Israeli innovation is a role model for the entire world. Delegations from around the globe frequent Israel on a regular basis to learn about the wonderful local innovation eco-system and to understand how a small country of only 8.5 million people has succeeded in becoming a world leader in this field. Pioneering Israeli technological innovation, the dimensions of which in relation to the total economy are exceptional, has justifiably earned us the name 'Start-up Nation'. Indeed, this is the very nature of Israeli society – innovative, entrepreneurial, and confident in its ability to lead and change the reality in which we live.

Israel was also a pioneer in realizing the importance of R&D and innovation to the country's prosperity. Already 45 years ago, with the establishment of the Chief Scientist's Bureau in the Ministry of Economy, we strove to promote cooperation between the government and the private sector with the objective of advancing R&D and innovation processes. This was undertaken out of an understanding that investment in innovation is the key to sustainable economic prosperity and to the creation of tremendous economic productivity and value. However, the value of innovation is not solely economic, but also exercises valuable diplomatic influence: for many other countries, Israel represents a primary target for potential collaborations in fields of science and technology.

The Innovation Report published each year by the Israel Innovation Authority has already become an honored tradition. It encompasses the range of achievements and challenges of innovation in Israel and signals the direction towards which we aspire. In so doing, the Authority is fulfilling its role as the body responsible both for advising on the formulation of innovation policy and for the efficient and high-quality implementation of this policy. This report details the Start-up Nation's achievements during the last year and the challenges we face in the future.

The Innovation Authority constitutes and important and central part of my Department's operations. I am convinced, that with the leadership of the Innovation Authority, the Ministry of Economy and Industry as a whole will meet the central challenges of the coming years as detailed in the report. Specifically, it is our intention that Israel maintains its position as a leader of technological innovation while simultaneously harnessing its resources for the benefit of Israeli industry in general and in the periphery in particular.

Best Wishes,

MK Eli Cohen,

Minister of Economy and Industry   

We are honored to present the "Innovation in Israel – Situation Report 2017".

The Israel Innovation Authority was established in order to advance innovation and R&D in Israeli industry in general, and knowledge-based industries in particular, while constantly adapting its operations and availability to the changing needs of the economy. The executives and staff of the Innovation Authority, led by the CEO Aharon Aharon, are active via a wide range of channels within the Authority's spheres of operation in order to achieve these objectives. This report gives fitting expression to this diverse and worthy endeavor.

The Authority's management and employees, together with the board of directors, are currently engaged in the formulation of its operational strategy for the coming years. We are presently contending with the challenges involved in the next quantum leap of Israeli innovation, this alongside the many assets at our disposal and the important opportunities that can be leveraged for the benefit of the industry as a whole. The State of Israel has hitherto succeeded in making significant decisions resulting in impressive achievements and pronounced advancements for the high-tech industry. The consequent branding of the State of Israel as the 'Startup Nation', flourishing as a result of these decisions, constitutes a role model for the rest of the world.

We must strive to preserve this standing and to provide the industry with all the necessary resources for doing so including aspects of finance, taxation, human capital, connections with academic institutions and research institutes in Israel and around the world, and others. To this end, the government offices responsible for advancing Israeli innovation, specifically the Ministry of Finance and the Ministry of Economy and Industry (in charge of the Innovation Authority), must play their role in this mission. Within this framework, collaborations between the various units of the Ministry of Economy and Industry, led by the Minister himself and the department management, are of vital importance. The Innovation Authority must act in conjunction with the Authority for Promotion of Investments in R&D towards advanced production; assist, together with the Foreign Trade Administration, in advancing export opportunities for Israeli industry; and promote a comprehensive policy that encourages Israeli innovation and R&D, together with the Bureau of the Chief Scientist who also serves as the Chairman of the Innovation Authority.

I believe, as written in our bible, that: "those who sow in tears, will reap in joy." (Psalms 126:5)

I am proud to take this celebratory opportunity to congratulate the incoming Chief Scientist and Chairman of the Innovation Authority, Dr. Ami Appelbaum. Since being "called to duty" several months ago, it has been my privilege to lead this fascinating organization while still serving as Director of the Investment Authority. I gladly agreed to the Minister's request to devote myself to this mission and have had the opportunity to contribute significantly from my extensive experience acquired over the years. I wish my friend Ami every success in his important capacity and am sure that the many roles he has fulfilled throughout his career will prove a true asset to the Israeli high-tech industry.        

I wish you all a blessed and sweet New Year,

Nachum Itzkowitz

(Acting) Chief Scientist in the Ministry of Economy and Industry and Director of the Innovation Authority

When I decided a year ago to join the Israel Innovation Authority as its first CEO and leave one of the most sought-after jobs in the Israeli economy (CEO of Apple), I was uncertain as to what the future held. After a little over six months during which I have devoted all my time and efforts to my new job at the Authority, the feeling of mystery has been replaced with a sense of a mission. There is nothing to compare to the weight of responsibility that accompanies me each and every day as I come to work in order to fulfill the Authority's mission – the preservation and strengthening of the Israeli high-tech system while simultaneously harnessing it to the other industrial and social spheres.

Indeed, the mission we have been entrusted with is especially challenging. Not just to assist hundreds of companies every year to develop advanced technologies, some of which feature frequently in the amazing success stories of Israeli high-tech, but also to strive for integration of wider circles of the Israeli economy in the worlds of technological innovation. These circles touch sectors of the population under-represented in Israeli high-tech, primarily women, Arabs, Haredim and older workers, but also traditional industries that have yet to adopt innovation as a business strategy.

In order to successfully meet these challenges, the Innovation Authority had been structured into Innovation Divisions alongside administrative units, responsible for designated missions and clientele. This has been done with the objective of adapting the supportive tools to the challenges and needs of the companies and entrepreneurs, as well as improving the service provided to our clients. The Authority's Innovation Divisions reflect the full life-cycle of the entrepreneurs and their companies  – the academic researcher searching for the business partner to turn his pioneering study into a practical application, the lone entrepreneur with the idea and daring to take risks and succeed, start-up company employees investing their efforts and talents to develop innovative technologies that will change our lives, the company that has already burst on to the market and is in the midst of its growth and expansion, and leading global corporations seeking to invest and generate the most from  Israel's unique and robust innovation eco-system. It is our role to lend the optimal support to all these bodies in the range of different technology fields: software, electronics, life sciences, energy, manufacturing technology and others.

The Innovation Authority is a public body, investing Israeli tax payers' money in order to strengthen the Israeli economy. I regard the wise and efficient use of every tax-payer's shekel we invest to be of the upmost importance. I was therefore happy to find at the Authority a professional and dedicated group of public servants, investing great effort and performing their jobs at the highest level out of a deep sense of duty. With such a high-quality team at the Authority, I am convinced that we will succeed in fulfilling our mission over the coming years.

During the past year, we said goodbye to several employees and this is an opportunity to mention three of them who retired: Lydia Lazanes who served in her last job as Deputy Chief Scientist for budgeting and retired following 40 years in the Chief Scientist's Bureau; Ya'akov Fisher who for the last decade directed the Tnufa Program; and Ilan Peled who retired after 20 years during which he led the MAGNET Administration (today the Technology Infrastructure Division). All three were public servants of the highest degree and we owe them our thanks. In addition, Avi Hasson, the outgoing Chief Scientist, this year completed a six-year tenure. Avi has a founder's share in the establishment of the Authority and I wish to extend him our thanks.

In conclusion, I wish to thank the Authority's Strategy Division and Marketing Department for leading the process of composing, editing and publishing this report. We have made every effort to present a report that is accessible, clear, and comprehensive while detailing the challenges and opportunities facing the Israeli innovation system. I hope that we have succeeded. 

Aharon Aharon

CEO, Israel Innovation Authority