| Without immediate government intervention, many start-up companies will collapse and the entire high-tech sector will shrink considerably, leaders of the high-tech forum in the Israel Center for Administration are warning. The recently established forum is made up of senior high-tech executives.Members of the forums management will appear tomorrow before the Knesset subcommittee debating the high-tech crisis. The subcommittee, headed by MK Eliezer Sandberg (Shinui), will operate within the Knesset Committee for Scientific and Technological Research and Development. The forum leaders welcomed the initiative for setting up a special committee to handle the high-tech crisis. They added that the Israel Center for Administration would hold a meeting next month to find alternative financing sources for start-up companies.
Forum chairman Erez Meltzer (formerly CEO of Creo-Scitex) and forum management member Shlomo Gradman (CEO of Monterey Design Systems) are calling on the government to set up government funds for supporting young high-tech companies. The two maintain that setting up such funds will make it possible to channel funds to start-up companies with economic potential and a clear-cut business model.
Meltzer and Gradman say that such support is necessary due to the drastic reduction in private investment in start-ups, especially by venture capital funds. The two add that such a move will also contribute to a favorable market atmosphere, and prevent such companies from moving abroad.
Forum leaders say that in the future it will be possible to privatize such funds fully or partially, as in the case of the government Yozma funds, which were set up to support newly fledged high-tech industries. Thanks to their great success, the funds became a model of imitation in many countries, including the US.
The forum leaders will also advise Minister of Finance Silvan Shalom to expand tax concessions for investors in high-tech companies. They argue that Shaloms decision to award tax exemptions to foreign venture capital funds investing in Israel is not sufficient.
The exemption does not apply to strategic and other investors not investing through venture capital funds. Forum leaders believe that such investors could be a source of investment, in view of the slump in the venture capital industry.
Published by Israel’s Business Arena on 15 October, 2001 |
