(Bloomberg) -- Israel’s government plans to offer whatever financial support and other assistance is needed to protect the country’s technology startup industry from the impact of the war with Hamas, according to the head of the Israel Innovation Authority. 

The publicly funded agency will this month roll out $100 million in conditional grants to early-stage startups if they can get matching funds from the private sector in whatever form, Dror Bin, its chief executive officer, said in an interview. 

Within weeks, it hopes to conclude talks with the government that will start a program to encourage large institutional investors to plow money into venture capital companies that have held back on funding due to the uncertainty caused by the war, he said. Incentives may include a government guarantee on lending to absorb any losses and an “upside booster” to increase profits from successful investment.

“The Israeli government is determined to do whatever is needed to make sure that Israeli tech will continue to grow and we are determined to make sure that all assets are protected and we will come out of it stronger,” Bin said. 

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Israel’s technology industry is key to the economy, accounting for about one-fifth of gross domestic product and about half of exports. The pledge of assistance comes as interest rates are already at a 17-year high and amid the uncertainty brought by the war that started on Oct. 7 when Hamas militants invaded Israel from Gaza. 

The conflict’s effect on consumer demand and a shortage of manpower due to military callups has seen many early-stage startup companies struggle to secure funding as venture capital firms hang back. 

“Many hundreds of companies were in the middle of fund raising and we’re caught in the middle and find it harder to close the round,” Bin said. “What we’re trying to do is to protect the main asset of startup nation, which is the early-stage startups.”

The agency hopes the $100 million in support will attract as much as $150 million in co-financing from private lenders. The grants are conditional in that they are repaid with royalties if the ventures are successful. If they are not, the money is written off.

The assistance for startups is relatively limited when compared with the overall funding needs of Israel’s technology sector.

Israeli technology companies in 2022 raised $15.5 billion, according to the Startup Nation Policy Institute, a think tank that tracks the local industry. 

Fund raising in 2023 took a hit due to unrest over the government’s planned judicial reforms, with quarterly fund-raising figures dropping to a five-year low. However, some Israel-founded technology companies managed to secure significant financing, including cybersecurity companies Wiz Inc., which pulled in $300 million, and Cato Networks, which raised $238 million.

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