Grant-to-Royalty Obligation (IIA)
The repayment terms attached to Israel Innovation Authority grants — royalties on resulting revenue, plus a substantially higher buyout and consent requirement if the funded IP or know-how is later moved out of Israel.
The Grant-to-Royalty Obligation is the repayment structure attached to Israel Innovation Authority (IIA) funding. Companies that receive IIA grants for R&D do not repay them as conventional debt; instead they pay royalties on revenue generated from the funded product, typically until the grant is repaid with interest. The obligation runs with the funded technology, not the company.
The consequential clause concerns relocation: moving the funded know-how or intellectual property out of Israel requires IIA consent and triggers a substantially higher buyout — often a multiple of the original grant. This is a recurring friction point in cross-border acquisitions of Israeli companies, where acquirers must price in the cost of moving IP offshore.