Tech gives vital boost to US-Israel relationship, says expert

If politics sometimes divides Israel and the United States, there is a strong force that consistently unites them. The tech relationship between the two countries is as firm as ever, according to Itay Frishman of international law firm Gross, Kleinhendler, Hodak (GHK), and that’s good for both sides.

Just as the US is Israel’s biggest international supporter, providing assistance – diplomatic, military, and otherwise – America is also the biggest overall year-to-year investor in Israel (though China is set to surpass the US in that area this year), with the world’s biggest economy and the most resources. And, it is still the country with the largest and most prosperous market – the best place for an Israeli start-up to sell products or technologies.

As head of GHK’s high-tech and venture law group, Frishman is one of Israel’s most active deal-making attorneys, in a law firm that is one of the biggest dealmakers in Israel. Among the recent deals GHK has handled: Rakuten’s acquisition of Viber, Yahoo’s acquisition of RayV, AOL’s acquisition of Converto, HiLan’s acquisition of Ness Technologies, along with investments by Goldman Sachs, Bessemer, Norwest Ventures, Samsung Ventures, and others in Israeli firms.

Nowadays, deals between Israeli start-ups and China are all the rage – or seem to be, at least from the headlines. But the US is still ground zero for start-ups looking to make it big. “We have nothing against China, and in fact we do a lot of work there,” Frishman said. “But the US is still the world’s largest economy, and I think for the sake of all of us, things should remain that way.

“Many Israeli start-ups that have technology or an app can only work with a large company in China, which will distribute its tech. But they cannot deal directly with the consumer or end-user – unlike the case in the US, where Israeli companies can sell to anyone,” he added.

Most attractive to multinationals and American companies today are Israeli start-ups working in the cyber-security and Internet of Things spaces, “but there is always interest in the more traditional areas of tech, like networking, telecom, etc.,” said Frishman. “We have 45 people in our department working on deals between multinationals and Israeli start-ups, as well as other tech issues.”

Although, as in the Rakuten purchase of Viber, GHK sometimes represents the non-Israeli entity – it’s an international law firm with offices around the world – both sides in a deal often take advantage of its location on the ground in Israel to facilitate a deal. “One of the things we try to do is educate entrepreneurs on the culture of work and business in the US,” said Frishman.

Itay Frishman (Photo credit: Courtesy)

Although the global village is smaller than ever, and Israelis are no stranger to American culture (at least as seen on TV), there are still nuances that Israelis don’t get right – and depending on the entity in question, those nuances can sometimes make or break a deal. “Americans have their own way of doing things, and expect others to do the same,” said Frishman. Among the differences are the way contracts are written or what is expected from each party, and often the Israeli side must adjust its approach in order to ensure that their American counterparts are on the same page as they are. “I am in the packaging business,” said Frishman. “Americans want to know what they are getting when they open a package, and we help that happen.”

Dealing as he does with tech companies, Frishman has an affinity for Silicon Valley, and that’s still the best place for Israeli companies looking for buyouts and partnerships to go. “You go to Boston for life sciences and New York for adtech, but for high-tech, Silicon Valley is still the ultimate destination, and that’s where we find most of these companies want to go.”

And despite politics (like the politics of BDS), Israelis are as welcome in Silicon Valley as ever, he insists. “We have a perfect storm in the best sense of the term,” said Frishman. “Israeli companies are getting more credit – both figurative and literal, from the bank – than ever. Israeli entrepreneurs are seen as cool, and Israeli technology is admired by everyone.

“People take the presence of companies like Apple and Google in Israel for granted,” Frishman said. “But their presence in Israel shows just how strong relations between Israel and the US are, and a lot of that strength is due to the tech relationship between us. Strengthening that relationship is good for the American firms – and it’s very good for Israel, which, for all its tech capabilities, needs allies like America.”