As Israeli technology startups mature enough to look overseas, they’ll gravitate to states with well-established Israeli corporate communities and mentoring networks, said Dan Senor, author of the book “Start-Up Nation: The Story of Israel’s Economic Miracle.”
“Where Israelis tend to face challenges are in the areas of marketing and business development,” Mr. Senor told GlobalAtlanta in a telephone interview. “In the event that states can cultivate large mentoring networks for Israeli companies, that is very attractive.”
Mr. Senor, senior fellow for Middle East studies at the Council on Foreign Relations and a former foreign policy adviser to George W. Bush, visited Atlanta Feb. 25 to speak on his book at an American Israel Chamber of Commerce Southeast Region event.
“Start-Up Nation” describes how Israel, a country of 7 million people bordered by nations that embargo its goods and at times oppose its very existence, blossomed into a dynamic, globally oriented economy and a hub for high-technology startups.
For Georgia, the question is not so much that the startups are thriving, but how to draw them to the state once they’ve matured, creating the sustainable, high-wage jobs that make economic developers’ hearts flutter.
To hear Tom Glaser tell it, that hasn’t been much of a problem in Atlanta. Mr. Glaser, president of the American Israel chamber, said his organization has worked with local Israeli companies to put in place a strong mentorship system that provides a “soft landing” for companies considering a Georgia expansion.
“As far as our state goes, Israeli companies already probably have the best mentorship program anywhere in the United States,” he said.
The chamber actively pursues new companies. Its committees form “screening teams” that hear presentations from Israeli startups and advise them on how best to break into the U.S. This free information could cost thousands of dollars elsewhere, Mr. Glaser said.
Over the past 18 years, more than 40 Israeli companies have set up national or regional operations in Georgia. Some startups have stayed here as they’ve grown into full-fledged American corporations, Mr. Glaser said.
Israeli firms tend to set up operations where they have easy access to customers and investment, Mr. Glaser said. Atlanta does well on the former – many Israeli companies came here in the 1990s to be near customers like Coca-Cola Co. and Cox Enterprises – but lags in the latter, especially in venture capital, he said.
“Very often, local high-tech startups can’t find the funding here,” Mr. Glaser said. “They get funding elsewhere and ultimately move their locations from here to be closer to their investors.”
For Seergate Ltd., an Israeli startup that sells an electronic bill payment system, moving to Atlanta from San Francisco a few months ago wasn’t about capital or cultural community. It was simply a sound business move, said Alicia Roisman Ismach, vice president and co-founder of Seergate, which coincidentally started in Ra’anana, Israel, a sister city of Atlanta.
Aside from its convenient air access, healthy talent pool and low cost of doing business, Atlanta has a large concentration of payment processing companies, Ms. Roisman Ismach said.
“There is no financial technology company that lives in a vacuum,” she said. Relationships, customer feedback and access to skilled professionals are essential. It’s easier to find all three in the midst of an industry cluster.
That said, Ms. Roisman Ismach sees the value of having a large pool of Israeli companies to shepherd newcomers along.
If the thesis of “Start-Up Nation” is correct, there won’t be any shortage of them.
The roots of the book came as early as 2001, when Mr. Senor took a group of 30 Harvard University business students on their first visit to Israel. They were impressed by the “economic miracle” Mr. Senor describes in 320 pages.
“At the end of the trip, the students were intrigued by the question of how Israel pulled this off in the least likely of places,” Mr. Senor told GlobalAtlanta.
Mr. Senor and co-author Saul Singer began writing in 2008 to answer policy makers who started asking during the economic “meltdown” how the U.S. could return to its roots as an entrepreneurial, innovation-based economy, said Mr. Senor, a longtime investor in Israeli startups.
“It struck us that staring at us was a phenonomenal model of an innovation-based, entrepreneur-centered economy, from Israel,” Mr. Senor said.
Many factors contributed to Israel’s ascent, he said. The country spends more as a percentage of its economy on non-military research and development than any other nation. Thanks to a temporary program that used government loans to entice large foreign firms to invest in Israeli startups, an unrivaled venture capital scene has developed, he said.
In some ways, Israel’s tech industry developed out of geographic necessity, Mr. Senor said. With a domestic market smaller than Georgia, Israel recognized very early that growth would depend largely on exports. But Arab boycotts against Israeli goods, still in place in most Middle East nations today, made trade with many of its close neighbors impossible.
“It left them exporting way beyond their region,” Mr. Senor said. “They needed to export small stuff, small and easily transportable. Well, the smallest and most transportable stuff out there is information technology.”
Culture and national policies have also helped foster a nationwide entrepreneurial bent. “Progressive immigration policies and innovative assimiliation policies” have helped Israel attract and keep brainpower from more than 70 countries, Mr. Senor said. Two years of mandatory military service gives Israeli youngsters leadership training that better prepares them for college and gives them the confidence that entrepreneurs need to strike out on their own.
About 140 people attended Mr. Senor’s Atlanta speech, according to Mr. Glaser.
The day before the event, reports emerged that Mr. Senor was mulling a Senate run in New York. He wouldn’t comment on the rumors.
“That’s not the purpose of this interview,” he said.