Israel moves to reignite university innovation engine
Finance Ministry unveils sweeping reform as startup creation from academia hits multi-year lows.
Fewer startups are being born out of academia, and Israel’s Ministry of Finance is attempting to revive the sector through a comprehensive reform. The commercialization of academic research has produced some of Israel’s most notable success stories, including Mobileye, which emerged from the Hebrew University of Jerusalem, and Teva’s blockbuster multiple sclerosis drug, Copaxone, which originated at the Weizmann Institute of Science.
For years, university technology transfer offices, which support startups in their early stages and receive royalties from their future revenues, operated as relatively small but highly profitable units within academic institutions. In recent years, however, commercialization activity has slowed, reflected in both a decline in the number of startups emerging from academia and a drop in patent registrations. Against this backdrop, the Budget Department at the Ministry of Finance has initiated a series of reforms and incentives aimed at revitalizing what was once considered a strategic national asset.
Following joint work by the Ministry of Finance, the Israel Innovation Authority, the Council for Higher Education, and the Association of University Heads, a reform package built around four main pillars has been developed. All major universities have signed the memorandum of understanding published on Tuesday by the Ministry of Finance, with the exception of the Weizmann Institute, whose technology transfer company, Yeda, is considered one of the strongest and most successful in Israel.
The Ministry of Finance and academic leaders are concerned that while Israel remains one of the world’s leading countries in applied research and continues to secure substantial research grants, a growing disconnect between research and commercialization has emerged since 2021. According to a report published two months ago covering 2023-2024, the number of startups established with the involvement of university commercialization companies fell 13% in 2024 to 81. The number of patent applications submitted by these entities declined 14% to 562.
As a result, aggregate revenues generated by commercialization companies also fell by 2.5%, slipping below NIS 1 billion to NIS 992 million in 2024. At the peak of Copaxone sales in 2012, their combined revenues approached NIS 2 billion. Eight of Israel’s ten universities operate technology transfer companies. The Ministry of Finance and academia now hope to draw entrepreneurs back into the academic ecosystem through a series of incentives.
Officials involved in designing the reform said researchers repeatedly pointed to cumbersome processes within commercialization companies. Four main challenges were identified: lengthy contract negotiations between startups and universities; the small size of technology transfer offices, which are required to cover a wide range of scientific and technological fields; limited budgets provided by academic institutions; and significant regulatory and tax barriers. In the past, entrepreneurs were more willing to tolerate these obstacles, but the growing availability of private capital from venture capital funds has reduced the appeal of the academic framework.
Under the memorandum of understanding, universities will develop seven categories of standardized agreements designed to provide greater certainty and predictability for entrepreneurs. Each institution will publish its own versions of these contracts. Startups will also be allowed to work with external commercialization companies that possess specialized expertise in relevant fields. In addition, the budgets of university commercialization companies will be increased through funding worth tens of millions of shekels from the Innovation Authority, while a dedicated task force will be established to examine regulatory and tax barriers.
“The reform will help researchers and institutions better realize the potential of the knowledge created in academia and deepen the connection between research excellence, innovation, and entrepreneurship, while making a significant contribution to the high-tech sector and the Israeli economy,” said Prof. Ami Moyal, chairman of the Council for Higher Education, and Prof. Daniel Haimovitz, president of Ben-Gurion University of the Negev. They added: “For the first time, the reform creates a fast, uniform, and direct pathway from the laboratory to the global market. We believe it will encourage the transfer of knowledge from universities to industry.”
