The short answer: the Israel Innovation Authority (IIA) funds early-stage startups through non-dilutive grants that take no equity and are repaid as royalties only if the product generates revenue. Since March 2024 the main early-stage routes sit under the IIA's Startup Fund: Tnufa for ideation (up to 80% of the budget, capped at NIS 200,000), the Pre-Seed track (60% of a qualifying round, up to NIS 2M) and the Seed track (50% of a qualifying round, up to NIS 6M), plus the separate technological incubators program. Funded know-how must stay in Israel unless the IIA approves a transfer.
Figures below are from the IIA's Hebrew program pages as of October 2026. Caps and thresholds change, often yearly, and the Hebrew text is the legally binding version, so check the current page before applying.
The early-stage tracks at a glance
| Track | What it funds | Grant | Key conditions |
|---|---|---|---|
| Tnufa (ideation) | Proof of concept or first prototype, IP protection, early business development. No salaries or overhead. | Up to 80% of the approved budget, max NIS 200,000 over 12 months | Individuals, teams or a very early company (up to NIS 200K revenue last year, up to NIS 500K raised). No need to leave your job. |
| Startup Fund: Pre-Seed | R&D in an Israeli deep-tech company, alongside private investors | 60% of the round, up to NIS 2M | Raised up to NIS 3M; round up to NIS 6M over up to 36 months, at least 75% to R&D |
| Startup Fund: Seed | R&D alongside a seed round | 50% of the round, up to NIS 6M (raised from NIS 5M in July 2026) | Raised up to NIS 15M; round up to NIS 30M over 36 months, at least two thirds to R&D |
| Technological incubators | A project inside an IIA-franchised incubator, with space and mentoring | Up to 85% of the approved budget (first period typically NIS 2M to 3.5M) | Apply together with the incubator; the founder invests no cash |
For all Startup Fund tracks, private investors must commit at least 15% of the round under a signed term sheet or agreement, the full round must close within six months of approval, and the IIA pays its share as the private money comes in. Each company can use each track once. The R&D Fund's main track, which many older guides describe, stopped accepting new programs in March 2024.
Tnufa: the first check before any investor
Tnufa is often the right first step for a founder with a technical idea and no investors yet. It funds getting to a proof of concept or prototype, and protecting the IP. It does not pay salaries, so it fits founders who are still employed or self-funding their time.
- Repayment.If the product reaches sales, the grant is repaid through royalties of 3% of annual revenue. The IIA takes no shares.
- Applications.Submitted online in rolling windows, each tied to a committee date. Expect roughly three months from the window closing to a decision.
- Limits.At most two applications in any 12 months, and support for one year in total.
Pre-Seed and Seed: the grant that matches your round
These tracks change the economics of a round. A qualifying pre-seed round can come with an IIA grant of up to NIS 2M that takes no equity. That is why many Israeli founders plan the IIA application together with the raise:
- Raise with the grant in mind. A signed term sheet for at least 15% of the round is enough to apply; you do not need the full round closed.
- Plan for the timeline. Committee decisions take roughly two and a half to three and a half months after a submission window closes, and the round must close within six months of approval.
- Budget for R&D. At least 75% (Pre-Seed) or two thirds (Seed) of the round must go to R&D carried out in Israel.
- Check the preferred-company terms. Companies led by women, Arab or Haredi founders, or located in Development Area A, receive an extra 10%; Sderot and the Gaza envelope receive an extra 20%. The ownership thresholds differ between tracks, so read the specific track page.
Incubators
The technological incubators are run by venture funds and corporates under eight-year IIA franchises. The founder applies together with the incubator, which provides space, administration and mentoring and covers the share of the budget the IIA does not. Incubators suit deep-tech projects that need longer development before they can raise from investors. The incubator's equity stake is negotiated with each incubator and is not set on the IIA's pages.
What you give back: royalties and IP
- Royalties.Paid only once the funded product generates revenue: 3% of revenue for Tnufa, and 3% to 5% of annual revenue for R&D grants, until the grant plus annual interest is repaid.
- Know-how stays in Israel.Transferring IIA-funded know-how out of Israel requires IIA approval and a redemption payment of at least the grants plus interest, up to six times that amount, or three times if the buyer keeps R&D jobs in Israel for at least three years. The IIA reports the median payment from 2005 to 2024 was under 1.5 times.
- Manufacturing abroadcan raise the repayment cap and the royalty rate; check the rules before moving production.
Grants and a Delaware flip
The IIA funds Israeli companies. A flip at the share level, where a US parent owns the Israeli company and the IP stays in the Israeli company, is the structure most commonly used alongside IIA grants. Moving the IP itself to the US company would trigger the transfer rules above. Law firms note that a change of control can also require notifying the IIA, so involve your lawyer before signing. See our guide to the Delaware flip.
Sources
- Israel Innovation Authority, Tnufa track, Startup Fund (Hebrew)
- Israel Innovation Authority, Pre-Seed track
- Israel Innovation Authority, Seed track
- Israel Innovation Authority, Technological incubators (Hebrew)
- Israel Innovation Authority, Royalties and intellectual property
- Israel Innovation Authority, Launch of the Startup Fund (February 2024)
- Israel Innovation Authority, R&D Fund track (Hebrew)