Jerusalem, Jul 31 (IANS): Israel launched a state fund that will allocate a total of 155 million U.S. dollars to 18 selected financial entities for investment in venture capital (VC) funds supporting startups, said the Israel Innovation Authority (IIA) on Wednesday.

The fund, initiated by the IIA in collaboration with the finance and innovation ministries, aims to support Israeli hi-tech companies, strengthen connections between institutional investors and local VC funds as in leading global markets, and enhance the stability of the local VC market against economic shocks.

The IIA noted in a statement that the fund will significantly boost innovation within Israel's tech ecosystem.

Major institutional investment entities in Israel submitted applications totaling about 500 million U.S. dollars, Xinhua news agency reported.

Under the program, the IIA will provide matching funding for institutional investments in Israeli VC funds and will waive its share of the returns from the investments to boost the returns for institutional investors.

The IIA will also share investment losses with the institutional entities.

The investment policies also require the IIA not to intervene in the investment decisions of the institutions or the VC fund managers, who will be able to invest the funds, the statement said.

During the first four years following the fund's investment, institutional entities can purchase the state's share at an annual compound interest rate of 1 percent, it said.

Additional incentives will be offered to institutional entities investing in VC funds that focus primarily on deep-tech companies, it added.