Growth of hi-tech turning Jerusalem into ‘Start-Up City’

"When we started here 10 years ago, it was like being on an island, but now it’s unbelievable how much is going on.”

DECEMBER 4, 2016 20:28

Updated: DECEMBER 5, 2016 12:01

Caption I: This year’s OurCrowd Global Investor Summit, which brought thousands of people from over 100 countries to Jerusalem. (photo credit: COURTESY OF OURCROWD) — Caption I: This year’s OurCrowd Global Investor Summit, which brought thousands of people from over 100 countries to Jerusalem.

(photo credit: COURTESY OF OURCROWD)

The hi-tech scene in Jerusalem is growing exponentially. Drawn to its academic and health-care business sectors – as well as its tax incentives – the number of hi-tech start-ups in the capital grew from 200 to more than 600 since 2012.

The city, whose economy has long foundered due to high Arab and ultra-Orthodox unemployment, is now experiencing what some are calling an economic renaissance.

Indeed, last year Time magazine named Jerusalem one of the world’s fastest growing hi-tech hubs.

According to two CEOs of its most thriving firms, this is just the beginning of unparalleled growth that will redefine the capital as “Start-Up City.”

Jon Medved, CEO and founder of OurCrowd, a venture-capital platform launched in 2013, may be the city’s burgeoning tech scene’s biggest cheerleader.

A 30-year veteran business leader, Medved said on Sunday that OurCrowd is now the world’s largest equity crowdfunding site, with 16,000 members in 110 countries and investments of more than $320 million in 100 companies.

Asked why he chose Jerusalem over the hot hi-tech hub of Tel Aviv, Medved responded with a laugh: “The primary appeal of basing the company in Jerusalem is that it’s a two-minute walk from my house.”

“I’ve been creating companies in Jerusalem for decades,” he said. “I’m a Jerusalemite, and I think it’s extraordinarily important that we have a growing and thriving tech business here and not just the existing sort of economic base in the country.”

Medved said close access to the Hebrew University and its growing talent pool has proven invaluable. He said one of the past decade’s most successful tech companies is Jerusalem-based Mobileye, with a market valuation of $9 billion.

“Things coming out of HU are companies like BriefCam, a smart video company, and HIL, which is building a new proton-beam therapy machine, and at the moment, they’re talking about over 100 new start-ups a year forming in Jerusalem,” Medved said.

“There is a lot of human capital here,” he said. “When you look for a place to set up shop as a start-up company, you look for a couple of things: First and foremost, is human capital – the people available who you can hire. And for us in particular, given the global nature of our business, all the immigrants here really help us. We have Anglos, Spanish speakers, Chinese speakers – they’re all here.”

“People forget how cosmopolitan Jerusalem is,” Medved said. “It gets this rap of being haredi [ultra-Orthodox] and not techy at all.

But first of all, it’s a university town, and there are more students in Jerusalem than any other city in Israel.”

Noting the planned sprawling business district at the western entrance to the city, which will be accessible by a high-speed train to and from Tel Aviv, Medved said Jerusalem Mayor Nir Barkat is further laying the groundwork for one of the world’s most venerable tech hubs.

“I think it will be a complete game-changer,” he said. “I think that it will take an already exciting, dynamic scene and supercharge it to warp speed. When I showed pictures of an artist’s rendering [of the new business district] to a bunch of investors in China over the last two weeks, they were all blown away. They all want to know how they can buy hotels and office buildings here.”

Another thriving Jerusalem-based firm is Oramed Pharmaceuticals, a publicly traded biotech company that works with Hadassah- University Medical Center in Ein Kerem to develop oral delivery systems for injectable medications, including oral insulin to treat diabetes.

CEO Nadav Kidron, a lifelong Jerusalemite, said the company recently signed a deal for more than $50m. with a Chinese pharmaceutical firm.

He cited Hadassah as a key variable in the decision to be based in the capital, adding that Jerusalem is far more than meets the eye.

“We feel that this is the capital of Israel, and there is no reason to just have our archeological findings and government offices here,” Kidron said. “And there’s no reason why the tech and biotech community shouldn’t be vibrant and alive and kicking here.”

He cited fellow Israelis who “act like going to Jerusalem is like going to another country” as one of the biggest challenges faced in operating out of the capital.

“People say, ‘Oh my God, when are you going to be in Tel Aviv so we can schedule a meeting?’” Kidron said with a chuckle.

“When we started here 10 years ago, it was like being on an island. But now it’s unbelievable how much is going on.”

Helen Wexler, director of JNext, a hi-tech entrepreneurial branch of the Jerusalem Development Authority, said Jerusalem’s hi-tech “ecosystem” is unusually supportive and poised for enormous growth.

She listed the close-knit nature of professionals working in the capital – coupled by government tax incentives and buttressed by a strong talent pool of university graduates – as reasons why companies find it increasingly attractive to set up shop here.

Wexler pointed to growth projections that indicate Jerusalem is poised to be one of the world’s top 25 “tech ecosystems” over the next 10 years.

“We have seen an exponential increase,” she said, citing the rapidly growing number of tech conferences in the capital as a leading indicator.

“In 2012, there were only 30 tech events the whole year,” Wexler said. “Last year, we had over 350 events.”