The Current State and Future of Israeli/American Business Alliances

In light of its geopolitical under-dog status, Israel’s global reputation for her cutting-edge high-tech industry continues to ripen.

Israeli StartupsJewish Ideas Daily recently released a report exploring “The drivers behind Israel’s innovative impulse, drawing in part on a recent series of panel discussions sponsored by the U.S. Chamber of Commerce.” We will also take a glance at the partnerships Israeli companies have forged with U.S. companies; and the causes of the painful adjustment period being faced today by the Israeli venture capital business.

Today, Israel has the second largest number of start-up firms in the world, and the largest number of Nasdaq-listed companies outside North America. Panelists at a conference which happened recently in Washington, D.C., called, “The United States and Israel: Building Business Through Innovation,” explored the issues contributing to innovation in Israel, while debating what has helped and hindered the Jewish Country’s move to be a hotbed of global entrepreneurship.

The fact is hundreds of U.S. and Israeli companies have formed alliances in recent years, while many more partnerships are in the works. The relationships are fueled by a nature of quid prop quo. The Israelis get funding, marketing expertise, job growth and better access to the North American market; while the Americans benefit on the job front and through increased market access. They also reap savings in development and production and have an opportunity to tap into Israel’s talent for innovation.

Once acclaimed in Israel for its ability to launch a rich stream of high-tech start-ups, the VC industry has been injured lately on two fronts: Firms in the sector are not able to raise money for new funds, and they cannot exit easily from existing investments via IPOs. Is this painful squeeze merely part of a healthy cycle or is it representative of something with more severe implications?

“The doomsday scenario, according to some industry experts, is that future high-tech start-ups will not need the VC industry as much as before.”

Wrote a researcher from the University of Pennsylvania who attended the conference.

Who’s Kicking Ass

One company to lookout for is Gazit Globe. Considered among the world’s top real estate investment multinationals, the firm is listed on the Tel Aviv stock exchange. They operate in some 20 countries and own or operate 6.3 million square meters of space spread over more than 650 properties.

In United States, Gazit’s investment vehicles include Equity one, a real estate investment trust which focuses on high quality retail properties. Gazit’s total asset value exceeds $15 billion. Gazit’s chairman and founder, Chaim Katzman, spoke recently with Wharton real estate professor, Peter Linneman, and Knowledge@Wharton about the firm’s origins, and a bit about his personal management philosophy.

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