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The Role of the State in the Creation and Development of an Ecosystem of Venture Capital Investment, Startups and Technological Innovations in the Israeli Economy

Author

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  • Alexey S. Larionov

    (Institute of Oriental Studies, Russian Academy of Sciences, Moscow, Russian Federation)

Abstract

State programs for support, development and stimulation of venture capital investment implemented in the State of Israel between 1990 and 2024 have created a world-class innovation ecosystem. This study is devoted to the role of the state in stimulating venture capital investment within the country as part of the creation and development of the technological sectors of the state economy. The author formed a comprehensive view through the prism of Israel’s historical experience on the system of state support for venture investors, identifying elements of successful state experience that can be replicated in other countries. The advantages and disadvantages of key state support programs for the innovation ecosystem were considered: Magnet, Magneton, Magnet Consortia, Tnufa, Yozma, Yozma-2, Superfund, the incubator and accelerator programs. The results of the state support programs were evaluated through an analysis of their impact on the KPIs of the venture ecosystem in Israel. The relevance of the research topic is due to the growing role of state institutions and programs in supporting and stimulating the innovative economy, developing small technology companies, attracting venture capital investment to achieve technological sovereignty of the country.

Suggested Citation

  • Alexey S. Larionov, 2025. "The Role of the State in the Creation and Development of an Ecosystem of Venture Capital Investment, Startups and Technological Innovations in the Israeli Economy," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 2, pages 100-121, April.
    • Handle: RePEc:fru:finjrn:250207:p:100-121
    DOI: 10.31107/2075-1990-2025-2-100-121
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    References listed on IDEAS

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    1. Manuel Trajtenberg, 2002. "Government Support for Commercial R&D: Lessons from the Israeli Experience," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 79-134, National Bureau of Economic Research, Inc.
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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