Startup nations | Israel and Egypt, working together for benefit of all

This month, my colleagues and I from Israel’s Economic Mission had a unique experience at the Magic textile and fashion show in Las Vegas. Together with our trade counterparts from Egypt and the U.S., we celebrated an agreement that is little known but that represents the power of economic cooperation in our turbulent region.

The Qualified Industrial Zones Agreement is a 10-year-old agreement between Egypt, Israel and the United States that enables Israeli companies to provide technology and supplies to Egyptian textile and manufacturing companies. These Egyptian manufacturers then sell their wares duty-free to well-known clothing and textile brands in the U.S., provided that the Egyptian goods include at least 10.5 percent of Israeli raw materials in the final product.

QIZ is beneficial to all parties. Last year, Israel exported around $100 million of raw materials to Egypt, used to produce and export around $1 billion worth of goods to the United States. The same type of agreement is also in place with Jordan.

During the Magic conference, my colleagues and I reached out to hundreds of importers and buyers from leading companies in the fashion and textile industries, spreading the word about the QIZ program while also forging connections with Israeli designers.

QIZ is proof that such economic ties often transcend other differences. So, for example, when in 2012 Mohammed Morsi (previous head of the Muslim Brotherhood) came to power in Egypt, there were fears that the QIZ agreement would take a hit. However, just the opposite happened. The Morsi administration asked us to organize a joint delegation to major U.S. apparel companies, something Egypt had shied away from previously. Today, such roadshows with retailers like JCPenney, the Gap, Levi Strauss and others take place on a regular basis. The partnership continues to flourish under President Abdul Fattah el-Sisi.

At the conference, we agreed with our Egyptian partners to strive toward doubling duty-free textile exports to the U.S. within three years to a total of $2 billion, and to explore the possibility of adding other products such as foodstuffs and plastics to the arrangement, thus bolstering at an even greater level economic cooperation between two of the most important countries in the region.


Startup of the Month

The featured startup this month is Fortscale, an Israeli cybersecurity company headquartered in San Francisco with an R&D center in Tel Aviv.

Israeli cybersecurity innovation has been gaining attention lately as headlines about major data breaches in Fortune 500 companies grow in frequency. In recent months, Sony, JPMorgan Chase and Target have been victims to cyberattacks, with hackers stealing sensitive personal, financial and health information from tens of millions. Many of these were carried out by rogue insiders or hackers who hijacked network log-in credentials to access sensitive data.

Fortscale’s flagship product helps enterprise security analysts easily identify user-related threats, malicious insiders, compromised accounts and risky access to data through state-of-the-art user behavior analytics. Their aim is to help stop attacks before they happen, rather than dealing with the aftermath.

Currently, Fortscale’s technology is used in many Fortune 500 companies. It is backed by investors such as Intel Capital and San Francisco’s Blumberg Capital.

Fortscale will be one of 25 Israeli cybersecurity companies featured at the prestigious RSA security conference in San Francisco in April.


Exits of the Month

Two great exits this month: First, Mountain View–based financial software giant Intuit acquired Israeli Porticor, a pioneer in cloud-based security, for an undisclosed amount. Porticor’s technology will assist Intuit in helping organizations combat the threat of tax fraud in the US.

Second, Yelp, the San Francisco company that crowdsources reviews of restaurants and other businesses, acquired Silicon Valley startup Eat24 for $134 million. Eat24 was founded by Israelis Nadav Sharon and Haim Erez in an apartment seven years ago.

Eat24 allows people to order from their favorite restaurants and have the food delivered. With Yelp’s acquisition, the idea is that you can find a great restaurant and have its food delivered to your doorstep.

The deal, which included a mix of cash and shares, comes on the heels of Eat24’s successful Super Bowl ad featuring Snoop Dogg and Gilbert Gottfried.

Gili Ovadia
is the San Francisco–based Israeli consul for economic affairs to the West Coast.