Investment Bank Jerusalem Global has changed its business model and turned its technology incubator into a venture capital fund specializing in young start-up companies, Shlomo Kalish, the company's chairman and founder told The Jerusalem Post yesterday.

The Jerusalem Global Ventures fund, which has raised some $200 million, focuses now on investments in seed and early-stage companies in addition to the supplying seed and pre-seed financing and backing to start-up companies.

The company, which was originally named Jerusalem Global Innovation Center, was founded with the idea of helping Israeli engineers who have strong technological knowledge but lack management experience and knowledge about the market's needs, by supplying them with administrative services and a supportive environment. The company was providing these services through three incubators active in the fields of Internet-enabling technology, communications, and medical devices. However, the bear market in Internet stocks has put much pressure on incubators around the world which have lost their luster. "We have decided not to limit ourselves to being an incubator and expanded the charter to investment in early stage companies," Kalish said. "There is an explosion of incubators, and investors found it difficult to understand that we are a fund that is also giving incubator services," Kalish said. "Now we give investors a much simpler message. We are a fund." So far Jerusalem Global Ventures has invested some $30m. in 11 start-ups.

The decision to abandon the incubator model is a clear result of the recent change in the technology market. Last week, US-based Internet incubator Idealab, which Kalish viewed as model when he established the innovation centers, said it was forced to abandon its grand plans for an initial public stock offering. Idealab, which created companies such as on-line toy retailer EToys, search engine company GoTo.com, and free Internet service provider NetZero, was expected to achieve a market valuation of $10 billion before US investors lost interest in dotcom companies. In November, Idealab's stakes in its public portfolio were worth nearly $2.3b., while today those stakes are worth less than $220m. and it is now expecting to see some of its start-ups shut down in the coming months.

Jerusalem Global has also announced yesterday a $5m. investment in Rosh Ha'ayin-based Mobile Economy as part of a $7.5m. investment round. The early-stage company offers value-added services to mobile operators, wireless Internet service providers, and content and application providers.