Getting passed on the information highway

By
October 3, 2010 04:22

Israel is no longer in the ‘fast lane’ of Internet development, and without serious and prompt investment, it may be forced off the road altogether.




SANI SANILEVICH

SANI SANILEVICH 311. (photo credit: Judy Siegel-Itzkovich)

Whenever Israeli scientists in their 60s or 70s win a Nobel Prize, commentators usually note that the country is resting on its laurels from discoveries made decades ago, and that inadequate funding of current research and/or encouragement of young researchers will make such prizes unlikely in the future.

Despite this country’s reputation as a leader in Internet and other computer software innovation, the same syndrome is afflicting this sector as well, warns Sani Sanilevich, an Israeli Internet entrepreneur and general partner in Yatir (www.yatirvc.com), a $25 million Israeli venture capital fund that invests in promising early-stage Internet companies. Yatir is located at Hod Hasharon in the Sharon region.

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There is a lot of innovation here – much of the talent from former Israel Defense Forces personnel, says the 35-year-old businessman in an interview with The Jerusalem Post. But there haven’t been major products from Israel in 10 years, even though some people still regard it as a hi-tech powerhouse. “Somebody in government has to wake up about the decline in education and technology. They have been neglected for years. Israelis have an amazing spirit of innovation, but it isn’t enough to translate this into products that will sell.”

He notes that Silicon Valley in the San Francisco Bay area in northern California is where Internet businesses are centered. Home to many of the world’s largest technology companies such as Google, Facebook, Yahoo, HP, Intel, Cisco, eBay, Adobe, Netflix, Oracle and EA, Silicon Valley initially referred to the region’s large number of silicon chip innovators and manufacturers, but gradually came to represent the hi-tech industry in California, and even the whole US hi-tech sector.

“Everything is happening in Silicon Valley,” he continues. “A young Israeli goes to the US to sell his idea and doesn’t know anybody. He needs not only luck but to understand the local ecosystem of making business there. Very few of them do. A decade or two ago, being an Israeli automatically was regarded as an asset and when hired, he was given an automatic bonus. Today, this is not so,” Sanilevich notes.

“Silicon Valley businessmen who meet entrepreneurs get very excited about an idea during an initial meeting with an Israeli, but the next day, he doesn’t even recognize you. It’s very hard. Even through producing a new Internet product today costs much less than it did before, Israelis are nevertheless doing much less now,” Sanilevich says.

THE YOUNG entrepreneur regularly travels to California to present ideas and make deals and meet with Saeed Amidi, the pro- Israeli Muslim founder and president (of Iranian origin) of the Plug and Play Center (www.plugandplaytechcenter.com) that has played a direct and significant role in starting successful ventures in Silicon Valley and around the world. Last February, Yatir signed a strategic agreement with Amidi’s company, which is the leading Internet seed investor in the US, and the home of over 280 technology startup companies, mainly in the areas of Web 2.0 and software. Since its inception in January 2006, the California-based Plug and Play has helped the startups raise in excess of $750 million in venture funding, and the start-up companies have created a cumulative value of $2 billion. Yatir is thus the Israeli branch of the Plug and Play Tech Center.

Sanilevich’s partner in Yatir is Avi Domoshevizki, who has 10 years’ experience in venture capital and founded Radnet/Seabridge (a telecom company sold to Siemens 12 years ago for $78 million), and is an inventor of many products at ECI Telecom that were sold for hundreds of millions of dollars.

Sanilevich also has an impressive CV, especially for someone of his age. Born in Moshav Neve Yarak in the Sharon area, he studied electronics and earned a law degree (at a college in Kfar Saba) and master’s degree in business administration (at the Hebrew University). After serving as an officer in the Israel Navy, he launched three startup companies and was introduced to MK Binyamin Netanyahu when the latter headed the Opposition in 2006.

The young Internet expert produced for Netanyahu the first Israeli political blog in 2006. When Netanyahu ran in the 2008 Likud’s primaries, Sanilevich was his Internet campaign manager, and the Likud leader later promoted him to the post of Internet and technology adviser in the Prime Minister’s Office. It was during this period working with Netanyahu that he discovered Israel was “living on its reputation from previous years.”

Having made a lot of connections, Sanilevich resigned and returned to business.

Other business and personal projects under his belt include being a partner and manager of sales in Ra’anana’s 400-apartment Sai real estate project; establishing Meduza Diving Centers and Meduza Marine Projects (and selling them); setting up and commanding (voluntarily) two Israeli special police force units; and initiating HSA Israel, a voluntary nonprofit organization for rehabilitating the disabled. He is also a marathon runner who has completed nearly a dozen races around the world.

“Nobody is investing now in Israeli ventures,” he maintains. “It was the same thing in the US, and every trend from the US eventually comes here. In the US, many venture capital companies closed. There are some US seed-money funds that can react quickly, but none in Israel anymore because investors want large products on which they can earn more. So nobody is investing here now.”

THE YATIR Plug and Play Tech Center offers 1,700 square meters of space and provides all the services that a startup company needs. Room for 40 startups is being established now. “As a venture capital partnership, Yatir specializes in funding and mentoring Internet Web-based applications startups at the pre-seed stage, especially on the Internet platform. We are directly connected online to Park and Play Tech in Silicon Valley; Amidi has a 20% investment share in Yatir.

“We raised money in the US, and we are known.

Eighty Israeli entrepreneurs have already contacted us. We are willing to invest in good ideas.” Amidi is a special advisor to the fund.

Yatir has an office in Saeed’s center in Silicon Valley as well as a full-time coordinator whose job is to connect Israeli startups with the local environment and business ecosystem, as well as to the large cooperations such as Google, Paypal, Apple and Microsoft. “This infrastructure enables us to accelerate Israeli startups directly into the heart and main market of The Valley,” Sanilevich says.

So far, it has itself put funding into three startups. One, called Certified (www.certified.com) provides authentication services for documentation that can be trusted. Another startup has produced an application for the iPad.

Israel’s well-known “red tape” deters people from establishing businesses , notes Sanilevich. “To get a business license or build something, you have to collect a huge number of documents and authorizations. In the US or England, you send documents by e-mail and get your answers in just a few months. Here it take years. Israeli bureaucracy should allow this system, giving an interdisciplinary body the power to decide whether to grant a 60-day permit. It can become permanent after the body investigates and finds out whether what you sent is legitimate. If you lied, severe sanctions can be applied against you.”

He added that when the approval process becomes transparent and the bureaucracy is reduced, the risks of “Holyland-style” corruption is drastically cut.

As an example of transparency via the Internet, Sanilevich offers the Web site of the White House in Washington, which presents to anyone a list of people who entered the building, whom he met and for how long (except for security-related visits).

Can any Israeli imagine such a thing being offered by our various ministries or the Prime Minister’s Office?


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