With COVID-19 ravaging most of the United States, the Northeast initially bore the brunt of the virus early in the spring. While there was a great deal we did not know about the virus at the time, many of the hard lessons were learned in the Northeast. But as American and Israeli ecosystems have shown, the tech community has been resilient, particularly with work-from-home protocols and the fact that venture capital is still being deployed in the ecosystem.
Once we ease into the ‘new normal’, Israeli startups are still going to need to enter the US market, and while the number of employees making the move may change, companies are going to need a physical presence in the States. Even before the pandemic, many small cities focused on economic development and worked to lure startups (Israeli or otherwise), and that trend has been accelerated due to the migration of professionals from major tech regions like New York and San Francisco.
As things are still developing, we do not know what the new normal will look like, but as it seems now, the Northeast United States looks to be the part of the country whose policies are going to allow a gradual resumption of getting back to business. Innovation and building startup ecosystems are key to economic development, and there are areas that would welcome in open arms Israeli startups opening offices in their cities. Today, because of remote work an Israeli startup does not need to land in a big city to succeed. In the US, there are many smaller cities and states with the same advantages as New York and San Francisco but without much of the downside.
Though many professionals who live in New Jersey commute to work in Manhattan, New Jersey has built its own center of expertise in pharma (Israeli companies like Teva host their US office in NJ), financial services, and a budding ecosystem. With a large and supportive Israeli community in places like Hoboken and Tenafly, there exists a built-in community for Israeli entrepreneurs. Many other Israeli companies dot the landscape across Manhattan and offer professionals access to the city without having to pay Manhattan prices.
Like any ecosystem, a strong academic institution offers support for research and sourcing talent. Revitalized cities like Newark host the state university Rutgers and other strong engineering programs. Venture also plays a major part; without a robust venture scene an ecosystem cannot grow, and homegrown funds such as Newark Venture Partners have filled this role. Andrew Gross, Director of the NJ-Israel Commission believes that "New Jersey and Israel are often spoken of as being the same due to their size and population. The reality is that what makes them similar is so much deeper. New Jersey can be called a true second home to Israelis and it remains one of the most accessible states to Israel with daily direct flights that never stopped, even during the height of COVID-19, here.”
Like the Israeli ecosystem, private capital alongside government and nonprofits also help in building up a tech ecosystem. Government bodies such as the NJ-Israel Commission are working actively to help facilitate connections and aid Israeli companies in the state. The benefit of a soft-landing pad in a place like northern New Jersey is that a support system already exists; moving to the US is not just a physical move, but a social one as well, and a strong and sympathetic community is key. As Gross states “importantly, the Garden State is home to a large and thriving Israeli community that is growing by the day. In New Jersey, we embrace our strong relationship with Israel and see Israelis moving not only their homes but their businesses, from nearby states and major cities to reap the benefits of what we offer."
New York State
New York City has made a significant effort to build a global ecosystem, and the city and state have strong ties with the state of Israel. The Israeli tech presence in Manhattan and Brooklyn has been well documented and is now operating at the city level with the Cyber Center and enabling New York to become a cyber powerhouse post-pandemic. But there are areas outside of New York that have become attractive to Israeli startups looking for US market entry.
Sadly, New York City is an example of what happens when a virus spreads through a densely populated area and sets the trend for the migration of professionals, or the “creative class”, to less confined areas. There is professional life outside New York; examples include the work by Empire State Development to make upstate New York into a drone corridor, and, as covered in a previous article, towns piloting Smart Cities tech in cooperation with the Israel Innovation Authority.
An example of a city that is set away from New York City, surrounded by nature, and remains a center of commerce is Buffalo. There have been active programs such as 43North that have encouraged startups to move to the city. For smaller cities to completely hyper-focus on one vertical has been a strategy such as in the state’s capital Albany; the city’s focus has been on building a center of excellence for nanotechnology.
Another state that is slowly opening and that is close to both New York and Boston is Connecticut. This state has traditionally been known as a state that hosts insurance and other specific areas in the finance industry such as hedge funds. Much of the allure of places like NY and SF was the cultural and social aspects of living in those areas. But Connecticut hosts smaller cities and suburban towns for commuters to New York, making the state an ideal place to raise a family.
Like other small cities with strong academic institutions, New Haven, known for hosting Yale’s campus has also made efforts to develop a startup ecosystem. Whether in the States or Israel, academic institutions serve as a source of talent, community, and mentorship for budding startups. Connecticut’s state university UConn is also collaborating with Israeli universities like the Technion on clean energy initiatives, further strengthening the connection between both regions.
Cities like Stamford have focused on becoming a center of innovation. Pre-COVID Stamford hosted a popular week around technology called Stamford Innovation Week that featured Israeli speakers alongside local ecosystem members. Like what SXSW did for Austin in creating a vibrant tech ecosystem, (now digital) festivals can be a part of helping build a community around an ecosystem. Additionally, there are non-profit groups that look to support and build the ecosystem such as the CT-Israel Initiative and are tapped into the local Jewish community.
While some people in Israel may confuse Rhode Island with Long Island this state between Connecticut and Massachusetts is transforming itself into a soft-landing pad for Israeli startups. The smallest state in the US, Rhode Island has made efforts to strengthen ties with the Startup Nation with the governor’s recent trip to Israel that opened the door for further economic cooperation. Rhode Island is culturally diverse, and thanks to its small size is a place where an entrepreneur does not have to wade through endless layers of bureaucracy to build relationships with decision-makers at the highest levels of government.
Rhode Island Commerce Secretary Stefan Pryor states “centrally located between Boston and New York City, Rhode Island has established itself as a fast-growing hub of innovation and industry. We are home to some of America’s most prestigious colleges and universities, and our policymakers have established smart, business-friendly programs that aim to keep our homegrown talent living here and working here. It certainly helps that Rhode Island is a beautiful state with an outstanding quality of life.”
On the ground, the organization taking the lead in fostering these relations and encouraging Israeli companies to open their offices in the Ocean State is the Rhode Island-Israel Collaborative (RIIC). This organization serves as a de facto chamber of commerce and has also partnered with the RIHub along with Brown University, CoWrks Foundry, and IBM. The RIHub is a “network of innovators, investors, students, citizens and those interested in building our economy through new ideas” and a center for the growth of Providence, Rhode Island’s capital. Small cities such as Providence offer culture, a high standard of living, and access to capital without the density of a major city.
Despite the pandemic, entrepreneurs are making do considering the circumstances. While there are other options outside the main tech hubs for market entry, companies need to grow and while it may be a scaled-back effort, they cannot afford to stand by and wait for this crisis to end.
Written by Jonathan 'Yoni' Frenkel CEO of YKC Media