Israel Linking Immigration With Innovation : Technology: Government program absorbs new arrivals in ‘incubators’ for inventors.

Russian physicist Igor Fridman moved to Israel four years ago with the dream of evolving a type of explosion technology he had developed back home.

Fridman arrived at the start of the Gulf War with his wife and two children, no money and no knowledge of Hebrew.

“The beginning was so hard I can’t even talk about it,” Fridman said.

Today he is director of Seditec Ltd, which is selling the systems developed by Fridman to remove sediment that accumulates in the production of cement, lime and concrete, and in mining operations. The system operates by combustion of a gas and air mixture which generates high energy shock waves.

Fridman is a graduate of the Israeli government’s “technological incubators” program, which was developed in 1991 at the height of the immigration wave from the former Soviet Union.

“The project is unique in the world,” program manager Rina Pridor said. “The idea was to integrate the concept of business incubators with the problem of absorbing these immigrants.”

It was also a way for Israel to reap benefits from the vast technological know-how brought by these immigrants.

“The immigrants know how to invent but they do not know how to do business,” Pridor said.

The incubator projects are all at a very early stage and would not normally attract outside capital.

Under the program, the government provides inventors--half of them immigrants--with $250,000 over two years and a team of professionals to carry out research and development. They are also given facilities at one of 28 incubators spread throughout the country, as well as professional guidance.

The first projects are just starting to emerge from the incubators in the form of start-up companies. The government calls the program a success.

“If they come out of the incubator after two years with an outside investor, then they are a success,” said Pridor.

Of 150 projects funded by the program, 103--or 70%--are operating as independent enterprises after two years in the incubator.

Fifty-five have signed contracts for investment, including Fridman, who formed Seditec with outside investors. A further 48 projects have folded.

Some of the more colorful projects in operation include a fish sperm bank, instant microwave espresso and equipment to unwind silk cocoons.

There is still a certain resistance in Israel to investing in incubator projects.

“The incubators are for projects that didn’t find capital venture funds. They are slightly less attractive projects that have no sponsor to invest in them,” said Gai Mar-Haim, managing partner of P.O.C. Strategic & Marketing Planning.

P.O.C. was hired by a large Israeli medical equipment company to examine one group with an interesting idea. Following a negative evaluation from P.O.C., its client decided against investing in the start-up.

“Since they didn’t get the financing they went into the incubator program,” Mar-Haim said.

Yet some of Israel’s leading high-tech firms and universities are sponsors of the incubators. Some of the high-tech firms continue to invest in the projects once they leave the incubators.

Mar-Haim said his firm was embarking on a project to exchange consulting services for an equity stake in the incubator projects.

The government, meanwhile, continues to bank on the incubators as a way for Israel to maintain its reputation as a leader in high-tech innovation.

The budget for the incubators has risen from $1 million in 1991 to $37 million in 1995.

The 230 projects currently in the incubators employ 1,000 scientists, engineers and technicians, 75% of them new immigrants.