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Top Israeli VC says startup nation drives US economic growth

Wednesday, February 15, 2017 - 18:23

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Jon Medved, the Israeli venture capitalist who backed Shopping.com and built investment platform OurCrowd, says tightening technology ties with the Trump administration and allowing Israeli companies to continue to open branches in the US will benefit the economies of both countries.

[JERUSALEM] Jon Medved, the Israeli venture capitalist who backed Shopping.com and built investment platform OurCrowd, says tightening technology ties with the Trump administration and allowing Israeli companies to continue to open branches in the US will benefit the economies of both countries.

Mr Medved said he hoped Israeli Prime Minister Benjamin Netanyahu would put technology on the agenda during his scheduled meeting Wednesday with US President Donald Trump in Washington.

"There's an untold story peeping above the radar, and it's how Israeli technology is driving US economic growth," Mr Medved said in an interview in Jerusalem.

"There's a virtuous circle: investment coming in to Israeli companies, who then go out and create jobs in the US. This story isn't out there, and in today's context it's important."

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A June report based on research by global consultancy Stax Inc concluded 216 Israeli-founded businesses in the greater Boston area employed 9,000 people and generated more than US$18 billion in direct and indirect revenue in 2015, 3.8 per cent of Massachusetts's gross domestic product.

Mr Medved's comments come amid turmoil in the tech industry over Mr Trump's executive order restricting immigration and his call for companies to prioritise hiring Americans and invest more at home. In Israel, the sector is pressuring Mr Netanyahu to open borders and allow visas for foreign experts to fill jobs vacant due to a lack of engineers.

"Without immigration, innovation doesn't happen," Mr Medved said.

In the US, according to the non-profit Israeli Executives and Founders Forum, there are about 175 Israeli startups in the San Francisco area alone. More than 1,700 Israeli technology companies have offices in the US, according to industry monitor IVC Research Center.

Before leaving for Washington this week, Mr Netanyahu said he planned to raise the possibility of strengthening cyber security ties with Mr Trump. Finance Minister Moshe Kahlon told his Kulanu party Monday he asked Mr Netanyahu to also request an exception for Israel where outside corporate investment was concerned. 

"Israel has a lot of US investors, our economy needs it and it's important to us," Mr Kahlon said this week.

While the two leaders are sure discuss regional issues like Iran, the Islamic State and settlements, Mr Medved said he would be surprised if technologies such as cyber security, border security, drones and remote sensors, weren't raised.

He noted that former New York City Mayor Rudy Giuliani, whom Mr Trump appointed to head a committee on cyber security, was just in Israel, where he met with Mr Netanyahu.

"For 'America First' you need partners. No one goes it alone, especially in technology," Mr Medved said.

"We have a deep and multifaceted alliance with the US, which Trump seems to be a big supporter of."

Mr Netanyahu has highlighted Israeli's technological expertise in securing its borders after Mr Trump said a wall could help prevent illegal immigration from Mexico. Shares of Magal Security Systems Ltd, a major contractor on Israel's West Bank barrier, have gained more than 60 per cent since Mr Trump was elected in November.

"The bottom line is an inhospitable America won't be good for any of this," said Mr Medved.

"But I don't think that is going to happen."

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