World’s biggest start-up accelerator makes ‘aliyah’ to Jerusalem

After a long relationship with Israel from abroad, MassChallenge is preparing to set up shop in the capital

Members of the MassChallenge 2014 Israel Judges Panel at an event held by the organization, June 11 2015 (Courtesy)
Members of the MassChallenge 2014 Israel Judges Panel at an event held by the organization, June 11 2015 (Courtesy)

MassChallenge, the world’s largest start-up accelerator, is setting up shop in Israel – the only other foreign location other than London chosen for the honor. And unlike most of the foreign tech groups that “make aliyah,” MassChallenge will be coming to Jerusalem, not tech-savvy Tel Aviv.

There’s a good reason for that, said Hanan Brand, chairman and founder of MadeinJLM, an organization that works with and promotes the start-up community in Jerusalem.

“The clincher was the city’s strong ecosystem in medical technology and digital health, and the presence here of major medical tech research institutions like Hebrew University and Hadassah,” he said.

“The municipality and the Jerusalem Development Authority worked very hard to convince MassChallenge to come to Jerusalem,” said Brand.

The project is being funded by the Jerusalem Municipality, Jerusalem Development Authority and the Ministry of Jerusalem and Heritage, with support from Combined Jewish Philanthropies, The Kraft Group, Bank Hapoalim, EMC and Herzog Fox Ne’eman. Earlier this year, MassChallenge announced that Israel Ganot, founder of Gazelle and veteran executive at eBay and PayPal, will lead MassChallenge Israel as managing director.

“Israel is an outstanding and growing hub for entrepreneurship,” said MassChallenge founder and CEO John Harthorne. “Launching a new accelerator in Jerusalem that is connected with other global hubs dramatically expands the MassChallenge community, which will provide entrepreneurs in Israel and all over the world better access to global resources.”

Annual MassChallenge accelerator programs in Boston and London support large cohorts of start-ups (128 in Boston, 90 in London) from anywhere in the world, in any industry. Entrepreneurs receive mentorship, office space, education, access to a vast network and other resources during over the four-month program. At the conclusion of the programs, MassChallenge awards over $2 million in no-equity, non-dilutive grants to the start-ups demonstrating the highest impact and highest potential.

Besides being the world’s largest accelerator, MassChallenge is among the most generous. Each year, the organization runs a competition, in which winning start-ups can get awards of over $1 million — with no strings attached — along with top-tier mentoring, training, free office space, access to funding, legal advice, media and over $15 million of in-kind support. In 2014, MassChallenge ran the program in Israel for the first time, taking 10 Israeli start-ups to Boston to compete against start-ups from the US and Europe.

The finalists were announced in Israel by Harthorne, together with Massachusetts Governor Deval Patrick, who had led a delegation of over 120 Massachusetts business and academic leaders representing nearly 60 companies and institutions in IT, healthcare, energy and water technology, cybersecurity, academia, financial services and life sciences. It was, said the New England-Israel Business Council (NEIBC), the largest-ever economic trade mission to visit Israel from the US.

Massachusetts has good reason to embrace Israeli tech. According to a NEIBC study released last December, Israeli businesses operating in Massachusetts have contributed significantly to the economy there, providing jobs and investment, and revitalizing key components of the state’s economy, helping it to rise from the doldrums of the nagging, long-running recession that still plagues the United States.

The study, the first in-depth analysis on the impact of Israeli tech on any US city or state, showed that in 2012, the 211 Israeli-founded businesses that have set up shop in the state — mostly start-ups — accounted for 2.9% of the state’s GDP. Some 6,700 people — the vast majority Massachusetts residents — worked for these companies, with an additional 17,000 people employed in businesses supporting these companies (technical support, janitorial services, banking, etc.). Thanks to this “multiplier effect,” the $6.2 billion business that these Israeli companies did in 2012 had an overall economic impact of nearly $12 billion.

Overall, job growth at the Israeli companies grew five times faster than the state’s overall employment growth rate between 2010-2012. Over that period, revenue at Israeli-founded companies in the state grew three times faster than in the Massachusetts economy overall, with revenue growth double the state’s most important IT and professional services sectors, including life sciences, the study showed.

With a MassChallenge “outlet” in Jerusalem – one source close to the deal said that it would be located in the center of the city – the city’s reputation would be solidified, said Mayor Nir Barkat.

“Jerusalem has been named the number one emerging global tech hub by Time and Entrepreneur magazines, and the buzzing High-Tech ecosystem in our city includes 500 start-ups and companies that raise hundreds of millions of dollars every year,” said Barkat. “The next step is welcoming MassChallenge to our city and providing a successful launching pad for our innovative and creative entrepreneurs in Israel.”

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