Israeli entrepreneurs, alumni of Technion institute deepen ties to booming Silicon Valley

"It used to be that Israeli mothers wanted their daughters to marry doctors or lawyers," said Shuly Galili, the executive director of the California Israel Chamber of Commerce.

"Now, all the Israeli mothers want their daughters to marry entrepreneurs," she quipped during a recent interview.

If that's the case, they might want to look West — to Silicon Valley.

What Galili calls chalutzim, or "pioneering spirit" has resulted in a distinct sabra flavor in the South Bay, home to an estimated 30,000 Israelis.

More than 50 Israeli-owned firms or subsidiaries have emerged in the Valley during the past five years — ranging from large publicly held firms such as Check Point Software, a Redwood City-based company with a market value of nearly $1 billion headed by 31-year-old Gil Schwed to nascent start-ups.

Many of the ex-pats have graduated from technology institutes in Israel, including an estimated 700 to 800 alumni of Technion-Israel Institute of Technology.

The Bay Area's Israeli community has an impact that extends from Hayward to Haifa, home of the institute, according to Jack Kadesh, the North Pacific regional director of the American Society for Technion.

"The entrepreneurs who settled in Silicon Valley benefit Israel in two ways," said Kadesh. "They speak well of Israel's technological universities and they convince high-tech companies to invest in Israel."

Kadesh ticks off a number of U.S. companies that have seen the benefits of having a presence in Israel, including Microsoft, 3Com, Intel, Hewlett-Packard and the Israeli-owned Applied Materials.

Locally, the Israeli-owned Mercury Interactive, a Sunnyvale-based Web site testing and monitoring company, was ranked 13th on Fortune's list of the 100 fastest-growing companies.

"Israel has always had an entrepreneurial spirit, and those fires are stoked when they the see all the success of Israelis in the Valley," said Kadesh.

Indeed, Israel's roughly 2,000 start-ups rank second behind only those of the United States. In addition, the success stories of Israeli entrepreneurs in Silicon Valley have helped contribute to a shift in Israel's paradigm, according to Lili Naveh, the director of the Silicon Valley chapter of American Technion Society.

The grit-your-teeth and defend-your-country mentality has been edged out by a people whose cultural heroes are more familiar with IPOs than Uzis, she said.

In the past five years, groups such as the Carmel-Dalia, a networking organization of Israeli executives, and the California Israel Chamber of Commerce have sprung up in Silicon Valley, fostering ties between local Israelis and building bridges to the homeland.

They're drawn here by the promise of affluence, lower tax rates and an entrepreneur-friendly culture. While some become U.S. citizens, they retain strong ties to the Jewish state — both personally and professionally.

"It's very easy to take the Israelis out of Israel, but almost impossible to take Israel out of the Israelis," said Galili, who counts more than 200 members in the CICC. "What's good for the Israelis in the Valley is often good for Israelis in Tel Aviv."

Galili's sentiments were seconded by Arnon Gat, CEO of GuideTech, based in Sunnyvale, and president of the Carmel-Dalia organization.

"When Israelis call me for help, I respond right away — even if I don't know who they are," said Gat, a Technion graduate. "It's a kinship that we were born with, one that we feel as far as 1,000 kilometers away."

Gat also said the Israelis living in the Valley helped introduce a new concept to the cultural lexicon: philanthropy.

"When I wanted to expand my previous company [AG Associates], I elected to form a subsidiary in Migdal Ha'Emek [outside Tel Aviv]. That's also where I recruited my general manager. I could just have easily gone to Chicago, Germany, or Ireland," said Gat. "But that wasn't where my heart or mind was."

Or his wallet, for that matter.

"Living in America for the past 25 years, you begin to appreciate the value of philanthropy," said Gat, who received his Ph.D. at Stanford. "Now that disposable income is much higher among Israelis here, many people are giving money back — and that trend is really growing."

Chaya Hirsch, a Technion alumna, provides a good example of the new Israeli philanthropy. Hirsch, the vice president of the ATS, and the former head of research and development for Rita Medical Systems, provides annual scholarships for her alma mater.

"The Israeli high-tech community here is ripe for philanthropy," said Hirsch. "All it required was a little push."

Philanthropy, however, was not the primary reason that American-born David Blumberg jokingly suggested that El Al institute a non-stop flight from Tel Aviv to Silicon Valley.

"Call it the venture capitalist express," said Blumberg, the managing general partner of Blumberg Capital in San Francisco, which funds many Israeli entrepreneurs in Silicon Valley.

Venture investments in Israeli companies are expanding rapidly, with much of the capital coming from the United States. Of the total investments in Israeli companies, more than 70 percent go to Internet-based businesses.

"The high-tech Israeli community here really gets the credit for making Israel the poster child for successful economic development," said Blumberg. "And it's really a wonderful development, because for a long time Israel had somewhat of anti-entrepreneur culture."

The boom in the Valley bodes well for Israel, Blumberg said, adding that "if the Israeli government continues its non-intervention policies, then Israel could become the richest per capita country in the world over the next 20 years.

"Israel's image has really shifted from the land of orange groves and people struggling over the legacy of the Holocaust, to a very powerful world image based on strength rather than weakness."