The IAA and RFPs for Israeli Entrepreneurs and Startups

Quick Summary - Are you an Israeli entrepreneur with a new tech idea? An entrepreneur looking for ideas? A software development agency seeking to expand?

Are you an Israeli entrepreneur with a new tech idea?

Many new tech startups are based on combinations of existing technologies. Where funding is always an issue, let’s take a look at combining some funding options with business development — Accelerators plus Requests for Proposals (RFPs).

8 mins read

We live in an increasingly “On-Demand” world where “Access is better than ownership.” But, there’s one thing that is much more important than “access” – and that’s Awareness. It’s hard to access what you don’t know about. Doubly so when it comes to things like government sponsored programs.

With awareness of government programs you gain access to everything you could ever need to develop your idea or grow your business – funding, consulting, networking, connections with business partners, projects to build your portfolio and grow your business on whatever scale you desire. Here we’re going to take a look at two types of programs and how you might combine them.

First, there’s the Israelli Innovation Authority (IAA) and its programs for entrepreneurs and startups – to help get you going. Second, there’s the scarier topic of Requests for Proposals (RFPs).

The IAA for Israeli entrepreneurs and startups

We’ve talked about the Israel Innovation Authority before as it is a huge boon for entrepreneurs. The IAA backs nearly all of Israel’s startup incubators and accelerators while facilitating technology transfer, too. The Israeli Innovation Authority has programs that help get you started, even before you have a startup. Their programs have four fairly basic requirements:

  1. You need to be a citizen of Israel. That’s the hardest and rarest one.
  2. You must have an idea – preferably tech-related.
  3. Initiative and determination to develop your idea. Entrepreneurial spirit!
  4. The knowledge, experience, or other means to execute your idea with the assistance their programs provide.

Other means? Yes, again, “Access is Everything.” Or just about. You don’t need to be a software developer to have a software development agency. That’s just a simple plug that, for being on our website, we can provide you access to a large pool of software developers custom-fit for your project.

Leastwise, the IAA has fantastic funding programs for pre-startup, new startups, and early stage (Round A and B) startups.

  • Ideation (Tnufa or “Momentum”) Incentive Program is a fantastic opportunity for entrepreneurs who are still tied to their “regular job” but have an innovative technical idea they’d like to pursue. Startups can participate in it, too. It offers conditional grants of up to NIS 100,000 (~US $30k) per year over two years for initial prototyping, IP protection, patent attorney, exhibition expenses, and other non-salary business development expenses. (See Details).
  • Technological Innovation Incubator Program is for those with a tech idea that’s in the early stages of R&D. It offers a grant of up to 85% of the approved budget to a maximum of NIS 3.5 million (~US $1 million) for two years, with more possible. It is especially directed toward startups seeking to deliver products involving AI, computational biology, physics, nanotechnology, energy, defense, and more. (See Details).
  • Early-Stage Companies Incentive Program is for Israeli tech companies that have raised up to $10 million in funding with previous year revenues of up to $1 million. It offers a conditional grant for up to NIS 10 million (~US $3 million) with more available for Ultra-Orthodox and minority entrepreneurs. Receiving the backing of this program sends a positive signal to investors. Moreover, repayment is provided for by royalty payments based on sales with no transfer of equity. (See Details).

Additionally, the IAA promotes a Calls for Proposals in conjunction with global partnerships – with several active now for China, South Korea, Japan, and Singapore.

The scary monster called a Request for Proposal

Requests for Proposals are defined as, “a document that solicits a proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service, or valuable asset, to potential suppliers to submit business proposals.”

Requests for Proposals get short shrift with most startups and SMBs owing to their history for being hard to find, cumbersome, competitive, and having a long sales cycle. There’s some truth to this still, but eGov initiatives over the years are making it easier for entrepreneurs to get a piece of the pie. Lots of companies and even non-profit organizations and non-governmental organizations issue RFPs, too.

Many executives and senior managers in software development companies avoid RFPs like the plague because of their reputation. When asked if they’ve tried submitting an RFP lately, most answer no or that they’ve tried one or a few (in year’s past).

Here’s the thing — an RFP is a request by a serious client with significant funding asking you for something they want to buy. Oh no, we can’t do that – we might run into some competition! It’d be much easier to close a software development contract with an as yet unidentified client through our awesome Google ads and SEO. /sarcasm.

Why go after RFPs?

Companies go after RFPs because they can be lucrative, offer exclusive long-term arrangements, and once you win one your chances of winning more increase dramatically. Like anything, practice makes perfect. Many governments have programs legally requiring a portion of RFPs to be awarded to startups and SMBs. At the same time, most governments provide assistance to startups and SMBs in how to participate in the RFP and bidding processes. If you desire extra assistance, there are agencies that specialize in writing RFPs (and grant requests).

Because so many other businesses are so intimidated by RFPs, there’s a lot of competition that you won’t be facing. That does mean that you may be competing against companies more experienced with RFPs, but that doesn’t mean their offer will be better than yours. When it comes to software development, you can leverage software outsourcing through PerceptionBox to substantial advantage – in both cost and technical skill. You can add 2-4 Ukrainian developers for each US-based in-house developer.

Also, a quick look into the background of most major tech companies will show that, at one time or another, they’ve contracted with the government. Microsoft has a history of 5,000 contracts with the US government, Amazon has 350, Google 250 – and all, or most, of these contracts started with RFPs. That goes for nearly all types of businesses, not just tech.

How much does it cost to build a remote team in Ukraine?

If you decided to hire a development team in Ukraine or even open an R&D center, this calculator helps you figure out how much it would cost.

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Fail fast and frequently???

Going back to those afraid of RFPs, and the Silicon Valley mantra of “Fail fast and frequently” – it’s also a good idea to fail as painlessly as possible. In retail, not everyone who walks into a store actually buys something. They may be window shopping. An RFP is the same thing, backed by intent to buy. Of course, you need to discern between RFPs and RFIs (Requests for Information), suffice that you’re never guaranteed to win. If you never try to win, you never will win. An RFP is better than a lottery ticket, because someone will win – and it will be decided amongst a fairly small number of ticket buyers.

Statistics exist for everything, including RFPs (here are 34 interesting RFP statistics). RFPs are still cumbersome, having an average of 115 questions. Companies experienced in submitting RFPs take an average of 23 hours to complete them. Expect it to take much longer your first time. But by approaching it in an organized fashion, you’ll gather all of your information in one place and learn more of what to expect. Each subsequent RFP will be that much easier.

And this isn’t to say that every government contract or every time you win an RFP that it will be hugely profitable. Even if you barely break even, you’ve acquired experience into the RFP process increasing your chances of winning future bids, while developing your client portfolio.

These statistics also show that companies that win bids are more likely to win more bids. They are inclined to higher staff to focus on RFPs and use RFP software to make the process more efficient. Some RFP tools include Loopio, RFP360, RFPIO, and Qvidian – but there are plenty of other RFP software options.

RFPs and subcontracting - win at different levels

Even if you don’t pitch for a high-level RFP, keeping an eye on who wins a contract opens the door to subcontracting.

Setting aside the politics, a great case study in this direction is the Logistics Civil Augmentation Program (LOGCAP) III in support of the US military in Afghanistan and Iraq. Kellogg, Brown, and Root (KBR) won the contract (which ultimately paid out over $35.7 billion). KBR, in turn, subcontracted with other companies like EG&G, LSI, DynCorp, Wackenhutt (now G4S Secure Solutions), among others. In turn, most of these subcontractors ended up very busy working with recruiters to bring on and maintain 65,000 individual contractors from cooks and document control specialists, to system administrators and network security specialists, firefighters, etc.

Combining funding and business development

So, who can take advantage of all of this?

  • Entrepreneurs without an idea – you don’t necessarily need the idea when you have large companies and government agencies telling you exactly what they want. If one wants it, there’s a chance that others may want it, too.
  • Startups and Entrepreneurs with an idea – while seeking funding to develop your idea or startup, develop awareness of other companies and government agencies wanting the same or similar. Adding paid clients extends your funding runway.
  • Software development agencies – RFPs range the spectrum of tech projects spanning from web site development and management, web portals, mobile apps, databases, ML/AI projects, IoT devices and companion software, etc.

Other RFP links of interest

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