Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions.
Financing, investment and government support
Does the government provide any incentives or support programmes to promote fintech innovation in your jurisdiction (eg, tax incentives, grants and regulatory sandboxes)?
The government provides direct funding for research and development (R&D) in various fields of technology through the Israeli Innovation Authority (formerly the Office of the Chief Scientist at the Ministry of the Economy). Many of the programmes are available for companies looking to innovate in the fintech field (ranging from start-ups at various stages of growth, through to mature and well-established companies and financial institutions), as long as they meet the criteria set out in the various programmes. Additionally, for early stage start-ups the Israeli Innovation Authority also supports funding through technology incubators, a number of which are open to invest in fintech companies, depending on their internal investment committee's discretion. From time to time, the authority has also offered special funding programmes for multinational corporations to establish R&D centres or innovation labs in Israel.
Similarly, tax incentives for technology companies, in particular those operating in certain various geographic areas in Israel, may also be available to fintech companies or their investors (eg, reduced corporate tax rates, accelerated deduction of R&D expenses and tax benefits for angels investing in start-ups) so long as they meet the general criteria prescribed under the law.
Has the government concluded any international cooperation agreements to promote and facilitate the cross-border expansion of fintech businesses?
The government arranges delegations of Israeli companies for roadshows and meetings with relevant potential partners and investors. It also supports marketing and export activities and cooperation with non-Israeli corporations through various funding programmes. These opportunities may apply also to fintech companies.
Financing and investment
What private financing and investment schemes are available and commonly used for fintech start-ups in your jurisdiction?
Investment in fintech companies in Israel is generally available as part of the robust and sophisticated technology investment system operating in Israel. While some venture capital funds include fintech companies in their portfolio as part of diversifying investment strategy, others have been set up specifically for investment in the fintech field. Of those specifically targeting the fintech industry, while some target early-stage companies investing smaller amounts at a higher risk, others seek to invest in growth stages and subsequently invest significant amounts at later stages of the company's lifespan. Additionally, many of the international financial institutions operating in Israel have collaborated and taken part in supporting many local fintech start-ups, offering them collaborations and beta sites in addition to direct investments. This has contributed to the growth of the fintech industry in both available capital and expertise.
Click here to view the full article.