Yozma
Israel's first venture capital incentive program (1993), which seeded the Israeli venture ecosystem by funding 10 private VC funds with government capital.
Yozma (Hebrew for "initiative") is Israel's pioneering venture capital program, established in 1993 by the government to catalyze private venture capital formation. It is widely credited as a foundational driver of the Israeli tech ecosystem and stands as a model for government-backed venture initiatives globally.
Program Structure & Mechanism
Yozma operated as a closed-end fund seeding mechanism: the government committed $100 million in capital to co-invest with private venture managers, creating 10 regional VC funds. Each fund received government capital (typically 40% of fund size) alongside private LPs. The government had board representation but limited operational control; private managers made investment decisions.
Economic Impact & Legacy
Yozma's impact was transformative. Before Yozma, Israeli VC was virtually non-existent; the program jump-started the ecosystem by: (1) Providing "patient capital" for high-risk early-stage investments; (2) Attracting international LPs (pension funds, insurance companies) who followed government co-investment; (3) Creating a generation of Israeli VC professionals trained in deal-making, diligence, and portfolio management. By the late 1990s, Israeli VC capacity expanded rapidly—partially due to Yozma's demonstration effect and partially due to domestic success and international recognition.
Model & Replication
Yozma's success inspired similar programs globally (Singapore's GIC, China's government venture funds, post-2008 stimulus programs). The key innovation was: limited government operational control, time-bounded commitment (funds eventually returned capital and became independent), and focus on co-investment rather than direct government decision-making.
Subsequent Evolution
After Yozma, the Israeli government has continued venture support through: the Israel Innovation Authority (IIA, established 2005), which co-invests in startups; MAFAT defense R&D grants; and subsidized incubators. These programs build on Yozma's model but operate at different scales and sectors.