Israel has been frequently referred to as the "Startup Nation" with over 600 net new startups established annually. While startups are in many cases the ones to make the technological breakthrough, they are often complemented by the involvement of large companies, in particular large multinational organizations, who present strong advantage and assist in commercialization, manufacturing and in opening the door to global markets.
Startup companies and MNCs can both benefit from this collaboration, by sharing the risk of R&D investment and relying on the facilities and expertise of MNCs for "whole product" development and market penetration.
In order to encourage the creation of MNC-Startup partnerships in Israel, the Israel Innovation Authority operates a dedicated Global Enterprise R&D Collaboration Program.
Basis for Collaboration
This framework provides a friendly, favorable approach and supportive work environment ("one-stopshop") for Israeli Startup companies looking to collaborate with MNCs. Within the framework, both the Israel Innovation Authority and the MNC commit to equally invest in pre-selected R&D projects, conducted jointly by the MNC and the Israeli company.
Financing is provided only by the Israeli Innovation Authority and the Israeli company.
The MNC can invest funding in the joint project and/or provide in-kind services that can take the form of facilities or resources, such as technological guidance, manpower, equipment, use of labs, discounted/free software licenses, regulatory advice and more, instead of or in addition to cash funding.
Benefits to both Parties:
- Risk-sharing of the R&D investment between the three entities:
MNC, Startup and the Israel Innovation Authority
- Preferential access to know-how and technologies otherwise not readily available to participants, as well as assistance in identifying partners
- Improving prospects for successfully marketing and supporting the developed product or service internationally
Israeli companies, interested in submitting a proposal for a joint R&D project with an MNC enlisted in the framework, will be required to follow a two-stage procedure:
- Submit an executive summary for the purpose of selection and approval by the Israel Innovation Authority, according to the Authority's internal procedures. This summary can be submitted for instance, but not necessarily, as a reply to a Call for Proposal issued jointly by the MNC and the Authority.
- Apply for the Authority's grant, according to the regular Authority's procedures, once the MNC has approved the proposal and its participation in the joint project.
Qualification requirements for Multinational Corporations include:
- Annual revenues exceeding USD 1.5 Billion
- Significant investment in R&D
- Worldwide presence of R&D facilities and activities
Upon qualification, the MNC will be required to sign an MoU with the Israel Innovation Authority, which will settle the terms of cooperation between the MNC and the Israeli company.
Qualification requirements for Israeli companies include
- Strong R&D focus
- Annual revenues not exceeding USD 70 Million
- No affiliation to the MNC
Requirements from the joint project:
- Involves both parties in the R&D
- IP will be handled according to Israel Innovation Authority guidelines
- Synergy with the MNC core business
Intellectual Property Rights
The R&D law permits the MNC to have joint ownership (or a non-exclusive license) of the foreground IP with an Israeli company, if they both mutually contributed to the development of the IP. In such case, the right of the Israeli company to use the new know-how would be subject to the R&D Law. However, the MNC would have the unrestricted, royalty-free right to use the new know-how inside or outside Israel, provided that the right of the Israeli company to use/exploit the new know-how is not negatively affected.
IP rights are handled in one of the following manners:
- Sole ownership by the Israeli company
- Israeli company owns the IP and provide the MNC a non-exclusive license
- Joint ownership by the Israeli company and the MNC
Israeli companies seeking further information on the requirements and application process to this program, should refer to the Israel Innovation Authority's Hebrew site:https://innovationisrael.org.il/program/2734