering and technology excellence Haim Rousso serves as Incubit's chairman. He says the decision to establish the incubator represents a new trend in industry's desire to grow. Companies are not satisfied with in-house initiatives and ideas, but seek innovation outside. "Neither we, nor other companies, have done anything like this for 60 years," he says. "We're the first manufacturer taking this step, which is important for Elbit Systems. Technology has rushed ahead in recent years, causing industries to become open to innovation. It is hard to continue sticking with the approach that it is possible to germinate and grow everything in-house and stay at the forefront of technology.
"This is why more companies are tightening their ties with academe and small companies. We're reached the point at which you simply have to look outside and see what's there. Incubit expresses the realization of this concept. I believe that, in the coming years, we will see more and more companies taking similar steps, because there is no choice."
On the eve of inauguration of Incubit, which already has a logo, tight business plan, and enthusiastic entrepreneurs, Elbit Systems is trying to lower expectations. "It would be a bit arrogant to say that Elbit Systems' next flagship product will germinate here. We're still a company with 10,000 employees. And yet, if you want to keep the lead in our business, you must have an open mind," says Rousso.
Published by Globes [online], Israel business news - www.globes-online.com - on June 26, 2013
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