German drugmaker Merck sets up Israel incubator to tap into chip, sensor tech

Israel is ‘hotspot’ with ‘an incredible amount’ of ‘super-exciting ideas’ but a shortage of translation into well-funded companies, says Jasper Bos, head of Merck venture arm

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Jasper Bos, the senior VP and managing director of M Ventures, the venture capital arm of the German giant Merck in Yavne, Israel, on February 12, 2019  (Liat Eldar)
Jasper Bos, the senior VP and managing director of M Ventures, the venture capital arm of the German giant Merck in Yavne, Israel, on February 12, 2019 (Liat Eldar)

The 351-year-old German pharmaceutical and chemicals firm Merck last week launched its newest incubator in Israel, called PMatX, which will support Israeli startup companies specializing in advanced electronic products including semiconductors and sensor technologies.

“This is our newest initiative in Israel to help startups and academic ideas in the material sciences to become real companies, and support them in their first steps to validate their technologies,” said Jasper Bos, senior vice president and managing director of M Ventures, the venture capital arm of the German giant that will be in charge of the incubator. “This fits into the mandate of M Ventures, to invest in groundbreaking technologies that lead to a paradigm shift in how we do business.”

Merck, with some 52,000 employees globally and total sales of €15 billion in 2017, makes a wide range of products, including biopharmaceutical therapies for cancer and MS, and liquid crystals for smartphones and LCD televisions. The founding family remains the majority owner of the publicly listed corporate group, which was established in 1668.

The new incubator, set up in Yavne, Israel, in August but officially launched this week, will run a budget of about €20 million over three years, and will invest in startups that focus on semiconductor and display crystal technologies. This is the second incubator Merck has set up in Israel and globally.

In 2011, Merck set up a healthcare and life science incubator, BioIncubator, which invests in biomedical-focused startup companies in Israel.

Regine Shevach, managing director of Merck R&D Centers in Israel, right, and Jasper Bos, senior VP and managing director of M Ventures, the venture capital arm of the German giant in Yavne, Israel, February 12, 2019 (Liat Eldar)

“Israel takes up a very important part in our early investment strategy,” Bos said in an interview in Yavne, from where the new incubator will operate out of the German firm’s research and development operations already at the site.

“A number of years ago we started mapping out places in the world where we saw disproportionate innovation compared to the amount of money being invested and compared to the size of the country. That led to Israel being seen as one of the hotspots, where we saw an incredible amount of very early stage, super-exciting ideas but at the same time shortage of the translation of those ideas into well-funded companies. And that led us to the set up of the BioIncubator, and eventually to this, our latest incubator.”

Bos said that Merck saw that in Israel there was “quite a lot of material science going on here, quite a lot of semiconductor and sensor technologies and at the same time a real need for young entrepreneurs to work with seasoned venture fund and incubators to allow these ideas to mature.”

“We invest in concepts and in people, and we help the best people mature the best concepts into businesses that are fundable,” he said.

The program is supported by the Israel Innovation Authority and additional partners including HP of Palo Alto, California, US-based global investment firm Battery Ventures, and Flex, a provider of electronics manufacturing services. The program has a budget of €20 million and will run for three years, initially.

The first startup that will joint the incubator is FeelIt, a company that is developing sensors that can be printed on a variety of materials using a special ink, Merck said in a statement, enabling the transformation of any object into a smart one, for example smart packages or smart valves.

Last year Merck also inaugurated a new technology innovation laboratory at its subsidiary, Qlight Nanotech in Jerusalem, which it bought in mid-2015 to boost its expertise in liquid crystal display materials and OLED materials.

Merck has been active in Israel for over 50 years, employing more than 300 people, mainly scientists. The firm has research sites and technology incubators in Yavne, Herzliya, Rehovot and Jerusalem. All three of its business sectors, healthcare, life science and performance materials, have R&D sites in Israel.

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