New York Investors Move to Target Israeli Startups

wall streetBy Paul Grossinger

“Everybody is now interested in Israeli technology,” said Yoav Lietersdorf, the Israeli venture capitalist, in comments to Bloomberg this summer on why Israeli startups are expanding more rapidly to the United States. The next step for that expansion should be the Big Apple.

New York is fast becoming a global hub of technology startup innovation and, while it has been a long time coming, New York investors are finally beginning exciting new initiatives targeted specifically at the exciting Israeli startup market.

The recent success of Israeli startups, represented most prominently by Google’s spring acquisition of Waze for a tantalizing $1.1 billion, has got New York angels and venture capitalists, many of whom have significant personal and philanthrophic interests in Israel, interested in diving into the market.

New York investors’ interest in Israeli startups is part of a slow, but growing, trend of interest in international companies. Foreign startups, or startups with international co-founders, have been funded in increasing numbers this year by tri-state angel groups, a trend of which I myself have been a beneficiary as my own startup, Pervasive Group’s MMGuardian, which has two international co-founders from China and England, was funded by Jumpstart New Jersey and Delaware Crossing Investor Group. But no other country’s startups have piqued New York investors’ interest quite like those of Israel and there is an exciting back-story to why the “Startup Nation” now captivates the New York investment community.

The Big Apple itself planted the seed with its choice of the Technion-Cornell University partnership for its new entrepreneurs’ campus on Roosevelt Island. The partnership, which beat out Silicon Valley heavyweight Stanford, brought new, positive scrutiny to Technion University and many of the startups it has produced in the past decade. That interest, in turn, spawned new relationships between New York investors, many of whom backed the Roosevelt Island project, and Israel’s top incubators, including the relatively new Google and Microsoft accelerators, IDC Elevator, and the HiCenter.

The seed grew with this year’s New York mayoral delegation trip to Israel this past March. The delegation, which included prominent New York Angels, venture capitalists, and seed-stage investors, visited Israel’s most prominent accelerators and universities, including, of course, the Technion, and cemented many of the informal relationships that began forming after the Roosevelt Island decision in 2011.

Recently, that interest has exploded into action. Examples abound: Dreamit Ventures, which hosted its accelerator demo day last week, launched several exciting Israeli startups. These included Mimoona and Instrumagic, which demoed for a large investor audience. Tanya Low of Starfarm Ventures is recruiting Israeli companies with the offer of funding and accommodation in New York City. New York Angels’ Israel Investment Committee, on which I sit, is now working with angel and venture partners to host Israeli and other international companies in investment-oriented summit events during the late fall of 2013 and throughout 2014. The US-Israel Business Council recently hosted an investor event for fifteen Brazilian and Israeli startups where the companies raised a collective $1 million afterword, and plans to host a follow-on event October 7-9, 2013 that will feature fifteen more companies with the goal to raise several million dollars in capital.

What will become of this flurry of activity? When the dust settles, no one knows exactly which events and partnerships will be successful and which Israeli companies will make it in the Big Apple. But one thing is clear: New York investors, after slow interest for nearly a decade, are now deeply interested in Israeli companies. One way or another, the Startup Nation will find a home in the Big Apple.

Paul Grossinger is a New York City mobile technology entrepreneur, angel investor, and accelerator mentor as well as co-founder of Pervasive Group, Inc., a mobile-security software company. He is a member of The Cline Group’s Advisory Council.

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