It's because of technology. Israel has the second-largest venture capital market after the U.S., which is an expression of how much technological innovation is taking place, more so than the European countries.
Whenever anyone needs to look at innovation, they have to look at Israel.
There has been an international movement in the last decade to pressure large and institutional investors to divest themselves of holdings in companies that do business with Israel. Is it a challenge to get some Maryland businesses interested in working with Israeli counterparts?
There has been an Arab boycott against Israel for decades which only the Arab countries ostensibly adhere to. There is a lot of quiet trade between Israel and the Arab world.
Otherwise, there has been a lot of talk about divestment from Israel but it has not really materialized, especially from the U.S. There is more strident talk in some parts of Europe and while it has been unpleasant, it has not seriously affected the economy or investors.
Why did MIDC decide to open a for-profit investment fund with an Israeli partner, Trendlines, earlier this year?
The background is that Trendlines is a consultant firm in Israel, which has been our representative for 15 years. We've worked with them for a long time. We have a great relationship with them. They set up their own venture capital fund about six years ago. …
They've been doing very well. And a year or so ago, they wanted to raise another fund and we said we would like to get into this.
We see great companies and this is a great way to support high-tech companies, support Israeli innovation and feed a pipeline of Israeli companies that we could bring to Maryland. We partnered up with Trendlines in order not to jeopardize our nonprofit status. We set up a for-profit subsidiary, Maryland/Israel Development Corp.
The fund is formally called Maryland/Israel Trendlines Fund.
How would the fund work?
The incubators in Israel have been so successful that they've been able to attract private investment. They ended up privatizing the whole system, which means the government sold licenses to operate incubators to private investors. …
Trendlines, when they set up their fund, they set it up in order to become a private investor of two Israeli incubators.
Trendlines markets the incubators to Israeli entrepreneurs and gets the deals they want to invest in with their own funds. Entrepreneurs go into the Trendlines incubators, and Trendlines invests in them and supports them. The government puts $500,000 in each company.
What we're doing is our new fund is also investing in those companies that go into the two incubators.
Half a million coming from the government is a huge leverage for private investors. …
We're evaluating what companies to invest in. We're looking to make our first few investments by the end of the year. We hope to have three or four investments.
How will MIDC's for-profit venture benefit Maryland?
We have target industries. One is life sciences, primarily in medical devices; and the other is green tech, which has two pieces. One is in environmental technology and the other is agricultural technology.
So in these fields, particularly in biomedical, companies have to do clinical trials to submit to the FDA (Food and Drug Administration).
We'll work hard to introduce them to scientists at Hopkins and Maryland and all those places so they could do trials here. It'll take a few years to finish a product. When they do, with all the contacts we've developed for them, it'll be natural to open their U.S. offices in Maryland.