An expressway to Silicon Valley for Israeli start-ups

For Israeli entrepreneurs seeking a toehold in the United States, UpWest Labs, located in Palo Alto — the heart of Silicon Valley — offers some important advantages, according to Shuly Galili, one of the Upwest’s three founders and partners. “Israeli start-ups that want to succeed in the US really need a presence in the US,” said Galili, who started UpWest with partners Liron Petrushka and Gil Ben-Artzy in 2012. “They might as well come to Silicon Valley to begin with, because if they want to succeed in America, they are probably going to have to come here in the end anyway.”

UpWest is just like any Israeli tech accelerator, except for its location — which, Galili said, is its advantage. “We provide investments, supply them with office space and services, and get them discounts on PR, legal assistance, etc. (UpWest takes up to 8% of equity in companies it funds, Galili noted). But the most important benefit is that they get introduced to the ecosystem of Silicon Valley, and get an opportunity to work with some of the most influential and experienced people in the technology world.”

“We help them learn the business ropes and gain the skills they need to make sales and meet investors in Silicon Valley,” said Galili. “In two years, we’ve provided essential resources to over 150 entrepreneurs representing 30 startups, connecting them with hundreds of top Silicon Valley mentors and entrepreneurs.”

And then there’s the house UpWest provides the entrepreneurs during their stay in the US. “In order to help entrepreneurs save money, we maintain a house in Palo Alto. Silicon Valley, of course is one of the most expensive places to live in the world, and having all the entrepreneurs living together lets them come home to a community of fellow Israeli entrepreneurs, where they can swap stories and experiences and learn how to improve their products,” said Galili.

It sounds like the perfect setting for a reality show. “We’ve actually gotten offers to do a show about the house and the program, but we politely declined. We don’t want to get distracted from our main goal,” said Galili.

Mentors who work with UpWest companies include the cream of Silicon Valley’s crop, with top managers and executives from companies like Paypal, Google Ventures, Facebook, Dropbox, and many others advising Israeli start-ups on how to approach and pitch investors, how to improve their products and services, etc.

Shuly Galili (Photo credit: Courtesy)

In UpWest’s two years, some 30 companies have gone through six accelerator programs — each four month program includes 5-7 start-ups. This week UpWest opened its seventh class, with six companies participating. Graduates of the first six classes have raised more than $20m in funding, with average seed funding at over $1m per company. Over two-thirds of the UpWest graduates have raised follow-on funding.

Like in previous classes, the companies include start-ups in a variety of areas. Among this year’s crop: Donde, a mobile app that leverages artificial intelligence to help users search for fashion products; ModusP, a legal knowledge platform providing attorneys with advanced research tools for legal databases; Javelin, an advanced security platform providing real-time reactions to beat cyber-threats; and Doomoro, a marketplace for freelancers.

To break into the market, a Silicon Valley location is key, Galili believes — that’s where the money and contacts are, after all — but bringing companies to the US doesn’t automatically mean they are going to leave Israel. In fact, over the two years of the program, almost none have. “The ideal formula for an Israeli start-up is to have a sales and marketing office in the US, with their R&D facilities in Israel,” she said.

But Israel, still a hotbed of innovation, is the ideal place to do R&D, and the entrepreneurs who flock to UpWest (about 200 companies apply for the slots each time a program is announced, said Galili) know it. “So many American companies go to Israel to look for talent and to open development centers, and these companies are already part of the Israeli ecosystem, so they don’t leave,” Galili said. “In fact, once they break into the market in the US, they expand and hire even more people in Israel. We’ve seen it happen with companies like Waze, and many others.”

And as savvy as the entrepreneurs who attend UpWest are, there’s plenty they need to learn. “Things work differently here than they do in Israel,” Galili said. “You have to learn to build relationships with the potential partnets and investors here, understand how to relate to them.” Silicon Valley “loves Israel, especially the out of the box thinking and independent spirit of Israelis, and their ability to build with very few resources.”

But the directness and dismissal of convention that helps a company thrive in the Israeli ecosystem might not serve them as well in the more formalized, rule-oriented milieu of Silicon Valley, said Galili. “It’s an educational process, and one of the things that our mentors especially stress.” Fortunately, she said, the vast majority of entrepreneurs are motivated enough to do what they have to in order to fit in.

UpWest’s staff comes with the right credentials to ensure success of the program. Gili Ben-Artzy has had a long career working with Silicon Valley companies, setting up Yahoo’s R&D center in Israel. Liron Petrushka is a serial entreprener, having started, invested in, or been a key part of over a dozen companies in Israel and the US. And Galili herself was the founder of the California Israel Chamber of Commerce (CICC), which serves a network of over 10,000 companies in Israel and California.

“Our goal is to help Israeli start-ups find their place in Silicon Valley,” said Galili. “The formula is simple: The closer they are to the action, the more likely they will be to get in on the action. The action is here in Silicon Valley, and we help them to be a part of it.”