Mammoth American multinationals depend on ingenuity from small Israeli startups to drive their businesses forward.
To understand the strong and rising impact of Israeli startups on the US tech scene, consider this month’s Super Bowl LI.
Intel and FOX Sports unveiled a 360-degree “Be the Player” replay technology giving viewers an unprecedented, immersive player’s-eye view on the football championship.
The groundbreaking technology was first developed in Israel by eight-person Replay Technologies in collaboration with Intel, which then developed it further with a large team after buying the 3D video technology startup in March 2016 as the cornerstone of its new Intel Sports Group.
The California-based multinational has been supporting and acquiring Israeli companies since 1974.
“Many of Intel’s core products are developed in Israel,” said Joel Fisch, director of Intel Sports Group’s Technology Collaborations, speaking at a press event at the OurCrowd Global Investor Summit in Jerusalem on February 16. Representatives of some 200 multinationals were there to scout out Israeli talent and build on existing relationships.
“Our role is to identify new and disruptive technologies that we often find in Israeli startups. One needs to be very cognizant of mutual benefit apparent to both sides,” said Fisch.
The Project Alloy VR headset, introduced at CES 2017 in Las Vegas, was created at Intel Haifa using Israeli-developed 3D vision technologies from Omek and Envision, which became the foundational technologies in Intel RealSense.
Intel paved the way for many American multinationals that regularly incorporate Israeli tech.
A late player to the game, Apple, only this week announced its fourth acquisition in Israel as it bought RealFace Technology, a leading developer of facial-recognition tech.
US chipmaker Analog Devices and China’s Changhong recently teamed up to put the SCiO mini spectrometer from Israeli company Consumer Physics inside the world’s first molecular sensing smartphone allowing users to analyze everything from foods to gems.
“Ultimately, in order to survive, a small startup will have to connect or interface with a large multinational,” said former Replay COO Aviv Shapira, now senior director of operations and production at Intel Sports Group.
But the connection will bear fruit only if the startup offers something of outsized value to its American partner. A large number of Israeli innovations consistently do just that.
New Jersey-headquartered medical-devices and life-sciences company Becton Dickinson (BD) “has been actively involved with many startups in Israel,” said Yuri Haverman, BD head of strategic innovation.
“Israeli companies are driving the Massachusetts economy and it’s a proxy for what’s happening in cities all over the United States.”
“Big corporations like ours are looking at the entrepreneurial agility of Israeli startups that are able to come up with very technologically deep solutions to important problems, and do it fast. What we bring to the table is scale and infrastructure. It’s a perfect combination,” Haverman said.
Aiming to reduce the “huge burden” of medication errors, BD’s latest Israeli collaboration is with MedAware, which uses machine-learning algorithms and large-scale electronic medical records data to identify prescription medicine errors in real time.
Innovative Israeli technology companies boost investment, jobs and growth not only within US-based multinational companies but also within individual states.
Take a look at what’s been happening in Massachusetts.
According to the 2016 Massachusetts-Israel Economic Impact Study, 216 businesses in greater Boston have at least one Israeli-born founder.
In 2015, those companies booked $9 billion in revenue and had an overall economic impact of twice that amount, including 27,000 jobs generated and $400-500 million in venture capital brought into the state.
Since 1999, acquisitions and collaborations across Massachusetts- and Israeli-founded companies — including giants such as Boston Scientific, Raytheon and Dell EMC — have totaled over $10 billion.
“A small country having such a huge impact half a world away is extraordinary,” says David Goodtree, a board member of MassChallenge Israel and the New England-Israel Business Council and an OurCrowd global venture partner.
Goodtree holds up Argo Medical Technologies’ ReWalk as a prime example. The very successful Israeli developer of a robotic exoskeleton for paraplegics opened its US manufacturing, sales and service headquarters in Marlborough, Massachusetts, in October 2012 with a former Boston Scientific executive as its CEO.
Massachusetts Governor Charlie Baker recently led a high-level business delegation to find new partnerships in Israel – the only country to which he has made such a trip.
“Israeli companies are driving the Massachusetts economy and it’s a proxy for what’s happening in cities all over the United States,” says Goodtree.
OurCrowd CEO Jon Medved says this phenomenon has indeed spread way beyond New York and California, where scores of Israeli-founded companies have set up shop.
Ohio, Michigan, Alabama, Georgia, South Carolina, Vermont and Florida are among many US states actively hosting and courting Israeli companies, and the list is growing constantly.
“Israel is really becoming the hub for creating jobs and making money together,” said Medved. “And as we move into more frontier technologies, Israel’s place in innovation will strengthen.”