Government firms to become innovation guinea pigs

Government firms to become innovation guinea pigs

A new program aims to boost technological advances at state-owned companies by allowing startups to test out their technologies in-house

Illustrative: A man typing on a computer keyboard, January 24, 2017. (Flash90)
Illustrative: A man typing on a computer keyboard, January 24, 2017. (Flash90)

In a new program, government companies will open themselves up to Israeli startups and allow them to test their technologies onsite, in what could be a win-win for all sides, the program initiators said.

The Government Companies Authority and the Innovation Authority launched the program on Sunday. The aim is to support the development of products and at the same time increase the efficiency of government companies, the two organizations said in a statement.

“The plan gives an additional incentive for government companies to join the digital age,” Finance Minister Moshe Kahlon said in the statement. “The innovation systems that will be set up in these companies will lead to an added boost of their performance, make them more accessible to the public and upgrade their level of service.”

Running the pilots within the government companies will boost the development of emerging and developing innovation systems in areas that require cooperation with government companies and infrastructures, said Eli Cohen, the minister of economy and industry. The move is in line with a government decision to boost innovation in government-owned companies, and to encourage them to invest in new technologies, he said.

Startups will be able to test out their technologies within the relevant companies and also get access to data or information that is available to the government company to help them with their work.The idea is to allow the company to make “significant progress” in getting the product ready for commercialization and eventual penetration into the market.

Tech firms that are selected will be eligible to get up to 60 percent of the costs of running the pilot, said Sagi Dagan, the head of the growth division at the Israel Innovation Authority. If the company reaches sales, it will need to pay back to the Innovation Authority royalties from the sale of products up to the amount of the conditional loan they got from the authority as part of the project.

“Government companies will be able to incorporate the technologies and on the other hand the startups will get access to fields for experiments that were not open to them previously,” he said.

The startups will be selected according to their level of technological innovation and the uniqueness of their product; the challenges they face in realizing the plan; their capabilities, including the managerial capabilities of the startups and the chances of the firm being able to bring about the completion of their products; the potential of the company’s business-economic growth; and the contribution it is expected to have on the Israeli economy and on the company that will test the technology.

“Investment in innovation is the key to sustainable economic growth and to creating productivity and economic value for the economy,” the chairman of the Innovation Authority, Ami Appelbaum, said in the statement. “We believe that through the program we will achieve a dual goal: technological companies will be given access to the largest pilot sites of their kind in Israel, and government companies will be given the opportunity to upgrade their systems, thereby enabling them to access advanced technologies in their fields worldwide.”

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