The privatization of Israel's high-tech incubators has been halted, due to a budget shortage, says Technical Incubators Program director Rina Pridor. She said 12 of Israel's 24 incubators had been privatized to date, but the privatization had halted, due to a budget shortage, even before the anticipated cut in next year's budget.
Pridor said, "We probably won't be able to meet our commitments for the incubators that have already been privatized. This is very serious, because the privatized incubators raised capital from foreign investors for their projects.
"Legal claims are probable, but foreign investors perceptions of us is even more serious. The state pledged to invest money and won't meet its commitment. A further blow is that we'll probably have to completely suspend the activities of both government and private incubators."
Pridor said irreversible damage would be caused if the government does not meet its commitments, over and above the anticipated cut in the R&D budget. She said the Ministry of Industry, Trade and Labor has sent clear messages to the Ministry of Finance that the planned cut would totally destroy the incubator program. "We built an exemplary enterprise and we're about to wipe it out. Israeli and international concerns are waiting in line and we lack the budget to have them participate in the privatization of more incubators. I don’t know if anyone understands this at the Ministry of Finance."
Many venture capital companies are involved with the incubators: Jerusalem Venture Partners in an incubator in Jerusalem; Israel Infinity Venture Capital in an incubator in Beer Sheva; Xenia Ventures in an incubator in Kiryat Gat; and Peregrine Ventures in an incubator in Ariel.
The technology incubators committee approved NIS 6.72 million in grants to four new incubator companies this week.
The Ministry of Finance responded to the report on the incubators, saying, “The state has no obligation to maintain a minimum level of activity for the private concerns operating the incubators. On the contrary; under the terms of the privatization tender, the companies are committed to a minimum number of projects. Furthermore, had the state made such a commitment, the state would have had to support a specific number of projects, regardless of the their level an absurd situation. Should he so choose, the Chief Scientist of the Ministry of Industry, Trade, and Labor is authorized to change the internal division of investment, and increase the budget for the incubators."
Published by Globes [online] -l www.globes.co.il - on November 26, 2003