LONDON — The CEO of Israeli start-up Brandsforce had planned to open the company’s European office in Berlin until her recent visit to London for a conference showcasing Israeli technology. Following her meetings with UK investors, potential partners and fellow entrepreneurs, Nili Goldberg said she was now determined to open her European hub in London.
If the US has always been the number one target market for Israeli technology companies, with the UK and Europe lagging behind, London finally got a chance to take center stage last week.
Some 30 Israeli start-ups and a line up of more than 40 high-profile speakers gathered on June 26 at a glossy London hotel for the first Innovate Israel conference, organized by UK Israel Business, together with the Israeli Embassy’s Trade and Economics Affairs division and the Israel Export and International Cooperation Institute. Nearly 500 delegates from the UK investment and technology communities attended the event, where young Israeli technology companies got the chance to seek out investors and partners.
Trade between Israel and the UK has increased steadily over the past few years, despite a downturn in Israeli exports to Europe. Here are some numbers:
- The UK ranks as Israel’s second-largest export market, behind only the US, recording a total of $3130.9 million in exports in 2011 and $970.6 million for the first third of 2012.
- In the first third of 2012, bilateral trade between the UK and Israel was 42% higher than the same period in 2011.
- The UK currently stands as Israel’s fourth greatest trading partner, behind the US, China and Germany, with joint import and exports totaling $5136.8.
‘The most powerful response to the boycott, divestment and sanctions campaign – which seeks to drive a wedge between Britain and Israel – is to deepen that relationship’
Addressing the conference, Israel’s Ambassador to the UK Daniel Taub said: “The most powerful response to the boycott, divestment and sanctions campaign – which seeks to drive a wedge between Britain and Israel – is to deepen that relationship.” The conference, he noted with satisfaction, was “advancing the tremendous potential for high tech partnerships between British and Israeli companies.”
There are currently some 300 Israeli companies operating in the UK, with 34 listed on the Alternative Investment Market (AIM) and a further 11 on the main London Stock Exchange (LSE).
London-based venture capitalist Frank Meehan has been dealing with and in Israel since 1995. The fund he works for, Horizon Ventures, has invested in 13 Israeli start-ups in a 12-month period. Meehan currently sits on the board of a plethora of Israeli technology companies including Magisto/SightEra, Fixmo, Summly, Trapit, Tout and others. Speaking to The Times of Israel, Meehan said that he has always been “amazed at the scope of Israeli companies.”
“They think global; they think big; they work hard and drive fast — all very attractive to investors,” he said.
Horizon Ventures is the private investment arm of Li Ka-shing, the Hong Kong business magnate who launched Orange mobile phones in Israel in the 90s via his company, Hutchison. Horizon Sweden, headed by Solina Chau, a long-time companion of Li Ka-shing, first galvanized investments in Israeli technology.
Daniel Saunders, chief of staff at the Embassy of Israel’s Trade and Economic Affairs division and one of the conference organizers, also believes that the UK is increasingly attractive to investors and start-ups alike.
‘UK companies are gradually replacing their US counterparts’
“Our division at the Embassy deals in business, not politics. We have been organizing events for individual companies and have definitely noticed recognition of Israeli technology in the last couple of years,” he said. “UK companies are gradually replacing their US counterparts. For example, there is now a big appetite in the UK for new media, which in Israel has grown in the past five years.”
Nili Goldberg says she is also focusing on meeting London’s renowned advertising agencies as potential partners for Brandsforce, which recruits and mobilizes brand advocates via social media. She came to the conference, she said, to meet investors, potential partners and customers.
“I would be lying if I said I wasn’t interested in investment,” she said, “All entrepreneurs must be interested in investments. But we are ok; we have money to last. Many entrepreneurs want to work primarily with the US and then they add on European markets. We are based online and need to touch base with all markets.
“This is the first time I have been to such a conference in London. It helped me reach the decision to establish my European entity in the city.”
The idea for a world-class conference was first conceived around a year ago by Daniel Seal, CEO of UK Israel Business, entrepreneur Marc Worth, and technology godfather Yossi Vardi, one of the first Israeli start-up CEOs to make millions by selling his company, ICQ, to AOL in the late 90s.
Seal worked closely with the Israel Export Institute and the Israeli Embassy in London to identify 30 likely start-ups and organize 200 one-on-one meetings with potential investors, partners and customers.
“I was very strict about making this conference a world-class event with speakers to match,” says Seal, 30. “We initially expected around 250 attendees and were really proud and pleased that nearly 500 decision makers attended. It was very much a team effort between different organizations which made this vision a reality.”
Delegates paid £550 to attend the conference and gala dinner. High profile speakers included Vardi, Jimmy Wales of Wikipedia, Brent Hoberman of lastminute.com, Errol Damelin of Wonga, Jimmy Maymann of the Huffington Post, Mark Read of WPP, Dov Moran, founder of M-Systems, which invented the USB flash drive, Yahal Zilka of Magma Venture Partners among others.
Noah Shani, the Commercial Attache at the Embassy of Israel said that the event will widen collaboration between the UK and Israel. A memorandum of understanding was signed there between the British Venture Capital Association (BVCA) and its Israeli counterpart, Israel Advanced Technology Industries (IATI) to formalize relations and bolster trade. Other high profile meetings were also held there between politicians and heads of industry from both countries.
‘Not all British VC funds who invest in Israeli technology have actually visited Israel. They generally use local companies on the ground as their go-betweens’
“On an organizational level, the memorandum of understanding will lead to additional joint activities,” said Shani. “Not all British VC funds who invest in Israeli technology have actually visited Israel. They generally use local companies on the ground as their go-betweens. Hopefully, they will now visit, once they take a look at new ventures and initiatives. Israel is second only to Silicon Valley in terms of technology.”
Frank Meehan believes this latest wave of Israeli technology start-ups will continue to flourish. However, this group differs from those of 10 years ago.
“From the late 90s to the new millennium, it was the young [Israeli] guys who developed the technology, while the older guys took over the marketing and management teams,” he said. “The older people didn’t really know how to do it. Now, it’s the young guys who develop the technology from the army, and those same people who build management and look after the business internationally. They are responsible for marketing and seeking out investments, which works well – much better than previously. This is very much like the business model in Silicon Valley.”
Horizon Ventures has invested in such companies as Waze, Onavo, Magisto, Everything.me, Wibbitz and others, whose names the company keeps under wraps.
What does an investor look for in Israeli companies? “A good company valuation and a good technology,” said Meehan. “At Horizon we are a small team who can make quick decisions and move fast. We don’t need to cut through red tape. We support our companies and look for a management team who can take a technology to the consumer stage. We are in it for the long term.”
So what is the next big thing in technology? “It’s hard to say, as there are so many different ones, but security is big,” said Meehan. “We are seeing more and more breaches of cyber-security, and Israel has always specialized in this kind of technology. But there’s also education and health-related technologies.”
One of the panels at the conference also debated the next big thing. E-money, predicted one expert; the Internet of Things, forecast another. (The Internet of Things, also known as the Internet of Objects, is defined as the networked interconnection of everyday objects.)
Some investors spoke of business partnerships with the West Bank and Gaza as a step to peace in the region.
Israeli Minister of Industry, Trade and Labor Shalom Simhon paid a visit to the conference while on an official visit to the UK.
“We speak to many international companies in order to to encourage them to take part in collaboration between Israeli and Palestinian companies,” he told the conference. “We will be happy to see British companies joining these joint ventures.”
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