Jerusalem Report

Her majesty's hub

British Embassy in Tel Aviv serves as center for high-tech cooperation.

British delegation meets Israeli entrepreneurs at
Photo by: Courtesy British Embassy in Israel
Like many Israeli startups, Outbrain has been highly focused on the United States since its inception in 2006. The company, which helps readers discover interesting content by collecting user recommendations, describes itself as an American-Israeli company. It has headquarters in New York, while the Netanya office in Israel serves as its research and development arm. More branches are located in San Francisco, Washington and Chicago.

But the global marketplace today includes much more than just the American market. Outbrain began expanding outside the US in late 2010 and early 2011.

The company considered several possible places for its European headquarters, but soon settled on London. “Ireland and Switzerland were strong contenders, but London won out,” says Eytan Galai, Outbrain’s managing director. “The ease of doing business there and its international status made it natural to be located there.”

Galai’s words are exactly what Britain’s Ambassador to Israel, Matthew Gould, likes to hear. Gould, who was appointed ambassador in September 2010, set himself a target early on to increase UK-Israel high technology business partnerships. At his initiative, the British Embassy in Tel Aviv established a UK-Israel Technologies Hub to promote cooperation in technology- related fields. The hub was tasked with positioning the United Kingdom as a natural partner of choice for Israel in technology and to ensure that the UK market can make full use of the breadth and quality of Israeli R&D and innovation.

Gould’s initiative is unique. His Tel Aviv team is the only dedicated group in the world promoting high-tech cooperation from inside an embassy, British or otherwise.

The hub, formally founded in October 2011 and chaired by Haim Shani, former director general of the Finance Ministry, has received the enthusiastic backing of British Chancellor of the Exchequer George Osborne, who addressed the team’s launch via a video in which he called for an increase to the “export of expertise and capital” from Israel into Britain. It has already conducted several meetings in which representatives of local technology companies have met potential British partners, and hosted a high-level delegation of more than a dozen British business executives, headed by the UK Minister of State for Universities and Science David Willetts, who came to Israel for a firsthand look at the country’s technology sector.

In October 2011, Willetts and Science and Technology Minister Daniel Hershkowitz announced the establishment of a new body called BIRA X – the Britain-Israel Research and Academic Exchange Partnership in Regenerative Medicine. The UK and Israel will each provide matching funding of up to £50,000 for the initial phase of BIRA X’s work, and European Union funding will be sought by both countries for joint research programs in regenerative medicine.

In addition, the first annual meeting of a newly formed UK-Israel Technology Council was held on March 14 in Lancaster House in London, co-chaired by David Willetts and Israel’s Chief Scientist Avi Hasson. The council identified digital technology, water technology, life sciences, creative industries and financial services as key sectors for the two countries to focus on, where the UK and Israeli economies match each other particularly well. The Council is comprised of 35 highranking business leaders and senior officials as well as senior executives from Virgin Media, Google, Alcatel Lucent, Amadeus Capital, NI CE Systems, Pitango Venture Capital and other leading corporations and investment funds.

Silicon roundabout

It is not news that the main business story of Israel these days is technology – and a lot of it. Israel has more companies listed on the tech-heavy NASDAQ stock exchange in New York than any country outside of the US except for Canada and China. The “start-up nation,” with ever growing numbers of young Israelis graduating each year from its top-notch universities and techsavvy military units to a dizzying array of start-ups, has consistently been located among the leaders of the international technology pack. That leadership has been proven through all the major tech trends of the past decade and a half, from the earliest Web chat programs to today’s smartphone apps and interactive media environments.

Rothschild Blvd. in Tel Aviv today hosts so many young technology start-ups that some are calling it “Silicon Boulevard,” the local counterpart of California’s Silicon Valley.

“The UK is now developing ‘Silicon Roundabout,’” says Naomi Krieger, director of the UK-Israel Technologies Hub. “Every advanced country today understands that technology is essential for economic growth.” In some measure, the British Embassy’s High Tech Hub initiative is an expression of admiration for what Israel has achieved in technology and a desire to mimic some of its success in the field. A technology center called Tech City in London’s East End, bringing together some 200 start-ups, is being promoted by the British government as a magnet for early stage entrepreneurs.

Ambassador Gould believes there are good reasons for Israeli companies to partner with British companies and establish branches in the UK. For one, in comparison to California, which is a full day and ten time zones away by aeroplane, Britain is almost on Israel’s doorstep.

“I know that the default option for Israeli tech entrepreneurs is to go straight across the Atlantic,” Gould told the star-studded guests, who gathered at his residence to launch the hub last summer. “Let me tell you why you should stop in London first. We’re close, practically in the same time zone, and a whole lot closer than Palo Alto. Britain offers you a great market, access to the whole of the European Union, and trading links across the entire world. We offer skills in business development, sales and marketing that can help Israeli innovation go global.”

Eye-opener

Krieger points to several British advantages for Israeli companies. “The UK itself is a major hub,” she says. “It is a hub for Europe, for the English-speaking world, for the commonwealth, for media. Those are only some of the advantages. Not to mention being only five hours away, the language, and a legal system that is similar to Israel’s. There are advantages that the U.S. cannot offer.”

Conversely, exposing British firms to Israel’s potential is also an eye-opener for some, showing off an Israel that may be different from the image the country enjoys in newspaper headlines on the Middle East conflict. Referring to one of the members of a British business delegation visiting Israel at the invitation of the high-tech hub recently, Krieger reports that she was told by the executive that “she had met Israeli start-ups before but had no idea of the magnitude and the hotbed of innovation here.”

The executive, says Kreiger with a smile, was “blown away by how much there is in one place.”

The high-tech hub places stress on finding synergies between Israeli and British companies, looking for opportunities for Israeli technology to partner with UK industries, with each side bringing unique talents that complement each other. “We are not interested in simple ‘you buy, we sell’ stories,” stresses Krieger. “We are not handing out money, this is not a fund. We are providing a very important facilitation service for matching, collaboration and bridging gaps.”

New media

Krieger herself is not British. She hails from New York. Before joining the British Embassy staff, Krieger was Director of Strategy and Operations at the Taub Center for Social Policy Studies in Israel, and Executive Director of STRI VE Israel, a national organization dedicated to helping unemployed Israelis develop careers and financial independence. She gained experience working with the Israeli high-tech sector after completing a master’s degree in public policy at Harvard University, working as an investment banker for Lehman Brothers helping Israeli companies to access global markets and conduct mergers and acquisitions.

Krieger’s five-person staff at the hightech hub is still working on finalizing the list of technology fields on which it will focus, but it has already identified several that will get prominent attention because of the synergistic possibilities for combining Israeli technologies with what British companies can offer. New media is at the top of the list.

“New media means mobile apps, game apps, anything that bridges the creative world of content and broadcasting,” explains Krieger. “New media is interesting for us because the UK is very strong in media and creative content, while Israel is very strong in technology for delivering content to customers.”

In addition to digital technology and telecommunications and life sciences, which includes bio-med, bio-technology and the pharmaceuticals industry, the British Embassy hub is taking special interest in the emerging field of environmental “clean technology.” Israel’s long-standing expertise in water engineering and water management comes to the fore in that area.

“Israel has companies with advanced technology in desalination, purification, irrigation,” says Krieger. “The UK has a large water industry that has been privatized but is regulated. Water utilities are constantly seeking new technologies that will improve their bottom line, which is why we have brought delegations of Israeli water companies to the UK.”

Arabic-speaking

The Arabic-speaking sector in Israel, yet another example of the complementarities between what the UK and Israel have to offer, is also a focus of the team’s efforts.

London, explains Krieger, is a major hub for Arabic-speaking media and services for the Arab world. Israel has a highly-educated Arabic-speaking population.

The quickest route to connecting the Israeli Arab sector and the wider Arab world might just run through Britain. The hub is currently seeking a candidate to direct its Arabic-language division and make business connections between Israeli-Arab companies and UK-based corporations.

Krieger’s team is also looking at partnership opportunities in the financial services sector. London is one of the world’s leading financial services centers, while Israeli know-how, in the private sector and the universities, potentially has much to offer in technology support for that industry. Barclay’s, a British bank, recently opened an R&D center in Israel to develop technologies for the financial sector.

“Even Walmart has bought start-ups,” points out Krieger. “They understand that these days it is not enough to outsource all your digital technology needs. Software is no longer only Internet and telecoms. It is important now in financial services, in retail, in most businesses. That is what is exciting here, in that there is so much real business potential. Our mission is to promote innovation and economic growth on both sides. Partnerships between the UK and Israel in technology can benefit both sides.”

Outbrain’s Galai, who participated in the UK-Israel technologies hub’s new media event in March, says he does not need to be convinced of that. “They are preaching to the converted,” he says with a laugh.

“From our perspective, London is the place for our European headquarters, no doubt about it.”


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