There is a growing number of Israeli startups originating in universities and medical centers, accounting for almost 13% of all new startups set up in 2020, new data shows.
The number of tech firms getting their start in research institutions in Israel has grown every year since 2016, even as the total number of new startups each year has declined, the data released by the umbrella organization of Israel’s tech transfer companies shows. They accounted for almost 13% of all startups set up in 2020, compared to just 3.2% in 2016, the data shows.
Tech transfer companies are created within universities to manage the intellectual property assets of researchers and help transfer their knowledge and technologies to the business sector, thus bridging the gap between research and commercial products. This transfer of innovation is often done though cooperation and licensing deals. Scientists who once worked in the so-called ivory tower, where their main purpose was to do research, publish papers and teach, are today encouraged to collaborate with businesses and boost R&D.
“Over the last 10-15 years the collaboration between academia and industry has proved to be a strong source of innovation,” said Karen Primor Cohen, the CEO of Ramot, the Tech Transfer Company of Tel Aviv University, and co-chair of the Israel Tech Transfer Organization (ITTN).
Industry representatives today often have premises on campus, hold sessions with students and researchers, and collaborate on projects.
“The perspective has changed. There is consensus that bringing into academia entities that can contribute to research, with data, pilots and proof of concept trials, contributes to a flourishing of ideas,” Primor Cohen remarked.
The data was released alongside the annual report of the ITTN, an umbrella organization representing the tech transfer companies of Israel’s leading research institutions. These include the Weizmann Institute of Science’s Yeda Research and Development Company Ltd.; Hebrew University of Jerusalem’s Yissum; Tel Aviv University’s Ramot; Hadasit of Jerusalem’s Hadassah Medical Center; T3 of the Technion-Israel Institute of Technology; Bar Ilan University’s BIRAD, and others.
“Tech transfer companies have been a key component of Israel’s tech ecosystem,” said Aviva Steinberger, director of innovation diplomacy at Start-Up Nation Central, a non-profit that promotes the tech ecosystem. “They have been critical in churning out some of our most prized unicorns in the sector.” Unicorns are privately held tech companies that are valued at $1 billion or above.
Success stories coming out of university research include companies such as Mobileye, an Intel-owned Jerusalem-based self-driving technology firm that is trading on the Nasdaq at a valuation of some $33 billion, co-founded in 1999 by Hebrew University professor Amnon Shashua; Nasdaq-listed Alpha Tau Medical Ltd., a developer of radiation therapy, whose technology was initially developed by Prof. Itzhak Kelson and Prof. Yona Keisari from Tel Aviv University; and Aleph Farms, a developer of cultivated meat, which was fostered within the walls of the Technion-Israel Institute of Technology.
During 2016-2020 there was a rise of 121% in the number of startups set up per year by universities and medical research centers, increasing to 34 to 75, the latest available data shows. Universities and hospitals accounted for almost 13% of the total number of startups set up in Israel in 2020, up from just 3.2% in 2016. In contrast, the total number of new startups set up in Israel declined 45% from 1,074 in 2016 to 588 in 2020.
One of the main reasons that the number of new startups from universities is growing compared to a decline in the general figure stems from the fact that the research originating from universities is generally less affected by rapid changes happening in the financial world, said Dr. Tamar Raz, the CEO of Hadasit, the Tech Transfer Company of Hadassah hospital, and co-chair with Primor Cohen of the Israel Tech Transfer Organization (ITTN).
“It takes time for turmoil in financial markets to affect the research in academic institutions and hospitals that drives innovation,” said Raz. “In some cases, like during the COVID-19 pandemic, it’s even the opposite: the crisis inspires novel research and new ideas specifically in healthcare.”
“The technology transfer companies can present investors excellent opportunities even in times of crisis, when other sources of startups are less abundant,” she added.
Meanwhile, the drop in the total number of new startups set up every year derives from a maturation of Israel’s startup ecosystem, said Start-Up Nation Central ’s Steinberger.
“Rather than having a flood of very young startups, we are seeing founders growing their companies to maturity” while employing larger numbers of skilled workers, she said.
Even so, a recent report by the policy arm of Start-Up Nation Central warned that should the decline in new startups persist, Israel may lose its status as the so-called Start-Up Nation with more startups per capita than any other.
The turmoil in the global tech world driven by higher interest rates and the global economic slowdown, coupled with the social, political and economic upheaval in Israel over a judicial reform the government is trying to push through, is causing a slowdown in investment in Israeli tech firms. In addition, more and more Israeli startups are registering their companies on foreign shores.
“The global financial situation is challenging, and on top of that the political situation in Israel, which create uncertainty, makes it very challenging for startups to raise money regardless of the promise of the technology and strong IP position,” said Raz.
Pioneering tech transfer
University technology transfer companies are very developed in the US and in Israel, though not as much in Europe, explained Primor Cohen.
The Weizmann Institute’s Yeda, which began operations in the early 1960s, was the first tech transfer company set up in Israel and only the second in the world, according to the institute’s website. This has made Israel a pioneer in developing models for the transfer of knowledge, with delegations coming to Israel to learn how they operate, said Start-Up Nation Central’s Steinberger.
The signing of the Abraham Accords in 2020, which enabled diplomatic ties with the UAE, Sudan, Bahrain and Morocco, has also paved the way for delegations from the Middle East to come study Israel’s tech ecosystem.
“They are investing billions of dollars into their own tech ecosystems and are looking to Israel as a source for knowledge and collaboration,” said Steinberger. “Tech transfer companies come up very often as one of the linchpins of how Israel’s academia and research help foster that ecosystem.”
Start-Up Nation Central recently hosted a delegation of representatives from Morocco’s Mohammad VI Polytechnic University to study Israel’s tech transfer models, she said.
According to the data compiled by the ITTN, in 2021 there were 179 startups set up in Israel based on IP owned by universities or researchers at medical centers, with over 1,000 commercialization agreements signed with the industry. Eighty percent of those startups were in the field of life sciences, the data showed.
“The uniqueness of Israel stems from the fact that the ecosystem is so small; everyone knows everyone,” said Primor. “This enables us to create opportunities for collaborations in an easier and much faster process.”
In July, Quantum Source (QS), an Israel-based quantum computing firm, said it had raised $15 million from a seed funding round. The startup was founded by three serial entrepreneurs and a professor from the Weizmann Institute of Science. Imagindairy, another example of a startup stemming from university research, has developed a precision fermentation technology that the company says is able to create milk proteins that are just like the real thing, but without using animals. The technology is based on 15 years of research led by Tamir Tuller, Imagindairy co-founder and a professor at Tel Aviv University.
The main role of the tech transfer companies, explained Hadasit’s Raz, is in the “art of translation, connecting the academic language with that of the industry.”
The Technion, for example, has helped create some 150 companies at a total valuation of some $23 billion, including nine publicly traded companies valued at over $8 billion, according to data provided by the university. In 2021-2022, 30 new startups were created within the Technion. These companies have raised over $4 billion and employ more than 3,400 people, half of them in Israel, said Rona Samler, who heads the Technion’s tech transfer company T3.
“Industry and academia are mutually dependent when it comes to finding truly breakthrough technologies,” Samler said. “When you want to achieve a real breakthrough, you need both a multidisciplinary approach and deep technology. That is why the industry needs academia, where it can tap into scientific excellence. On the other hand, universities and their researchers need the industry for both investment and the knowledge necessary to bring their development to market and scale it up.”
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