The Israeli Government has been always supportive to the Israeli industry and since the 1970 first priority was given to industrial research and development. The Government has been aware of the human resource being the major Israeli resource, of the growing role this resource in modern economy and on the leverage Government support can provide to rapidly developing industries.

Government has continuously attempted to direct its limited resources to provide the best leverage for development of the industry. An excellent example may be the creation of the Israel industry. In the early 1990s there was not a single Venture Capital fund in Israel. Government, recognizing this market failure, founded a Venture Capital fund Yozma and through it supported high level guaranties to new Venture Capital funds. Within few years the industry "stood on its feet", government guaranties were stopped and Yozma was privatized.

Today hundreds of VCs operate in Israel, many of which are second and third generation VCs, many are overseas VCs with a affiliation in Israel.