NEW YORK — New York City wants to keep young technology professionals from fleeing to California’s Silicon Valley, and the city has turned to an established Israeli venture capital firm to help it keep the tech talent on the east coast.
The city on Monday launched a unique partnership with Israeli venture capital and start up incubator firm Jerusalem Venture Partners with a flashy celebration at the new tech hub in downtown Manhattan, featuring deputy mayor Vicki Been and actress/entrepreneur Gwyneth Paltrow.
The $100 million partnership, including a $30 million contribution from New York City, will focus on companies working in the cyber technology sector.
New York City settled on cyber security as an under-represented sector in the technology world with officials saying that there are approximately 10,000 job openings in the cyber security field in New York City alone, and a shortage of more than one to two million cyber security experts around the world in the coming years.
גווינית', אנחנו מזמינים אותך!
הלילה בשיחה עם אראל מרגלית @GwynethPaltrow (בעלת שורשים יהודיים כשרים) התלוננה שמעולם לא הוזמנה לישראל. היא אפילו חתמה ב"לשנה הבאה בירושלים הבנויה" בעברית! כל זה קרה באירוע חנוכת מרכז סייבר חדש בניו יורק.@Sykocan @GLZRadio pic.twitter.com/iq0oqz4bb8
— Inbal Gasit (@InbalGasit) February 4, 2020
“The bottom line is that there are not enough well-trained people in cyber security to fill the jobs that are required for a safer, more thriving commercial sector,” said Wilson Lin, the head of Cyber NYC, a city initiative of the New York City’s Economic Development Corporation.
One of the biggest issues is that large companies are able to afford expensive cyber protection from established security companies, but small to medium size businesses do not have affordable solutions. As data is increasingly online, hackers can target anything from health data to a city’s electric grids to nuclear reactors to home security systems to stealing personal information from your local coffee shop’s loyalty program. Smaller companies need new cyber security solutions from up and coming companies, ones that will hopefully be scaled up at the joint JVP-NYC hub.
“Cyber security is continually growing more and more complex, and it is more and more urgent not only for large corporations like banks and large companies, but also for your own personal lives,” Lin added. “There are new stories every day, every week about some large credit agency or large hotel chain being hacked. People are continually realizing that we are vulnerable, and a lot of our personal data is at risk.”
In an effort to draw a more diverse workforce into the cyber security pipeline, the city of New York has partnered with tech entrepreneur and former Israeli politician Erel Margalit’s Jerusalem Venture Project (JVP).
Israel was a natural partner because the country already has a developed cyber security ecosystem, said Margalit, who previously served as the head of Knesset’s Cybersecurity Taskforce while he was a Labor MK from 2013 to 2017.“We needed to be as strong as many countries around us, not just on a physical level, but also on a cyber security level,” Margalit said. “Israel needed to be on a different level to protect itself.”
JVP has seven innovation hubs in cities across Israel, focusing on areas in the geographic periphery of the country, in places like Kiryat Shmona, Beersheva, Haifa, and the Galilee, places that do not have the same economic opportunities as Tel Aviv. JVP has $1.4 billion in assets that they have invested in dozens of Israeli companies, largely in the early seed stages of the company’s growth.
“In Israel, our work was not just about business but it was about social impact, so we had a vision to bring these Centers of Excellence to the South and North to give young people all over Israel a chance like they get in Tel Aviv,” Margalit said on Monday, ahead of the opening ceremony of the hub. “New York is about something else, it’s about the drama of taking investors from Israel and Spain or Paris and other places and taking them to the next business level.”
JVP raised approximately $220 million from investors to invest in cyber security companies based in New York City, some of which also have ties to Israel. Many of the companies they have invested in are housed at the cyber security hub, called Margalit Startup City, the real estate arm of JVP that manages the physical buildings. Margalit is looking to expand this city-private venture firm partnership to Europe, possibly in Milan, Amsterdam, or Copenhagen, in the coming years.
There are currently 28 companies in the airy offices of Margalit Startup City in the trendy downtown SoHo neighborhood. Fourteen of the companies started in Israel or have Israeli founders. The Times of Israel was invited as a guest of JVP to cover the opening.
“Israel has a strong, deep technology scene, but Israel has no market, or at least not an addressable market in the tech world,” because there simply aren’t enough people in Israel, said Fiona Darmon, one of the senior partners with JVP. “We are very hands-on investors, and in the home turf of Israel, we feel confident that we can help companies early.”
With the New York initiative, JVP plans to invest in companies ready to scale up. Many companies arrive in New York when they are already established in their home country but are looking to leap onto the global market. Israeli companies, by nature of the country’s small population, are forced to do this more quickly than companies based in Europe. “Israeli companies are successful internationally because they quickly go global,” Darmon explained.
The partnership between New York City’s Economic Development Corporation also includes cooperation between a number of universities, led by a new cyber security mentorship program at Columbia University. NYC is also offering scholarships for the first cohort of 150 students to do a four-month cyber security boot camp, in order to diversify the tech world and provide high starting salaries to people who have traditionally been excluded from technology jobs. The average starting salary for a cyber security expert is between $70,000 to $80,000, said Lin. Like many jobs in the technology sector, the job does not require a four-year degree, or any degree, but rather a deep grasp of the latest cyber security technology, which is changing rapidly.
Coronet, a cyber security company that started in Beersheva in JVP’s tech hub, recently moved to the Margalit Startup City in New York to expand internationally. The company provides a low-cost cyber security subscription service for small businesses. According to the company’s data, New York City is one of the top three US cities that hackers target for cyber attacks, along with Las Vegas and Boston. The company tracked approximately 9,000 cyber security threats every 24 hours in New York targeting customers who use their service, which is about 4 million worldwide.
According to their data, Tel Aviv is the sixth most attacked city in Europe for small businesses.
“Cyber security was about protecting large utility companies, large banks, and large cities, that was one phase,” said Margalit. “Now we’re coming to the next phase, which is protecting information democracies, the rights of the individuals… Cyber security now touches every category of technology.”
The conference was not just about cyber security, however, and dealt with general industry and innovation. Interviewed by Margalit as a leading female entrepreneur, Paltrow noted her wish to visit Jerusalem.
“A kabbalist rabbi that I studied with in London a number of years ago, he said that Jerusalem is the energetic center of the world,” she recounted. “He said that if a good deed is done in Israel then its power is amplified across the world.”
Margalit then led Paltrow on a Hebrew recitation of the Passover phrase “Next year in Jerusalem: “L’Shana Haba’ah B’Yerushalayim.”
“I’ll come! I’ll come!” Paltrow promised.