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Promised Land

U.S. companies find new opportunities by partnering with Israeli firms.
August 1, 2005
URL: http://www.entrepreneur.com/article/78844

Susan Rogers' search for a low-cost device to screen American students for scoliosis led to an unexpected place: Israel. In 2003, through the Tel Aviv-based BIRD Foundation, an organization that connects U.S. companies seeking technology with Israeli firms that want access to U.S. markets, School Health Corp. in Hanover Park, Illinois, located an Israeli company to work with on product development. School Health, a 100-employee company founded by Rogers' grandfather in 1957, even got financial help for the project.

OrthoScan, the Israeli company School Health is partnered with, "has a product that's successful with orthopedic surgeons," Rogers explains. "They were trying to make something that could be used for screening, which is what we specialize in. We saw a really good fit." With the help of a $400,000 joint grant for OrthoScan and School Health from the BIRD Foundation, School Health hopes to sell its low-cost scoliosis screener to American school nurses and health departments starting in late 2005.

The School Health deal is one of more than 700 projects the BIRD Foundation has arranged in the past 20 years, says executive director Dov Hershberg. "Each year, we support between 25 and 30 new projects," says Hershberg. And that's just a fraction of the alignments between U.S. and Israeli companies.

The American-Israel Chamber of Commerce has been involved in more than $700 million worth of transactions between U.S. and Israeli companies in the past 13 years, says Tom Glaser, president of the not-for-profit group's Atlanta-based Southeast region. Many other organizations also facilitate U.S.-Israel connections, including permanent Israeli government trade offices in many cities, export institutes, VC firms and traveling trade missions. "The Israeli model is not taking [products] to market directly," Glaser says. "It's almost always through channels such as strategic partnerships."

Israel's technological prowess in areas from IT to life sciences is rooted in the mass emigration of talented scientists and engineers from the former Soviet Union in the early 1990s, Hershberg says. Today, interest in Israel is picking up as the Israeli-Palestinian conflict subsides, easing American concerns about the security of doing business in Israel, Hershberg says. U.S. firms are also motivated to pursue Israeli alliances because of U.S. immigration restrictions that make it hard to hire foreign talent.

Working with an Israeli firm hasn't turned out to be as easy as dealing with one across town or even across the United States, says Rogers, 36. But the entrepreneurial attitude of her Israeli partner has been a welcome surprise and a key reason Rogers recommends that other U.S. entrepreneurs seek Israeli allies. "It's the technology," she explains, "and the people behind it."