Venture capitalists encourage Israeli investment at Haas panel

Sign up for Weekday J and get the latest on what's happening in the Jewish Bay Area.

The buzz of Hebrew conversation was heard in the Great Hall of Haas Business School at U.C. Berkeley Jan 28.

Haas was hosting a panel on cross-border investing, using Israel as a case study. The event was sponsored by Haas’ Lester Center for Entrepreneurship and Innovation, which presents monthly forums on business topics.

The idea for the event was born when two Israeli business students approached the director of the Lester Center. The forum aimed to examine issues of multinational investment, using Israel as an example.

One of the main speakers, David Akov, the Israeli consul general for the Pacific Northwest, made a pitch on why Israel is a great venture capital investment opportunity.

“Israel doesn’t have oil. That’s the curse of the Middle East. So Israel’s economy must be fueled by brainpower and innovation,” he said, adding that Israel has the largest number of companies listed on NASDAQ after the United States.

Akov also cited the highly educated work force, the technical training of ex-Soviet immigrants, and the high expenditure on consumer and military research and development as Israel’s cutting-edge advantages.

The panelists included venture capitalists Steve Krausz from US Venture Partners, Isaac Applbaum from Opus Capital and Opher Kahane, the only Israeli on the panel and the vice president of voice technologies at Juniper Networks.

The panel opened up with a Lester Center tradition of picking people from the audience to introduce themselves and give a quick spiel about why audience members should invest in their ventures.

The first speaker sought investors for his new concept in Jewish funeral homes, calling it (to the giggles of audience members) a “growth industry.” The second speaker was a linguist looking for funding for her study on Israeli and American communication styles.

When the attention turned to the panelists, Krausz talked about his company’s successful investment in Checkpoint Software Technology, a leading Internet security company and blockbuster startup success story out of Israel.

Applbaum’s firm has been investing in Israel since 1986, and funds one Israeli startup a year. With eight companies funded to the tune of $40 million since 2000, Opus has been the most

active American investor in Israel, and is seeking to invest $40 million more.

Applbaum, who joked that he lives on El Al, travels to Israel every month to meet with Israeli entrepreneurs and often partners with Israeli venture capital firms to fund promising upstarts.

Kahane, whom the moderator kiddingly referred to as “the only working man

on the panel,” said his first Israel-based tech startup, Kagoor Networks, got funding from and opened an office in Silicon Valley. He has since sold Kagoor and is onto his next project with Juniper.

The secret to succeeding in a foreign market, according to Kahane, is being close to the market in both proximity and team members. He described his strategy as “being on the frontline.”

The panelists also hotly discussed where to put the CEO and management team of a cross-border company. “One needs to invest in a company that is close to the customer, but a management team sitting in the U.S. creates problems with some Israeli CEO’s,” said Applbaum.

The panelists also offered cautionary tales about mixing Israeli and American teams to avoid culture clashes. “American corporate culture makes it hard for Israelis to communicate. Israelis think from right to left,” said Kahane. Krausz also warned that beta testing a product in Israel is not a good indication of how it will do in the U.S. market.

Answering an audience question on why U.S. firms would want to invest in Israel, Krausz said, “There are great management and technical teams coming out of Israel, where team loyalty is much higher.”

On a closing note, the panelists picked up their crystal balls to forecast about the future of cross-border investment in Israel.

Krausz said that the most promising startup ideas will come from abroad as the United States shifts from the center of innovation to a consumer-based market. Applbaum added that the key to finding winning companies of the future is to study what the entrepreneurs are looking at and to learn from them.

Kahane predicted that in 10 to 15 years many of the Israeli tech expats living in Silicon Valley will move back to Israel, helping the country create its greatest multinational firm yet. “Israel hasn’t created its Nokia or IKEA yet, and it is time that it did.”