The Charles River in front of the Boston skyline.
(photo credit: REUTERS)
BOSTON -– Israeli-founded companies based in Massachusetts brought in $9.3 billion to the state last year, continuing to outpace the state’s economy in overall revenue and job growth, according to a new report released Wednesday by the New England-Israel Business Council.
When factoring in the impact of spending on goods and services, such as office space, marketing and other business needs, that figure nearly doubled, to $18.1 billion, the report found.
Some 200 companies employ nearly 9,000 people in Massachusetts, up from some 6,600 three years ago, when NEIBC released a similar study. Both studies were conducted by Stax, Inc, a strategic management consulting firm, with support from the Combined Jewish Philanthropies of Greater Boston.
In that time, the revenue from the Israeli-founded companies grew twice as fast as the Massachusetts economy overall and now represents nearly 4 percent of the state’s entire economy.
“That’s a big deal,” said the report’s author, David Goodtree. “Israeli founded companies are a major driver of the [Massachusetts] economy and are bigger than before, Goodtree told JTA in a phone conversation ahead of a news conference on Wednesday morning at MIT’s Sloan School of Management. Massachusetts Governor Charlie Baker is expected at the press conference, as are several hundred business leaders including Lior Div, the CEO of Cybereason, an Israeli-founded cybersecurity firm now based in Boston.
While data storage companies and the life sciences have been significant for several decades, the fastest growing sectors for Israeli-founded companies in Massachusetts include cyber security as well as companies that focus on the tools to create apps, Goodtree found in the study. Other strong sectors include water technology, eHealth, and 3D printing.
“Israeli businesses play a leading role in our state’s robust economy, in both tech and life science and we greatly value our special relationship,” Baker said in a statement. “The future looks bright for the Commonwealth and Israeli companies to bring even more world-changing innovations to global markets together.”
“The Massachusetts-Israel innovation partnership is about more than just revenue; it is about improving the quality of life for Israelis, Americans, and the world as a whole,” said Israeli Consul General to New England Yehuda Yaacov. In a statement, Yaacov said, the economic relationship is a model of collaboration for other states.
But Goodtree cautioned that competition from other states is fierce. Since 2010, thirty U.S. governors have brought trade delegations to Israel, the report noted. The chief competitors are New York and Silicon Valley. The advantages of Massachusetts are in its stronger talent pool and a lower cost of doing business, Goodtree said, but this is not widely enough known in Israel.
The report also noted that Israel-founded businesses in Massachusetts secured nearly $1.2 billion in venture capital investments between 2013 and 2015, representing 10 percent of all venture investments in the state. Nearly 70 percent of that money came from out of state, including from Israel and Silicon Valley.
“The Israel – Massachusetts business relationship started over half a century ago and has grown ever since,” said Dan Trajman, president and CEO of NEIBC. Over the next several years, “Looking towards the future, we can see in the next several years the addition of one hundred Israeli founded companies contributing to the local economy with the support of the innovative ecosystems on both sides of the pond,” he said in a statement.