OPINION:
Much of the talk around President Trump’s meeting this week with Prime Minister Benjamin Netanyahu at the White House surrounds the political and security relationship between the two countries. That is important. But it is only part of the story. Despite having a tiny population of eight million people, Israel is playing a crucial role in helping to power the U.S. economy for the next generation.
It is no exaggeration to say that the U.S.-Israel economic and commercial relationship is transforming the economies of both countries, creating a virtual circle of productivity and growth. And what is behind this? In one word: innovation.
What we are seeing is a different form of globalization, with innovation breaking down barriers and enabling small countries like Israel to have a disproportionate positive effect on superpowers such as the United States. This free flow of investment is not only bipartisan, it transcends politics. Technology is by its very nature immune to protectionism. Innovative startups create new jobs rather than transferring or outsourcing old ones. As the U.S. looks to meet Mr. Trump’s ambitious growth plans and encourage more business growth in the United States, Israeli technology startups launching in the U.S. will be a big part of the answer.
There is data to back this up. According to the recently published Massachusetts-Israel Economic Impact Study, Israeli-founded businesses generated a total of $18.1 billion in economic impact for Massachusetts alone in 2015, which is 4 percent of the state’s GDP. The same report went on to highlight that over 200 Israeli-founded businesses called greater Boston their home in 2015, securing over $1.2 billion in venture capital from 2013-2015, representing 10 percent of all venture capital funds raised in the state. Most important, these companies created 28,000 jobs. And that is just one state. No wonder Massachusetts Gov. Charlie Baker just led a 90-person trade delegation to Israel this past December that included the CEOs of Athena, Optum, IBM Security, MIT and more. States and cities across the United States are promoting and deepening their ties to Israel in places as diverse as Vermont, South Carolina, Texas and California.
The economic relationship between both Israel and the United States has grown significantly in the past decade, with American companies accounting for two-thirds of the 300-multinational research and development centers in Israel. These centers often result from mergers and acquisition activity where U.S. companies buy Israeli startups, often serially (Microsoft bought five Israeli companies in 2015 alone). Today, Israel is providing much of the design and manufacture for Intel chips, IBM software, Facebook facial recognition and Cisco Networking, to name a few. There are also almost 100 Israeli companies that trade on the U.S. stock exchanges, putting Israel in the top three of foreign countries with U.S.-listed companies, with a combined capitalization of $117 billion.
Looking ahead, I see even more importance in US-Israel collaboration as the focus of venture capital investment moves to “deep technology.” The most exciting new Israeli start-ups are focused on the newest tech trends that require hard core technology prowess in difficult areas such as machine learning, cybersecurity, robotics, big data, autonomous driving and more. Virtual reality from Israeli flight simulation engineers at surgical theaters enable U.S. neurosurgeons to visualize the patient’s brain before and during operations. Command and control software developed by Iron Dome pioneers at mPrest are helping New York Power protect and manage its electrical grid. Machine learning from Zebra Medical is saving lives by enabling automated analysis of radiological images. Big data software from Medaware was just found by Harvard Medical Center to potentially be able to save many thousands of lives by preventing prescription errors. The artificial intelligence team at Intuition Robotics are building Elli-Q the first robotic senior companion that will enhance the lives of countless elderly.
A key theme in the ongoing Trump-Netanyahu discussions is cybersecurity, where Israel is a global superpower, with an estimated one in four of the world’s cyber startups. Companies like Biocatch, where behavioral biometrics are used to stop fraud. Or Argus, whose technology will stop a hacker from taking your car for a joy ride while you are in it. You don’t need to be a spook to appreciate Israel’s contributions to cybersecurity.
When Mr. Trump and Mr. Netanyahu discuss innovation collaboration, they enable the best part of globalization — where no one loses, and both sides win. The Israel-U.S. strategic innovation partnership is about to get stronger and that is a good thing for both countries and for the world.
• Jon Medved is the CEO of OurCrowd.
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