Chicago looks to Israel for tech startup lessons
Sep. 10, 2014
Even with its cycles of violent conflict, Israel has built a high-tech environment that some experts say is second only to Silicon Valley — one in which government, the military, academia, multinational corporations, venture capitalists and angel investors work in tandem to foster the risky business of launching companies, at least half of which will fail.
This summer's conflict with Hamas, like past episodes of armed confrontation, does not appear to have soured investors, who tend to see the outbreaks as temporary disruptions.
Jerusalem-based Mobileye, whose technology aims to prevent accidents in driverless cars, raised $890 million in its U.S. initial public offering Aug. 1, which was $250 million more than it anticipated and a record for an Israeli company.
"Some of the biggest upturns in Israeli high-tech occurred during very serious conflicts in the region," said Gadi Tirosh, general partner with Jerusalem Venture Partners, one of the country's largest venture capital firms. Israel's tech scene performance tends to mirror the sector's global trends, he said.
The Office of the Chief Scientist in the Economy Ministry acts as the central clearinghouse for public-private high-tech partnerships.
"Every dollar we put into research and development generates another $1.50 in research spending by the private sector that wouldn't have happened without our dollar," said Avi Hasson, the chief scientist, citing a 2008 analysis that is being updated.
In the rocky, terraced hills outside Jerusalem, early stage investment firm Trendlines Group operates an agriculture incubator. The scent of a neighboring dairy farm seeps into the cut-limestone office building as scientists puzzle over robotic chicken-feeding systems, ultraprecise irrigation equipment and automated grafting processes.
The company, which has Chicago investors, sees potential demand worldwide. "All the problems this country was facing during the years — lack of water, lack of arable land, harsh climate, small resources — these days, these are faced all over the world," said Nitza Kardish, the incubator's CEO.
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