Following the example set by countries such as Finland, Holland, Italy, New Zealand, Italy, the US and the UK , this study advocates the establishment of a joint private-equity fund by the Israeli government, in cooperation with the private sector, with the goal of facilitating investment in small enterprises. Such a fund would create a new financing channel for small enterprises, allowing them to access growth and development capital. Within current support mechanisms, the proposed investment sums, ranging from NIS 2 million to NIS 12 million, are available only in the form of a loan. Another advantage is that these enterprises will enjoy improved management skills thanks to the supervision of the fund managers who can assist in the growth of an enterprise while improving its management, marketing, and operations. Thus, this support mechanism tackles two of the three major barriers by providing the small enterprise with significant investment capital and improving its business capabilities.