More Israeli Tech Ventures Expand Into Connecticut

In Guilford, an Israeli clean tech company is planning to triple the size of its one-acre hydroponic lettuce farm.

In Stamford, two Israeli cybersecurity businesses are building their U.S. presence. In West Hartford, an Israeli digital tech company plans to set up shop on Main Street, where it will market its mapping services to cities and towns across the country.

Each enterprise was founded in Israel and courted by Connecticut officials through a state program aimed at enhancing commercial and scientific ties with the country known as Startup Nation. Launched in 2013, the international business-building effort gained momentum this year with the approval of several new grants and loans.

One such award went to SolView, a software company that maps the solar power potential of municipalities, down to individual homes. CEO Ofer Sadka, who has moving his family to Connecticut to lead the new U.S. operation, said choosing this state was an easy sell.

“I think there’s a growing awareness in Israel toward the opportunities that Connecticut has to offer in many respects — geographically, socially, commercially,” Sadka said. “I personally believe these will lead to many more companies coming in.”

The state Department of Economic and Community Development has committed to provide SolView a $75,000 matching grant and $165,000 loan. In all, DECD and Connecticut Innovations, the state’s venture capital firm, have committed more than $3 million to eight Israeli companies since 2013.

The state is also building partnerships with Germany and Brazil but it’s invested most heavily in Israel, which sends about 80 percent of its research and development exports to the United States, according to the country’s statistics.

The money adds up. In 2013, Israeli parent companies with locations abroad spent $560 million on scientific research and development, and another $745 million on computer programming and other information technology services, the country reported.

That year, Connecticut’s economic development commissioner led a delegation to Israel and left with a signed memorandum of understanding with the country’s tech transfer entity.

Since then, DECD has approved a total of $475,000 in grants and $765,000 in loans to five companies, including West Hartford’s SolView and Guilford’s H20 Farm, which is planning a million dollar-plus expansion to keep up with demand from customers like Big Y, PriceRite and ShopRite, according to director Ido Helse.

There’s also Applango software company, which settled in Stamford in 2014 after pledging to create four jobs; medical research company Nervomatrix, which started building a six-person sales team this year out of its new Farmington office, near the University of Connecticut Technology Incubation Program; and software developer Qmarkets, which has had a Stamford office for about a year and recently secured $5.2 million in funding to further expand its U.S. presence.

Since moving to the U.S., Qmarkets has gained customers such as Ford Motor Company and Liberty Mutual, who now use its idea-sharing platform to elicit suggestions and collaboration from stakeholders and employees.

“The obvious choices (to locate) were New York and California, Boston,” finance vice president Guy Cohen. “We talked with people in Texas and Rhode Island.”

But in the end, Stamford’s appeal came down to two things, Cohen said: the 40-mile drive to John F. Kennedy International Airport in New York and a $400,000 loan-grant package from DECD.

Three more companies have received a total of $1.9 million in investments from Connecticut Innovations to move to Connecticut. All three — online plagiarism checker Copyleaks Technology and cyberthreat detection companies SecBi and Wymsical — chose Stamford.

That’s not surprising, said Steven Lanza, an assistant professor of economics at UConn’s Stamford campus. Not only is the wealthy city close to New York, it’s the biggest, vibrant metro area Connecticut has to offer, Lanza said.

“Businesses see that and come in to take advantage of that and then other businesses follow on their heels,” Lanza said. “It’s sort of a virtuous activity that gets started with a couple of small things.”

Over the same period, a couple more Israeli companies moved here without incentives or assistance.

Dereck Schwartz, who set up a U.S. office for Israeli cybersecurity business Safe-T two and a half years ago, said to this day, he didn’t even know the state program existed.

Meanwhile, nonprofit organizations like the Florida-Israel Business Accelerator and Maryland/Israel Development Center sought Safe-T out and lobbied for it to relocate to their states. Their offers were all the more tempting because Connecticut was doing nothing to keep Safe-T in Stamford, Schwartz said,

“These guys are active,” he said. “They’re looking for Israeli companies to locate in Tampa (and Maryland) and they’ll make investments in you to do that.”

Schwartz said he ultimately made the “tough call” to stay in Connecticut, where he lived before Safe-T hired him.

Beatriz Gutierrez, executive director of business development for DECD, said the state’s strategy comes down to resources, and Connecticut’s are limited.

If a business decides to move to or stay in the state without financial support, all the better, she said.

“We want to be filling the gaps, not necessarily be the only way people know about Connecticut,” Gutierrez said. “One thing we spent a lot of time on with these efforts is getting people to see what a wonderful secret we are, in a way.”

“Part of the conversation is to really connect the dots and say, ‘We are here in the same ecosystem with these big players.’ ”

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