Israel Business News
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When the online retail giant Amazon recently entered Israel’s high-tech ecosystem, it was far from business as usual in the “start-up nation.”As the conglomerate began attracting top Israeli programmers with aggressive hiring tactics and unusually high salary offerings, industry experts initiated calls for the Jewish state to expand its pool of highly skilled technology talent—which is becoming an increasingly scarce resource despite the country’s well-known penchant for innovation.
Deutsche Bank last week ranked the Israeli shekel as the world’s second-strongest currency, bolstering the broader outlook on the Jewish state’s economy. During the past year, the shekel has appreciated 6.1 percent against the currencies of Israel’s main trading partners, including the U.S. dollar, British pound, euro and yen. “The strength of the shekel reflects the strength of Israel’s current economic position,” said Leo Leiderman, a professor of economics at Tel Aviv University and the chief economic adviser for Bank Hapoalim, Israel’s largest bank.
Dan Senor and Saul Singer’s 2009 book, “Start-Up Nation,” first captured Israel’s chutzpah-driven culture of innovation. More recently, stunning multi-billion dollar acquisitions—such as Intel’s $15.3 billion purchase of Mobileye—have prompted Israelis to rethink what’s possible. “Sometimes I’m uncomfortable with the term ‘start-up nation,’” says Raphael Gross, co-founder of the Israel Aliyah Fund online platform. “People don’t realize that Mobileye was started nearly 20 years ago at Hebrew University. At what point is a venture no longer a start-up but, rather, a full-fledged company?”
In the latest development solidifying Israel as a key player in the emerging financial technology field, the founder of the Ethereum digital currency network, Vitalik Buterin, visited the Jewish state this week to meet with local digital currency and blockchain technology entrepreneurs, writes JNS's Adam Abrams.
As bitcoin and other digital currencies make historic gains, the “start-up nation” of Israel is uniquely positioned to become a global leader in financial technology. In August, digital currencies exceeded a global market cap of $172 billion, meaning the combined value of all publicly traded digital currencies surpassed that amount. Alignment, Israel’s first blockchain incubator, was launched in late August. Blockchain is a distributed database for transactions made in digital currencies.
The latest innovator from Israel’s “start-up nation” to score an international breakthrough is seeking to make the exchange and creation of digital currencies accessible to the masses. The Tel Aviv-based Bancor Foundation start-up recently raised $153 million on the Ethereum digital currency network, in a record-setting initial coin offering. “As the world moves into its next era of geopolitical organization, and cryptocurrencies improve in adoption, security and stability, we can imagine a new financial world order which is based on algorithmically ensured balance rather than politics,” Galia Benartzi, Bancor’s co-founder, told JNS.org.
When Mark Rosenblatt touched down at Ben Gurion Airport in Tel Aviv April 5 and powered on his cell phone, he got the surprise of his mobile technology life. Rosenblatt received a text message from his cell phone carrier, Verizon, reading, “Welcome to Palestine.” Attempting to explain the situation, Verizon spokesman Scott Charlston told JNS.org that Ben Gurion Airport “is close to the Israeli border [with the West Bank] and there are cell sites and wireless signals from different providers on both sides. In general, customers living in or visiting border areas occasionally receive a wireless signal from a cross-border provider.” Experts dismissed Verizon’s response on the grounds that no state of “Palestine” exists under international law.
Who would ever imagine that two peoples living 5,470 miles apart (that’s 8,803 kilometers for the Israelis) would share so much in common, notably a mutual passion for innovation, a creative work ethic and a deep well of talent? Those ties that bind Israel and Massachusetts were both celebrated and strengthened during the Bay State’s Economic Development Mission to Israel last week. Massachusetts Governor Charlie Baker led a delegation of leaders from across his state—representing industry, academia, the non-profit world and government agencies—through a packed schedule of briefings, summits, forums and site visits. Participants said they were struck by the so-called “start-up nation” culture of innovation shared by Israel and Massachusetts. “The synergy between the two is amazing, especially when you consider that we come from such different backgrounds. But we have the same kind of passion for innovation,” Lior Div, CEO of the Israeli cybersecurity firm Cybereason, told JNS.org.
Sonnenallee, a street in Berlin’s Neukölln district, looks like it comes straight out of an Arab city. Kebab and bakery shops are advertised in Arabic; men sit in men-only coffee shops; and bridal shop windows showcase glittery, not-so-stylish gowns. But take a random turn, and you’ll find a swath of bars, burger joints, and Indian restaurants where hip Berliners announce that they have arrived to urban coolness. In this gentrifying neighborhood, Israeli investors are hoping to find some of the remaining affordable gems in the German capital’s increasingly competitive housing market. According to Gili Waldman—an investment consultant for Berlin Inspiration, one of several Israeli real estate companies marketing Berlin properties to Israeli investors—Berlin property values increase at a rate of about 10 percent a year. The rising costs have made Israeli investors in Germany turn east for real estate bargains.
Akko (also known as Acre), an Israeli city famous for Crusader-Muslim showdowns and Napoleon’s failed attempt to take its port from the Ottomans, is undergoing a transformation. In 2001, UNESCO named Acre as a World Heritage Site, a designation that spurred the municipality to cultivate world-class tourism attractions. Yet until now, Akko didn’t have the high-end accommodations to match the prestigious UNESCO designation. Creative entrepreneurs are increasingly realizing how this mixed Jewish-Arab city offers a model of coexistence, at a time when Muslim-Jewish tensions are heightened due to the spate of stabbings and other terror attacks against Jews in the streets of Israel. With its stone seawall recalling the city’s days as a fortress and a lively port, Akko evinces the antique charm of places like Jerusalem and Jaffa—minus the commercialization.
Ask the average Israeli where he or she has visited in the U.S., and you’ll likely hear New York, Los Angeles, or Washington, DC. But that’s changing, and one of the catalysts is the burgeoning economic relationship between Israel and Midwestern states. In March, Missouri Governor Jay Nixon led a delegation of state officials on a trade mission to Israel. The visit was focused on strengthening partnerships, increasing exports, and recruiting new high-tech foreign investment to the “Show Me State.” This week, from Missouri’s neighbor of Kansas, Lieutenant Governor Jeff Colyer joins a handful of other regional governors on a similar trade mission. “It sometimes kind of surprises people,” Colyer told JNS.org regarding his U.S. state’s ties with the Jewish state. “Israel is an important business relationship for us. A lot of things are happening here.” In 2015, Kansas exported around $75 million worth of goods to Israel, according to Colyer, and imported more than $80 million, according to the International Trade Administration. Missouri imported more than $161 million from Israel, Iowa a bit more than $91 million, and Indiana around $109 million.
Nine months ago, Seth Cohen, director of network initiatives for the Charles and Lynn Schusterman Family Foundation, and Randall Lane, editor of Forbes Magazine, were schmoozing about the “vibrancy of Tel Aviv and soul of Jerusalem.” They dreamed about how they could bring young and innovative millennials to the “start-up nation.” From April 3-7, Forbes turned that dream into a reality. Israel played host to the first-ever Forbes Under 30 EMEA (Europe, the Middle East, and Africa) summit. Lane said that hosting the conference in Israel shows future leaders that innovation and growth can thrive even in regions marred with strife. The event hosted 300 American, 200 European, and 200 Middle Eastern and African young entrepreneurs and game-changers. “There are 40 countries represented here, and the common language is entrepreneurship,” said Lane.
In 2003, Jeremy Lustman began working at the Washington, DC metro area’s DLA Piper law firm. Young and motivated, he could have never predicted the market crash that arrived in 2007. By 2009, Lustman had seen many of his colleagues laid off. While he was still gainfully employed, he decided to plan his next step. “I researched the prospect of trying to create an Israeli practice,” says Lustman. “Israel seemed to be a market that was growing dramatically...and a lot of Anglos were doing business there.” With no existing proactive law practice revolving around investment in the Jewish state, Lustman moved to Israel to try to fill the void. He says he started out with a list of 25 or 30 “random people”—and a lot of motivation. He knocked on doors; attended professional networking conferences; and tried to meet with local lawyers, investors, and venture capitalists. Ultimately, business snowballed. In just the first half of 2015, DLA Piper's Israel Country Group, led by Lustman, helped facilitate seven M&A (merger and acquisition) transactions that collectively exceeded $1.5 billion, brokered several real estate acquisitions, and helped enable three fund investments for Israeli institutions that total about $255 million. In essence, he has been a "shadchan" (matchmaker) in the Israeli start-up scene.
You’re cruising along the highway. Your car starts to sputter, your engine grumbles, and your car comes to a screeching halt. The tow truck drags the car to a local auto mechanic. Damage: $1,000. You have no idea whether or not the mechanic is trying to do one over on you. Engie, however, puts the car owner in the driver’s seat by providing a special malfunction reader that simply plugs into your car to assess the problem. It then transports the data on the malfunction via Bluetooth technology to an app that offers more information on the damage and helps determine how much the repair should cost. Engie was among the various Israeli innovations presented from Jan. 25-26 at the OurCrowd Global Investor Summit in Jerusalem. “It is amazing,” said USAID Economic Growth Officer Jarir Dirini, who attended the summit. “But we expect to find it here.”
There might be some bureaucratic hurdles, but Israel is an ideal environment for investment and opportunities are aplenty. That was the message the Jewish state’s energy minister conveyed to oil and gas companies during his recent visit to the “energy capital of the world.” Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz (Likud) was in Houston from Oct. 19-20 for a series of meetings and events pertaining to the energy and water industries. Houston is home to Noble Energy, which partners with the Israeli company Delek Group in the operation of Israel’s two offshore gas fields, Tamar and Leviathan. Michal Niddam-Wachsman, head of the Israeli government’s Economic Mission in the U.S. Southern Region, said Israel is looking for “several other Nobles”—more companies willing to be trailblazers and invest in Israel’s burgeoning natural gas industry. “The fact that [Steinitz] came [to Houston]…his presence, saying to the companies, ‘Listen, we have those opportunities, we want you to come,’ means that we as a government want to give motivation to the local companies to invest in Israel,” she said.
Given Israel’s penchant for innovation, it was only a matter of time before the “start-up nation” established a robust presence at the Offshore Technology Conference (OTC), one of the world’s largest annual trade shows for the oil and gas industry. “The people in Israel are entrepreneurs in their souls, so as soon as they see an opportunity, they take it,” said Michal Niddam-Wachsman, head of the Israeli government’s Economic Mission in the U.S. Southern Region. “When we discovered the natural gas [in the Tamar and Leviathan fields off Israel’s coast], they immediately saw the opportunity of developing the technology that would be related to the natural gas and the oil market.” Fourteen Israeli companies were on display in Houston from May 4-7 at the OTC, which was attended by 94,700 people. It was Israel’s third year with a pavilion at the trade show.
OurCrowd, the crowdfunding platform that has raised $100 million for Israeli start-up companies over the last two years, in late February announced its first official strategic partnership on U.S. soil. The collaboration is with the Maryland/Israel Development Center (MIDC), which promotes bilateral trade and investment to help create jobs in both economies mentioned in its name. But OurCrowd founder Jonathan Medved has much more than Maryland in mind. “This isn’t really about OurCrowd, or about OurCrowd and MIDC,” he tells JNS.org. “This is about partnership between the U.S. and Israel, which is linking the two most important sources of innovation in the world.”
Half of Israel’s new businesses fail within five years, according to a fall 2014 report from the French-based Organization for Economic Co-operation and Development. Against that backdrop, a recently launched networking initiative is helping olim (immigrants to Israel) acclimate to their new country and start over, partly by boosting local entrepreneurship. “If you’re going to develop a local business, you need to network,” said the Nefesh B’Nefesh aliyah agency’s Michele Kaplan-Green, who coordinates the Western Galilee Business Networking Forum. “The forum is in Hebrew, but everyone speaks English. It’s very olim-friendly.”
The “start-up nation”—a nickname Israel earned due to its population’s knack for innovation—is increasingly exporting its culture of entrepreneurship to America. There are a number of reasons why an Israeli might decide to come to the U.S., but for businesspeople, the move is often based on necessity. The relatively small market of Israel, a country that is roughly the size of New Jersey, leaves Israeli companies thirsting for opportunities outside of the Holy Land. “Israel is great place to nurture new ideas. But when they want to scale up, they have to go to the U.S. or Europe,” Benjamin Soffer, head of the Technology Transfer Office at Technion - Israel Institute of Technology, told JNS.org.