INNOVATION NATION

Israel INNOVATION NATION

SECTION I

Report in Foreign Affairs magazine, September-October 2014...... pages 1-3

SECTION II

Extended report available online at www.countrystrategic.com...... pages 5-21

Sponsored Section

INNOVATION NATION Company Highlight ISRAEL Strauss’ mission In the past twenty-years, Israel has “In Israel, we have our own DNA of earned the nickname “start-up nation” policy innovation” explains the Ministry Turning Israel exporting solutions to global human of Economy’s Chief Scientist, Avi into the foodtech challenges in the field of water and Hasson. His office supervises twenty nation technologies, healthcare and life incubators for early stage projects. Along- Started in 1936 with two cows in sciences, ICT, cybersecurity and en- side private venture capital, Israel provides Northern Israel, the ergy. Since the state was established in its entrepreneurs with the necessary has grown to become a significant 1948, and moshav (communal backing to turn their innovative ideas into global player. Ofra Strauss, third and cooperative agricultural commu- profitable businesses. The country has the generation to lead the company, nities), then state companies and start- highest density of start-ups per capita, and the head of the Israel-US ups have led the way. which aim high and global with more Is- Chamber of Commerce, explains raeli companies listed on the NASDAQ the recipe for her group’s national than the entire European continent. and international success: carefully Harel Locker, Director General of selected partners and an insatiable the Prime Minister’s Office, wants quest for better products. Israel to further open to the world. In “The encounter of several companies Locker’s words: “We help foreign inves- into one mission creates innovation, tors and companies that come to Israel creativity and an added value to remove any barriers”. Supported by these consumers,” she notes. Today, the regulations, almost half of the world’s top Group is in numerous international technology companies have bought start- partnerships with agro-industry and ups or opened R&D centers in the coun- appliance giants such as PepsiCo, Kibbutz Sdot Yam’s engineered stone try—200 of them from the U.S., such as and Haier, in products surface company, Caesarstone, is an ex- IBM, Cisco and Intel, and more recently ranging from candies to fresh food, ample of kibbutz perpetually renewing Apple and Facebook. dairies and water appliances. Thanks their range of activity. to these alliances, Strauss Group has Here: Calacatta Nuvo, latest design from become the world’s first hummus Caesarstone producer together with PepsiCo through their brand Sabra. It is also Dan Senor and Saul Singer, in their the fourth largest producer of eponymous book, explained it is all at the global scale. about creating the right innovation eco- system, which drives the remarkable A leading company at home, Strauss economic performances of the country. Group wants to take its mission Growth projection for 2014 is pegged further. It recently launched Alpha at 3.4—Israeli performance will exceed Strauss, an open platform to register that of OECD’s other members. Israel-developed food technology, Israel, a world leader in life sciences in an effort to turn the country into High tech products account for half of technology, has the world’s highest number the foodtech nation. Strauss, bank- industrial exports from Israel. Investing of patents per capita in the medical device ing on the country’s innovative po- the highest ratio of GDP into R&D Isra- area, as illustrated by pioneer Insightec, tential, explains: “The world doesn’t el is the world’s second most educated leading the therapeutic use of ultrasound have enough food or enough water. country after Canada. The engrained technology. We want investors and multina- quest for perfection and the local sense Here: Physician and patient during ExAblate tional companies to look to Israeli of chutzpah—audacity—create a partic- Neuro treatment technology in the food sector.” ularly competitive business culture. Strauss Group has sufficient le- verage to take game-changing Read more innovations to the global stage. ¾ ¾Shimon Peres: Extended interview of Shimon Peres Thanks to the Group’s interna- ¾¾Oil & Gas: How the new discoveries will benefit Israel tional network, they will have im- ¾¾Cybersecurity: Be’er Sheva, the world’s cybersecurity hub mediate access to global markets, ¾¾Start-Up Region: Thinking regional thus tackling a pressing 21st cen- www.countrystrategic.com/Israel2014 tury issue challenge. 1 Sponsored Section PREPARING FOR TOMORROW An Interview with Shimon Peres The history of Israel coincides to a great degree with Shimon Peres’ own biography. Ever since Israel was born, the country’s immediate former president, 91, has pushed the country along the path of innovation. How has Israel become one of the world’s most in- novative and entrepreneurial economies? When Israel was started, the land we got was unfertile. We thus © Ouria Tadmor had to use technology. The need for weapons brought us to ‘real’ will know Israel is not their problem. If Israel helps without high tech, of which Ben Gurion put me in charge. My friend Al fanfare, we can contribute. Schwimmer, came from the US to help with this work. In spite “Concretely, we must move from the start-up of the failure the experts predicted then, our chutzpah helped us. nation to a start-up region.” What will be the impact of scientific innovation on tomorrow’s world? How can scientific development contribute to peace Tomorrow is already here but we think as we did yester- and stability in the region? day, ignoring reality. We have to adapt ourselves to a new For fifty years, poverty has been growing in the Middle East. age where competition, not wars, will take over. We have an People are overusing natural resources. The only thing we alternative way to government for governing: global compa- can do it is to improve quality of life. We must also ensure nies. Global companies do not have any force or power. It is men and women have equal rights. Concretely, we must a new sort of democracy, without delegation. They will be move from the start-up nation to a start-up region. Israel in charge of the future investing in innovation and research. has 13,000 start-ups involving 60,000 students. Everything will evolve around individuals. I suggest we open initiatives encouraging entrepreneurial ventures to Arab universities. Sixty percent of the 350 million “We have to adapt ourselves to a new age where Arabs living in this region are below the age of 26. One hun- competition, not wars, will take over.” dred million of them are connected to the Internet. Israel can How would you like to see Israel in the next few years? contribute indirectly to have all the youngsters connected. We must understand the decision-making processes in our Having completed your term, and as a “dissatisfied own brains. The brain is the most illustrious instrument that optimist,” what is next? exists. Israel must lead brain research. We live on our brain My dream is to help the region to escape poverty and more than our land. terror. I will do this working with multinational compa- Israel shall continue to prefer the moral code to any other nies. I want to create a sort of matchmaking Scan here for attraction on earth; values must come before power and bringing companies and people together. full interview wealth. If we overcome the difficulties in negotiations, Arabs This interview has been edited and condensed. water technology Israel setting the global pace Israel’s founder and first Prime Minister, David Ben Gurion, 2016. Felber explains that when it comes to cherished the dream of a blossoming desert. Ever water solutions the US is lagging behind: “U.S. companies can since, water technology has been top priority in a land that is learn from us in the fields of desalination, water treatment, and 60 percent arid. Watec Israel 2013 Chairman and former Wa- sophisticated water treatment solutions for complex projects”. ter Commissioner, Shimon Tal, refers to Israel as the “water Israeli technologies are also providing top-quality drink- solutions hub.” Technologies such as the desalination of sea- ing tap water in the home. Strauss Group, Israel’s second- water, reclamation of treated sewage “U.S. companies can learn from us in the fields of largest food group, is develop- for agriculture, early-warning meth- desalination, water treatment, and sophisticated ing patents for unique point of ods to detect leaks and computerized water treatment solutions for complex projects”. use water purification solutions drip irrigation, allow 80 percent of all available globally, and distributed water used in Israel to be recycled Avshalom Felber, CEO, IDE Technologies through joint ventures with Virgin and reused. Spain, the second biggest recycler of water by and appliance producer Haier, with products delivered in comparison, only reuses about one quarter of its water. the Israeli, European and Chinese markets. Ofra Strauss, Avshalom Felber, CEO of IDE Technologies, stresses that Chairwoman of the Group, reveals that the purification the water scarcity problem revolves around three angles: wa- technology is based on gravity, enabling its use in develop- ter conservation, water re-use and water desalination. IDE is ing countries with unreliable electricity sources. She guar- currently building the largest seawater desalination plant in the antees, “safety is inherent within this machine”. Thanks to Western Hemisphere, located north of San Diego in Carlsbad. this technology, “even if there is no electricity, and no water This US$1 billion dollar project has been developed with local pressure, one can get purified water,” thus suiting both partners to deliver 50 million gallons of water a day by early developed and developing markets. A Country Strategic feature (countrystrategic.com). 2 Publisher: Stephen de Vasconcellos-Sharpe; Global Director: Taylor E. Russell; Art Director: Anastasia Caramanis. Israel team: Country Director: Carolina Nuñez; Editorial Coordinator: Julie Mandoyan; Editorial Assistant: Stanislas Albert. Sponsored Section

Company Highlight Tourism in israel Isrotel redefines the essence of Israel’s hospitality Tourism is a booming sector in Israel. southern tip by the Red Sea. Since then, been ahead of the market and we will In February 2014, while visiting the U.S., the Isrotel Hotel Chain has grown to 17 continue being like that.” Prime Minister Benjamin Netanyahu hotels, including the Beresheet Hotel on Effectively, the company’s services and declared it was a priority sector for the the edge of the Ramon Crater, and its facilities have turned it into the go-to Israel economy to preserve its growth newest luxurious Spa Hotel, Cramim, in brand for international and local visitors. rate. “Tourism is an economic growth the hills. Isrotel pioneered the Urban centers, and Jerusalem, engine that we need to cultivate. It is Spa & Resort concept in Israel. are new development priorities, where important to show, to the world, Israel “Israel is a small country that Isrotel can truly leave a mark in redefining as a progressive and enlightened country high-end travel options for business and with scenic vistas and vibrant nightlife, has everything” leisure visitors. The results are already and as a state that respects all religions.” Lior Raviv, General Manager visible: the chain’s newest facility in Tel With over a billion NIS (US$300 Aviv, Royal Beach Tel Aviv by Isrotel million) in revenue in 2013, Isrotel has Isrotel Hotel Chain Exclusive Collection, open since June established itself as the leading hotel Isrotel, traded on the Tel Aviv Stock 2013, benefits from the city’s highest chain in Israel. Known for its ability to Exchange, mixes sound management occupancy rates for the first months of provide amazing added value, Isrotel practices with innovative thinking. Yet, 2014. Raviv anticipates: “I believe this will is able to turn each of Israel’s scenic contrary to international hotel chains, continue until the end of the year.” landscapes into modern and unique Isrotel confined its ambition to Israel, tourism destinations. turning its knowledge of the country Isrotel’s story begins in 1983 when into an unbeatable asset. The General David Lewis, a London-based Jewish Manager, Lior Raviv, explains “Israel is a businessman, realized the potential for small country that has everything”. For tourism in Israel—especially in Eilat, perfectionist Raviv, this innovative quest Israel’s premier resort town located at its is Isrotel’s DNA: “We have always

Israel >> UNDERSTANDING The Israeli economic wonder

Throughout the past 20 years, Israel has earned the nickname “start-up nation” by exporting solutions to global human challenges in the field of water and food technologies, healthcare and life sciences, information and communications technology, cybersecurity and energy. Dan Senor and Saul Singer, in their eponymous book, Start-up Nation: The Story of Israel’s Economic Miracle, explained it is all about creating the right innovation ecosystem, which drives the remarkable economic performances of the country.

ith a population of only 7.8 million, Israel ranks winners for sciences and economics and two for Chem- Wamong the world’s wealthiest nations. Growth istry from the last decade alone. The engrained quest for projections for 2014 are pegged at 3.4—Israeli perfor- perfection and the local sense of chutzpah—audacity— mance will exceed that of the OECD’s other members. create a particularly competitive business culture. The calculated that foreign direct investment For Minister of Economy Naftali Bennett, the ex- (FDI) in the first three quarters of 2013 of $10.5 billion, planation is simple: “We, as a country, can help cre- was already above the $9.5 billion seen for 2012. ate an environment where people can innovate.” In fact, an entire institutional structure has been set up “The Israeli high tech industry started because we to support Israeli talent. “In Israel, we have our own did not have a choice. We did not have land to live DNA of policy innovation” explains the Ministry of on, and we did not have arms to defend ourselves.” Economy’s Chief Scientist, Avi Hasson. His office Shimon Peres, President of Israel, 2007-2014 supervises a network of technological incubators for early stage projects: alongside a private venture capital Immediate former President Shimon Peres, who system, Israel provides its entrepreneurs with the nec- has been standing behind the development of high tech essary backing to turn their innovative ideas into prof- industries in the country since 1948, is categorical: “The itable businesses. The country has the highest density Israeli high tech industry started because we did not have of start-ups per capita, which aim high and globally and a choice. We did not have land to live on, and we did not have arms to defend ourselves.” Diversification of “In Israel, we have our own DNA of policy innovation.” Israel’s activities were led by the kibbutz and the moshav, Avi Hasson, Chief Scientist, Ministry of Economy communal and cooperative agricultural communities, recognized as Israel’s “first laboratories”. Today, kibbutzim more Israeli companies are listed on the NASDAQ exemplify Israel’s entrepreneurial spirit, having reinvented than from the entire European continent. themselves into innovative enterprises. Harel Locker, Director General of the Prime Minis- Numbers are revealing. High tech products account ter’s Office, maintains Israeli innovations can go beyond for nearly half of industrial exports from Israel. Prime the country’s borders. In his words, the goal is set: “We Minister Benjamin Netanyahu at the 2014 World help foreign investors and companies that come to Israel Economic Forum in Davos invited the world to Israel remove any barriers”. Supported by these regulations, “the epicenter of world innovation”. In addition to fa- almost half the world’s top technology companies have voring innovation, Israel invests the highest ratio of GDP bought start-ups or opened R&D centers in Israel—200 into R&D and is the world’s most educated country after of them from the U.S., such as IBM, Cisco and Intel, and Canada. It is no wonder it is home to ten Nobel prize- more recently Apple and Facebook.

Tel Aviv at sunset 5 SHIMON PERES >> Israel and Innovation

In Tomorrow’s World ©Ouria Tadmor

The history of Israel is his biography. Ever since the country was born, Shimon Peres, 91, until July the world’s oldest head of state, has been involved in all the steps that have led it to become a renowned innovative nation, anticipating research in promising sectors. Israel’s immediate former president gives us an account on what’s next for the start-up nation. How has Israel become one of kibbutz and every moshav became tion, one must understand why there the world’s most innovative and a laboratory. Before the State was were wars in the past. In the past, entrepreneurial economies? created, we founded the Volcani re- people were living from the land. To- search institute. day, we make our living from science. I have been part of this country’s After that, we had to defend Slowly, armies are declining. One of history since its first day. For me, ourselves. The United Nations ap- the ways of war is already on the history is my biography: it is per- proved the creation of Israel but way out: the ground war. There are sonal. We had two major ambitions: they put an arms embargo on us. to gather Jewish people and bring The need for weapons brought “We have to adapt ourselves to a them back to work and to cultivate us to ‘real’ high tech, of which new age where competition, not the land with our own hands. Until Ben-Gurion put me in charge. then, the Jews had not been living wars, will take over.” I was 24. I had the greatest qual- on their own land—they were re- Shimon Peres ity: ignorance. I did not know any lying on others. Israel is one thou- President of Israel, 2007-2014 rules. Had I known about the chal- sandth of the Middle East. Then, we lenges, I would have probably said still planes in the sky, but I do not be- were 600,000 people. The land we “It is impossible.” When we started lieve they will remain forever. We do got was infertile: swamps in the building an aeronautic industry, the not need men in the planes. Every- North, desert in the South. We only other industry we had was to thing is changing. Yet, wars shaped the thus had to use technology. Every build bicycles. And the bicycle in- administrations, namely hierarchies, dustry went bankrupt! My friend Al discipline, government, on which we Schwimmer, came from the U.S. to still rely today. Government admin- help with this work. In spite of the istration is heavy, expensive and bu- failure the experts predicted, our reaucratic. Governments always have chutzpah helped us. to justify themselves: they create their own ‘raison d’être’. This is why In January 2014, you declared: politics is at a low, all over the world. “the new goal and spirit of sci- People say “we don’t have great lead- ence is to be more humane, ers.” There are no great leaders be- to make people richer in hu- cause no one needs them. Kibbutz Sdot Yam’s engineered stone man capacity, not just to make We have to adapt ourselves to a new surface company, Caesarstone, is an ex- money.” How? age where competition, not wars, will ample of a kibbutz perpetually renewing Tomorrow is already here but we take over. Science cannot be conquered their range of activity. think as we did yesterday, ignoring re- nor defended. We have an alternative Here: The latest design from Caesarstone, ality. For example, in today’s world, is way of governing: global companies. Calacatta Nuvo war necessary? To answer this ques- Global companies do not have any

10 6 force or power. It is a new sort of democracy, without hundred million of them are connected to the Internet. delegation. Every buyer decides the fate of the company. Israel can contribute indirectly to have all the youngsters The national governments will remain. They will only deal connected. There are companies that will be glad to take with domestic matters. Their influence on global develop- care of this. Internet can be in Hebrew or Arabic. ments will be increasingly smaller. Global companies will be in charge of the future: they will invest in innovation and research. Everything will evolve around individuals. I think we must understand the decision-making processes in our own brains. The brain is the most illustrious in- strument that exists. It enables you to build an artificial brain, but does not permit you to understand your own brain. Today, the major effort in science is the research of the brain. After politicians and might, after multinational companies, we may then have a third government: the government of self-governed individuals because we shall be able to track our own brain. ©Moshe Milner With these paradigmatic changes in mind, how In March 2013, President Obama said Israel had would you like to see Israel in the next few years? “no greater friend” than the United States. Is- The greatest contribution of the Jewish people to the rael and the U.S. mark their partnership in the world is dissatisfaction. Dissatisfaction generates cre- technological field through bi-national agencies, ation. Deep in our heart, we know there is no perfection. such as the BIRD Foundation, enhancing coop- However, the search for perfection is the closest thing eration and innovation benefiting both coun- to perfection. What I called dissatisfaction, I can also call tries. Additionally, Israel is home to many R&D learning. There is no end to it. I say jokingly to young peo- centers and outsourced business units of several ple: “why do you eat three times a day? If you eat three U.S. high tech companies. What is it that the U.S. times a day, you become fat. Read three times a day you’ll and Israel find with each other that they cannot become wise. Better to be wise than fat.” Israel shall con- find with any other countries? tinue to prefer the moral code to any other attraction The Mayflower brought to the U.S. people who wanted to on earth; values must come before power and wealth. If go back to Zion. This is our first connection. Israel has the Israel helps without fanfare, we can contribute. Then, Is- U.S.’ pioneering and democratic spirit, in a non-democrat- rael will not be a country that needs contributions. Israel ic Middle East. Israel is a winning democracy, in spite of all must lead brain research. We must do it because we rely the odds being against it. America has respect for this sort on it. We live on our brain more than our land. of success. Israel and the U.S. also share dreams. America “Concretely, we must move from the start-up nation became great by giving, not ruling. No other country in to a start-up region.” the world welcomes new ideas more than America. It cre- ated the equal right to be different. Like Israel, America is Shimon Peres, President of Israel, 2007-2014 a gathering of excellence with many languages and many How will scientific development contribute to origins. We share the same understanding of the future: peace and stability in the region? national governments serving the state, global companies For fifty years, poverty has been growing in the Middle East. for research and development and understanding of the People are overusing natural resources: the water, the brain for self-control. land. The only thing we can do it is to improve the quality July 27, 2014 marked the end of your term. As of life; today’s currency is knowledge, ignorance is poverty. a “dissatisfied optimist” what is next for you? We must also ensure men and women have equal rights My dream is to help the region to escape poverty and otherwise you only get half a nation. Concretely, we must terror. I will do this by working with multinational com- move from the start-up nation to a start-up region. Israel panies. I want to create a sort of matchmaking sevice has 13,000 start-ups involving 60,000 students. I suggest bringing companies and people together. Whoever wants we open initiatives encouraging entrepreneurial ventures to be a great leader does not stand a chance; whoever to Arab universities. Sixty percent of the 350 million Ar- wants to be a devoted servant has a chance. For me, abs living in this region are below the age of 26. One helping people is more meaningful than ruling them. 117 Israel Leading Water tech Israel’s founder and first Prime Minister, David Ben-Gurion, cherished the dream of a blossoming Negev desert. Ever since, water technology has been at the top of the national agenda, in a country covered by 60 percent arid land.

he Israeli water market is internationally recog- water. Seed-stage start-ups to national giants are pro- Tnized as being highly developed, having benefited viding innovative solutions alike. Avshalom Felber, from many years of experience in managing scarce wa- the CEO of IDE Technologies, one of the country’s ter resources. Thanks to the smart use of technology, leading water technology companies that contributes in 2014, Israel no longer has to rely on rainwater to a great deal to these revealing numbers, summarizes secure its water resources—it is a world first. solutions which must be implemented to solve the se- This impressive result provides hope to the world rious problem of water scarcity: water conservation, and could reverse current trends. Otherwise, ac- water re-use and water desalination. IDE Technolo- cording to the OECD’s latest Water Outlook to 2050 gies have for years been providing the country with report, 40 percent of the world’s population will be its most efficient methods of desalination. In 2013, lacking water by 2050. In a global market estimated at USD 700 billion, “U.S. companies can learn from us in the fields of and growing, Israel is likely to gain a top position. The desalination, water treatment, and sophisticated country’s water industry is widely regarded as a nexus water treatment solutions for complex projects.” of world-class expertise in the field. Every year, Israel brings hundreds of experts, solution-providers and Avshalom Felber, CEO, IDE Technologies potential clients to its WATEC (Water Technology they opened the largest sea-water reverse-osmosis and Environment Control) conference, attracting an desalination facility worldwide, Sorek, which uniquely increasing number of international participants. employs green technology developed by the company. In 2013, Governors of Texas and Nevada made a Sorek sets significant new industry benchmarks in noted appearance, both praising the impact Israeli desalination technology, capacity and water cost. Lo- technologies could have on their drought-affected cated 15 km south of Tel Aviv, the plant provides clean, states. For former Water Commissioner Shimon Tal, potable water for over 1.5 million people, comprising Chairman of the 2013 edition of the event, there is no 20 percent of the municipal water demand in Israel, doubt his country is the world’s “water solutions hub”. thus alleviating the country’s potable water shortage In a global market estimated to USD 700 while minimizing the impact on terrestrial and marine billion, and growing, Israeli technologies are likely environments. Felber summarizes solutions to the se- rious problem of water scarcity: water conservation, to gain a top position. In the Global Cleantech water re-use and water desalination. In all these areas, Index 2014, Israel is ranked number one. he indicates that the U.S. is lagging behind in imple- menting solutions. He explains: “U.S. companies can Concretely, the employment of Israeli technologies learn from us in the fields of desalination, water treat- including the desalination of seawater, reclamation of ment, and sophisticated water treatment solutions for treated sewage for agriculture, early-warning methods complex projects”. Offering their expertise to North to detect leaks and computerized drip irrigation, allow America, a new priority area for development, IDE is 80 percent of all water used in the country to be re- currently building a huge desalination facility located cycled and reused. What Israel has achieved is unprec- north of San Diego in Carlsbad. This $1 billion project edented: Spain, the second biggest recycler of water has been in development with local partners for ten by comparison, only reuses about one quarter of its years to deliver 50 million gallons of water a day by

8 Sorek desalination plant. Image courtesy of IDE Technologies. early 2016 to 300,000 people. For environmental harm. Emefcy decid- Company Highlight Felber, the American adventure is ed to reverse the process, turning likely to continue for IDE. The next wastewater into fueling energy, cre- Strauss’ mission challenge? Provide IDE Technolo- ating a bio-electro-chemical pro- Turning Israel gies’ solutions for industrial water cess for electricity and hydrogen treatment, notably for the oil and production by developing fuel cells into the gas industries. that use bacteria to break down foodtech With over 280 water technol- waste in water. ogy companies, 150 of which are Sound water management prac- nation exporters, Israeli technology in the tices are also part of the Israeli Rooted in 1936 with two cows field of water is also a profitable success formula in preserving wa- in Northern Israel, the Strauss business, in full and rapid expan- ter. Using data analytics for this Group has grown to become a sion. The Global Cleantech Innova- purpose shows the way of future global player in food technolo- tion Index, released by Cleantech management practices. An innova- gies. Ofra Strauss, the third gen- Group and WWF, measures a coun- tive Israeli start-up, TaKaDu is a ma- eration to lead the company, and try’s potential to produce innova- jor contributor to our water loss the head of the Israel-US Cham- tive private cleantech companies. reduction plans. Its founder, serial ber of Commerce, states part- In its 2014 ranking, Israel occupies entrepreneur Amir Peleg, devel- nerships as crucial. “The encoun- the top position. Ofer Sachs, CEO oped an algorithm applied to me- ter of several companies into of Israel’s Export and International tering systems in order to detect one mission creates innovation, Cooperation Institute, forecasts leaks. The solution requires little in- creativity and an added value to the water industry is one of the vestment. Cloud-based and rapidly consumers” says Strauss. Today, future key growth engines of Is- implemented, it requires no physi- Strauss Group has numerous raeli exports. With growing global cal changes to the water utilities’ international partnerships in the demand caused by global warming network. The company has clients agro-industry. With appliance gi- and rising urbanization, the Insti- in Israel as well as abroad in Latin ants including PepsiCo, Danone tute estimated that in 2013 water America, and . and Haier and products ranging technology exports had tripled to Last but not least, Israeli technol- from candies to fresh food and $2.2 billion over a six-year period. ogies are also entering the home to dairies, Strauss has become the Israel Cleantech Ventures (ICV) enable top-quality drinking water world’s #1 hummus producer saw this opportunity arise. A ven- from the tap. The Strauss Group, together with PepsiCo, and the ture capital fund dedicated to clean Israel’s second largest food prod- world’s fourth largest producer technologies, it is one of the first uct group, is developing patents for of coffee. funds to have identified the sector unique point-of-use water purifica- Recently, Strauss Group created as an investment opportunity in tion solutions which are available Alpha Strauss, an open platform Israel. , an ICV Partner on a globally. They are distributed Jack Levy to register new food technolo- leading the fund’s activities in wa- through joint ventures with the gies developed in Israel, in an ef- ter-related technologies, explains likes of Virgin and appliance pro- fort to turn the country into the his motivation: “water is a critical ducer Haier, with products deliv- food-tech nation. She explains: resource and it needs to be treated ered in the Israeli, European and “The world doesn’t have enough as such.” The country’s awareness Chinese markets. , Ofra Strauss food or enough water. We want and strength in cleantech niches is Chairwoman of the Group, reveals investors and multinational com- why ICV invests principally in Isra- that the purification technology is panies to look to Israeli technol- el-based and Israeli-related compa- based on gravity, enabling its use in ogy in the food sector.” Thanks nies. He cites the examples of two developing countries with unreli- to the Group’s international net- promising start-ups: AqWise and able electricity sources. She guaran- work, these innovations will have Emefcy, on the board of which he tees: “safety is inherent within this immediate access to global mar- sits. Emefcy focuses on wastewater machine”. Thanks to the technolo- kets, thus tackling an increasing treatment. The concept is simple, gies used, “even if there is no elec- issue affecting humankind: the the idea brilliant: even after treat- tricity and no water pressure, one safe access to food. ment, wastewater residues cause can get purified water.” 9 FOCUS:  INTERVIEW WITH Avshalom Felber, CEO of IDE Technologies

IDE Technologies is present- Desalination technologies townships we can provide small- ed as a global leader in de- are energy hungry and of- scale project solutions. We be- salination and industrial wa- ten require intense use of lieve that this market represents ter treatment projects. What chemicals. Recently, IDE a constant growth for desalina- differentiates IDE from its launched the program IDE tion for the next 10 years. competitors? PROGREENTM, to promote In 2015, IDE Technologies environment-friendly tech- Our main difference resides will be celebrating its 50th nologies to desalinate water. in the ability to implement ad- anniversary. What would you vanced technology or thoughts IDE PROGREENTM’s goal is to like to be celebrating? into projects. IDE, through de- ultimately have chemical-free de- We have a few things that we cades of development of prod- salination. The goal for IDE PRO- want to see growing and to fo- TM ucts and ideas, has managed to GREEN technology is to have cus on. First of all, industry water develop a sense of managing the the entire desalination process treatment. It is a huge challenge, risk of innovation. This means chemical free, except for the probably even more urgent than both the ability to have innova- post-treatment element - the desalination because every day tion inside of the company and part where you re-harden the industry causes a lot of damage to have the technology leaders water after you clean it through around it. We want to deal with inside of the company that think the desalination process to make it. We need to see how we can along those lines; plus the ability it potable. We hope to achieve recycle most of the water used to manage the risks and actually this by the end of 2014 in order by industry for it not to become implement them into projects to have a full-scale plant end-to- a burden on the water balance even at preliminary stages based end with no chemical use. We of the places where industries on our analysis of the chances of also work on the reduction of are operating and in order to failures and successes. energy consumption. Being more protect the environment. The environment-friendly also helps tariff base has to be pushed fur- The world’s largest seawater towards having cheaper or more ther on, for damage to be taken reverse osmosis desalination cost-effective products. into account in the price of wa- plant, Sorek, using IDE’s ad- ter, and then more and more vanced membrane desalina- IDE has much interest in the industries will feel the need to tion technology, was opened U.S. What do you bring to treat and recycle. Business-wise, in 2013. Can you tell us more the U.S. markets? it is challenging and exciting be- about the technology used Desalination, water treatment, or cause it requires sophisticated for it? sophisticated water treatment technology. We believe that the This plant brings all of our cutting- solutions for complex projects more complicated it is, the bet- edge technologies together. We are not that well developed by ter chance IDE has, because of offer a reliable standard of water U.S. companies. We have a great our innovative nature, our abil- at the best water price, which is success story to show in the ity to give a variety of solutions what the government wants. For U.S.: the Carlsbad project, near from the thermal side, from the this, we employ all of our new San Diego. We are also target- membrane side, from various technologies to offer Israeli cus- ing Texas as a region to expand elements. An achievement for tomers the cheapest water-price our activities. Texas is now in its 2015 would be to have a few plant, but also the most environ- tenth year of drought. We can major clients buying our solu- ment-friendly project. For us, it is offer them both brackish and tions for industrial water treat- nice to have a flagship project like seawater desalination. There, we ment, specifically in the oil and Sorek in our home country try to see if at the level of small gas industry.

10 Company Highlight Tourism in israel Isrotel redefines the essence of Israel’s hospitality Tourism is a booming sector in Israel. southern tip by the Red Sea. Since then, been ahead of the market and we will In February 2014, while visiting the U.S., the Isrotel Hotel Chain has grown to 17 continue being like that.” Prime Minister Benjamin Netanyahu hotels, including the Beresheet Hotel on Effectively, the company’s services and declared it was a priority sector for the the edge of the Ramon Crater, and its facilities have turned it into the go-to Israel economy to preserve its growth newest luxurious Spa Hotel, Cramim, in brand for international and local visitors. rate. “Tourism is an economic growth the Jerusalem hills. Isrotel pioneered the Urban centers, Tel Aviv and Jerusalem, engine that we need to cultivate. It is Spa & Resort concept in Israel. are new development priorities, where important to show, to the world, Israel “Israel is a small country that Isrotel can truly leave a mark in redefining as a progressive and enlightened country high-end travel options for business and with scenic vistas and vibrant nightlife, has everything” leisure visitors. The results are already and as a state that respects all religions.” Lior Raviv, General Manager visible: the chain’s newest facility in Tel With over a billion NIS (US$300 Aviv, Royal Beach Tel Aviv by Isrotel million) in revenue in 2013, Isrotel has Isrotel Hotel Chain Exclusive Collection, open since June established itself as the leading hotel Isrotel, traded on the Tel Aviv Stock 2013, benefits from the city’s highest chain in Israel. Known for its ability to Exchange, mixes sound management occupancy rates for the first months of provide amazing added value, Isrotel practices with innovative thinking. Yet, 2014. Raviv anticipates: “I believe this will is able to turn each of Israel’s scenic contrary to international hotel chains, continue until the end of the year.” landscapes into modern and unique Isrotel confined its ambition to Israel, tourism destinations. turning its knowledge of the country Isrotel’s story begins in 1983 when into an unbeatable asset. The General David Lewis, a London-based Jewish Manager, Lior Raviv, explains “Israel is a businessman, realized the potential for small country that has everything”. For tourism in Israel—especially in Eilat, perfectionist Raviv, this innovative quest Israel’s premier resort town located at its is Isrotel’s DNA: “We have always OIL AND GAS >> a new sea of opportunities

ntil a few years ago, Israel personal sacrifice, he was one of Mexico, and innovative thinking, Uwas the exception in a fos- the few who persisted in the sec- provided by the Israelis and their sil-energy rich Middle East. With tor throughout the 1990s, a de- chutzpah. Equally praiseful is his humor, Israel developed a na- cade marked by the privatization counterpart Lawson Freeman, tional joke about this geological in charge of Noble’s operations misfortune: Moses led the Jewish “Businesses which could in the Eastern Mediterranean, people across the Middle East for not exist before now will who describes it as a “fascinating forty years to end up in the only be created around the gas mix.” The Tamar and Leviathan land with no oil. But the recent fields, discovered in 2009 and gas discoveries are shaking the industry. [Noble] could help 2010 respectively, represent the country’s reality. In the words of create these businesses in two main natural gas reserves Naftali Bennett, Israel’s Min- industries like desalination in the Eastern Mediterranean. ister of Economy, the uncover- Tamar has proven reserves of 10 ing of vast reserves of natural and glass. It will create jobs trillion cubic feet (tcf); Leviathan’s gas equates to “history knocking and generate many more estimated reserves are nearly at Israel’s door.” And the recent social benefits.” double that amount (18-19 tcf). discovery of huge offshore natu- For Israel, these discoveries will ral gas reserves could very well Lawson Freeman drastically change its status from mean a profound transformation Noble Energy energy-dependent to energy- for its economy and create new sufficient with the potential to regional dynamics. of Israel’s exploration companies become a supplier. These known The gas adventure started in and great uncertainty. gas reserves correspond roughly 1999 for Israel, when a maritime In 1999, he initiated a to Israel’s energy needs for 30 to drill struck gas in commercial partnership with the U.S. 50 years. New discoveries may not quantities near the port of Ash- company Noble Energy. The be over yet. In an assessment of dod, at what is now called the Texas-based group agreed to undiscovered fields in the Levant Mari-B. The discovery came after form a consortium to pursue Basin Province, the United States decades of drilling for oil with lit- exploration based on what they Geological Survey documented tle success. The energetic Gide- considered to be convincing twice that amount could be still on Tadmor, Chairman of geological assessments. Over discovered in Israeli waters. Drilling and CEO of Avner Oil, the years, this became an For the two aforementioned both subsidiaries of the Delek incredibly successful joint- members of the consortium, oil Group, recalls his unshakable venture—Tadmor refers to could well be next. belief in the presence of gas and it as a “magic partnership”— The discoveries will also have oil in Israel was initially met with combining expertise, brought by an impact on the Israeli economy. much skepticism. At the cost of Noble’s presence in the Gulf of It is estimated that they will boost

12 GDP by one percent and the additional revenue will ships, especially with the U.S. “We are relying on feed a sovereign fund promised to finance social and foreign technologies and foreign investors to de- education programs. Around this industry, it is also velop our gas fields,” he explains. Highlighting that expected that full new sectors of the economy will the profits to be made in the sector are “huge”, he be created. Freeman offers Noble’s global expertise joins his colleague: “Since the gas industry is a new to assist the country: “businesses which could not one in Israel, there is still room for many kinds of exist before now will be “Since the gas industry is a new one in collaboration—mainly created around the gas Israel, there is still room for many kinds academic and business industry. [Noble] could help opportunities.” In addi- create these businesses in of collaboration—mainly academic and tion to an open door to industries like desalination business opportunities.” new international col- and glass. It will create jobs laborations in explora- and generate many more Harel Locker tion and exploitation, social benefits.” Director General, Prime Minister’s Office these discoveries also At the Prime Minister’s Office (PMO), while re- create opportunities for Israel’s innovative potential joicing about what the potential new discoveries to be applied to a new field. could bring for the country, it is stressed that Isra- These discoveries could have major implications el has yet to adapt enough to fully benefit. Eugene in the region. Following the government’s decision Kandel, Head of the National Economic Council, in 2013 to make available 40 percent of the proven aims to develop capacity in Israel’s top academic reserves for export, Israeli companies have discussed institutions, notably at Technion, Israel Institute deals to supply Palestinian, Jordanian, Turkish and Cy- for Technology. His office works with the Academy priot companies with natural gas, a cheaper source of of Sciences to set up research and teaching cen- energy. As Tadmor noted: “gas not only brings huge ters focused on the Mediterranean basin. In the economic benefits to these countries, but also be- meantime, Harel Locker, Director General of the comes a bridge between nations and an important PMO, aims to capitalize on international partner- stabilizing factor in the region.”

13 FOCUS:  INTERVIEW WITH Lawson Freeman, Noble Energy’s Vice President for the Eastern Mediterranean

The success of Noble Energy cal engineering and construc- The exciting part about this in Israel is closely associated tion firms that we hire in Israel is what is possible in the future. with its ability to build suc- realize this very quickly. I would Israel can look now at what the cessful partnerships with lo- like to think that we have a posi- U.S. and other countries have be- cal industries. tive influence on their opera- gun, like converting fleet vehicles tions in other places too. over to natural gas. The savings I refer to our partners (Delek, Let me add that we have been from carbon monoxide are enor- Avner, , Ratio, Dor) as changed thanks to our presence mous whenever you move to nat- people who were ‘holders of the in Israel. Our Israeli partners con- ural gas. New businesses which flame’. They would not give up sistently challenge our structured did not exist before now will be before discoveries were made. I thinking and bring innovation and created around the gas industry. think that it is really powerful. creativity to the table. We learn It will create jobs and generate As a firm, what do you pro- from it and perceive it as a healthy many social benefits, and we want vide in these partnerships? process. This combination creates to be a part of it. a fascinating mix and chemistry. One of the biggest things we What are the potential and bring to the table is our rigor- Natural gas production from implications you see in terms ous project management – the Israel’s first major field Tamar of exports to Middle Eastern ability to plan five years down began flowing in March 2013. countries? the road and work simultaneous With gas field Leviathan in The ones that we talk the most timelines for all the activities development, Israel will be- about are Jordan, Cyprus, Egypt that make up a major project. come energy independent. and Turkey. The challenging and We also know how to bring hu- The benefits of Tamar gas as an exciting thing is to set up a man resources together to be alternate fuel supply along with win-win situation from a busi- successful in bringing on a field the resulting increased govern- ness perspective. Switching to by a target date. ment revenues represent ap- gas from liquid fuels to generate proximately 4 billion USD a year. power can cut energy costs by What makes Noble Energy It is a significant number! Now, two-thirds. It is good for energy a partner of choice for com- it is up to the State of Israel companies because they open a panies that want to develop to decide how to allocate this new market and it is good for new exploration activities? money. From an environmental countries because you see great In addition to what I just men- standpoint, the consumption of social benefits in cutting their tioned, we bring transparency - natural gas reduces CO2 emis- fuel costs. However, major proj- we have this belief that if you sions by 30 percent or more. Up ects like these need government consistently say what you mean, to this point, our gas deliveries champions. As a company we can and mean what you say, things have resulted in emission sav- show the benefits, share the ex- can work out, even in the face ings of 17 million metric tons citement and be the champion of political obstacles. People of CO2. The use of gas is also from the business side, but the have seen our contribution and beneficial to reduce the envi- government has to be involved our commitment to maintain ronmental footprint; you do not too. And we do hope that good the highest standards of safety, have big yards, towers, water use business across borders can have health and environment. The lo- etc. with gas. geopolitical benefits.

14 Be’er Sheva: INtroducing the world’s cyber capital A peripheral city unknown to the world a few years ago, Be’er Sheva is transforming itself into one of the world’s prime global hubs in cybersecurity technology. A specific ecosystem, initiated by political will, is transforming Israel’s Negev region.

or the past two years, prospects have been vastly the city for an easier and more direct connection to Fchanging for the 200,000 inhabitants of Be’er Sheva, Be’er Sheva. Finally, the municipality and the Israeli gov- a medium-sized peripheral city dubbed the “Capital of ernment are setting up an attractive financial package the Negev.” In an interconnected age, increasingly reliant to encourage the development of business activity. With on the cloud and cyber systems for transactions, interac- contagious enthusiasm, the mayor of the city, Ruvik tions and infrastructure, Be’er Sheva has been chosen to Danilovich says proudly: “We are in the middle of an become Israel’s—and one of the historical move. […] This is world’s—primary cybersecurity “We are in the middle of an historical the future of Israel.” hubs. The goal is twofold. Firstly, move. […] This is the future of Israel.” From a global point, Israel cybersecurity has increasingly holds sway over five to seven become a national priority for Ruvik Danilovich, Mayor of Be’er Sheva percent of the world’s cy- the Israeli government, and its bersecurity products, a share development naturally follows greatly disproportionate to the establishment of Israel’s its size and still likely to grow. National Cyber Bureau. The These figures are all the more body was put under the aegis impressive as the cybersecu- of the Prime Minister’s Office rity sector operates under na- (PMO) two years ago to foster tional security-related export Israel’s technology industry and restrictions. In fact, over the to help the military, universities past three years, Israel’s cyber- and businesses collaborate. Sec- security start-ups have raised ondly, this revitalizes a hitherto over USD 400 million, accord- peripheral region, the Negev, ing to the Tel Aviv-based IVC previously in the shadow of the Research Center. economic centers of Tel Aviv, and Jerusalem. Nowadays, the ‘opportunity capital’ of Israel boasts In early 2014, addressing the Cybertech conference the presence of CyberSpark, a unique type of complex in Tel Aviv, Prime Minister Netanyahu unveiled his grand located by the Ben-Gurion University of the Negev in plan for the country and the Negev region to an inter- the city’s high-tech park, the Advanced Technology Park. national audience: “Be’er-Sheva will not only be the Its first building opened in 2013 and its second build- cyber capital of Israel but one of the most important ing will be operational in the fall of 2014. It is already places in the cyber security field in the world.” Harel home to industry leaders, security agencies, educa- Locker, Director General of the PMO, maintains Israeli tional facilities and personnel specializing in cyber secu- innovations in cybersecurity will contribute beyond the rity. Multinationals have swiftly recognized its potential. country’s borders: “Although we are a small country, we To date, Fortune 500 companies Lockheed Martin and are at the technological forefront of the digital world IBM have confirmed they would invest in CyberSpark […] we are willing to cooperate and share that knowl- R&D facilities. Decisively linked to the government’s edge with other countries.” effort in Be’er Sheva, IBM will open a center for global Considerable investment in infrastructure has been excellence in the field of security and defense for infra- made. Thanks to the government’s cooperation with structures, assets and information together with the multinational tech company Cisco, Be’er Sheva will Ben-Gurion University. They will add to the list of com- become Israel’s first digital city, following the example panies already present in Be’er Sheva: Deutsche Tele- set by the likes of Barcelona. Logistically, the north- kom, EMC, RSA, venture capital JVP’s cyber security- south Highway 6 is being extended to the outskirts of dedicated incubator and many start-ups. 15 FOCUS:  INTERVIEW WITH Jackob “Kobi” Vortman, CEO, Founder and Chief Technology Officer of InSightec

After you graduated from is that you cut your way to the Only at the focus the paper will the Technion, you worked treatment area while causing sig- ignite. The level of energy we for defense company Rafael. nificant collateral damage. On use is capable of destroying tis- What are the links between many occasions, when we look sue. Magnetic Resonance Imaging the two parts of your career? at surgery, the level of damage is (MRI) is capable, in addition to There is much similarity between very significant, and the recovery very high quality anatomical im- the customers: performance- from these may take weeks. aging, of measuring temperature focused, complex systems, atten- deep inside the body to an accu- How does the technology be- tion to reliability, to safety. Ad- racy of within one degree. Tem- hind it work? ditionally, there is also much in perature measurement allows common in the science part and Acoustics is a physical wave, like you to understand which regions in the business part between the optics. At high frequencies, inau- you are treating. We check where two, as weird as it sounds. dible to us, you can focus it very we are inside the body and if we tightly. At this focus the energy are inside the target. InSightec presents itself as density is very high: it can heat If we have a child with a 41°C the operating room of the fu- and destroy targeted tissues – temperature we rush to cool ture. How do you change sur- but only at the focus. It is as if him down so no damage oc- gery as we know it? playing with the sun, a piece of curs. In reality, the high tem- Craniotomies (removal of parts paper, and a magnifying glass. perature is not that bad, since of the skull) took place as early you need to keep the tissue for as 8,000 years ago. In essence, four hours at 43°C to cause sig- surgery has not changed dramat- nificant damage. However, if you ically since then. Surgeons are were to raise the temperature still using their a priori knowl- to 60°C, it would take only 0.1 edge, vision, palpation, knives. second to destroy tissue. This is We thought that surgery could the whole concept behind In- be replaced by a completely Sightec: to be capable of using non-invasive therapy. We wanted thermometry non-invasively in- to give surgeons the possibility side the body, to verify the tar- of treating a target and only the geted tissue is destroyed. MRI, target, and knowing in real time which provides both anatomi- what they are doing. cal imaging and thermometry in Surgery is very unique in medi- real time, allows you to know cine. It is a highly focal and local where inside the body you are therapy. This is very positive be- treating and whether you have cause, in essence, what you are destroyed the tissue. The fact that you have real time feed- trying to do in medicine, if pos- Israel is already a world leader in life sible, is not to poison the whole sciences innovations. It has the world’s back and monitoring of treat- body. The problematic part of highest number of patents per capita in ment outcomes allows you to surgery is that the surgeon is us- the medical device area, as illustrated by change treatment parameters in ing vision and palpation to treat. the success of pioneer Insightec, leading the real time, and lead to whatever Let’s say that we want to remove therapeutic use of ultrasound technology. result you want. a tumor: I need to see and feel Here: Physician and patient during ExAb- We call it cutting-edge tech- it to do it. The outcome of this late Neuro treatment nology without the cutting!

16 After destroying the tissue, how do we get rid of could go through the body and wash out without the residue? any damages (neutral). If we vibrate the target hard enough, the tissue permeability is completely dif- Our lymphatic system provides the mechanism to ferent than in other areas, significantly higher. We remove dead tissue from the body. When we de- inject the encapsulated drugs into the body systemi- stroy large tissues volumes (fibroids, myomas), it cally and allow this drug to accumulate in this area. may take up to 12 months until the body removes Then using the acoustic beam you release the drug it, but it all happens naturally. in this area. With this you get an extremely high lo- Fifteen years after the company was cre- cal toxicity at the tumor site, without exposing the ated, what do you consider are InSightec’s body to this huge toxicity; you generate a differen- achievements? tiator between the target and the rest of the body. This is still basic research but I believe this could be The biggest achievements of InSightec are, first of another tool against cancer. It is not only destruc- all, developing a technology to treat people. This tion; it is local and targeted destruction. was my main drive in building this company. A woman no longer has to go through a hysterec- In 2013, you were selected by the BIRD Foun- tomy and lose her uterus because of a myoma; we dation together with the University of Vir- can treat her and the next day she can go back to ginia to launch a new project on non-invasive her life and work. Think about the brain; instead brain surgery. What is the importance of such of implanting electrodes inside the brain and elec- partnerships with U.S.-based institutions? tronics in your chest, you can undergo a complete- ly non-invasive three-hour procedure and get rid All our clinical development is being conducted of tremor immediately. with universities and academic hospitals. Our re- Now, the focus of the company is to drive brain lationships with institutions like the Mayo Clinic, treatment to become a major therapy. We are cur- Stanford, UCSF, the University of Virginia, Harvard, rently treating functional brain disorders, including Imperial College in London, University of Rome essential tremor, Parkinson’s and neuropathic pain. etc., are critical. These connections are what are The next steps will be to develop the hardware giving us the ability to move fast and combine IQs. and software to treat epilepsy and brain tumors. You can never have enough IQs! We envision our neuro (or brain) system as po- Where have you been able to commercial- tentially changing neurosurgery’s landscape, rede- ize the technology used at the moment and fining neurosurgery. The second area that we hope where do you have regulatory approvals? will significantly benefit is oncology. We have huge potential in oncology for many reasons but the We have about 110 worldwide installations in the main one is the fact that we can treat and treat leading hospitals. In the United States, we are in- again since there is no ionizing radiation, without stalled in the Mayo Clinic, Harvard Medical School, trauma, morbidity, and recovery. Why is it impor- Cornell, Memorial Sloan Kettering Cancer Center, tant? If we were able to turn malignant (oncology) Stanford, UCSF, UCLA, UC San Diego, and Swedish diseases into chronic diseases, and not give up, we Medical Center in Seattle, MD Anderson Cancer would change the situation completely. Center, University of Virginia, etc. We are in the Our technology has huge potential. You could leading hospitals in the US and around the world. program the acoustic beam not to heat but to vi- For fibroids, we now have regulatory approval brate the tissue hard enough so biological mem- globally (U.S., Europe, China, Japan and so on). For branes will start leaking. In many instances chemo- Metastatic Bone Tumors, we are approved in the therapy is very toxic and is provided to the patient U.S. and in Europe; work is underway in Japan and at a high level; if you go over this limit, the patient China to get approval. We also are commercially will die. Now, visualize a completely different situ- approved in Europe for neurological disorders of ation in which we encapsulate the toxic molecules the brain and are in the midst of a Phase III clinical in inert encapsulations: liposomes, polymers… They trial for FDA approval in the US.

17 Start-up nation to start-up region In recent months, a halt in the peace process and the degradation of the political situation in the region have made the headlines worldwide. However, a new type of low-key, business-based cooperation between Israel and its neighbors could be the trigger of a Middle East start-up region, fostering more peaceful relations.

he name “start-up region” is partnership project, is one of to access the Israeli and global Tnot trivial. It is a cherished the government’s programs to markets. Increasingly, the city is dream of Israel’s immediate for- connect the country’s peripheries becoming a life sciences hub. To mer President and Nobel Peace to its most active centers. Cisco, date, Israeli Arabs form 20 percent Prize recipient Shimon Peres. IBM, Google and are of Israel’s population, but they only For most of his political career– some of the players involved in account for only eight percent of a long one which can be traced the construction of Israel’s “digital its economy. Nevertheless, the to the country’s inception, he has highway”, with predictable effects trend is changing. The number of led Israel along the path of tech- on more accessible government Arab engineers in the Israeli hi-tech nological innovation. For the past sector grew from 300 to 1,500 in few years, as first described in his “We need to offer new the past five years. Again, a proactive book The New Middle East, broad- ideas to the Israeli public attitude from both the private ening this innovative potential and public players led to these across the entire Middle East is at about what we can do with encouraging results. In 2011, Shimon the top of his agenda. the Palestinian Authority Peres and John Chambers, CEO It is undisputable; for Israel to and new models to create a and Chairman of , maintain its position at the top of launched the “MaanTech program”. the world’s most innovative nations, win-win situation.” MaanTech works with over twenty the first step on this region-shaping Erel Margalit multinationals (in addition to journey starts at home. Israel’s Founder of JVP and Member of Cisco, participants include as IBM, labor force must become more the Knesset for the Labor Party Intel, and Google from the U.S. inclusive. Israeli labor participation, and CheckPoint and from according to the World Bank, is Israel) to provide language and tech only 57 percent, meaning a huge services, education and health. training—and jobs—for high-tech unexploited human capital. In order Following the example of Be’er workers in the Arab sector. to benefit from this untapped Sheva, other peripheral areas in Venture capital firms are also resource, Israel must equip its Israel are turning into tech centers keen to seize the unique asset peripheral regions and favor the of excellence. Nazareth, the Israel’s diverse population offers. inclusion of its minorities—namely country’s largest Arabic-speaking Pitango Venture Capital set up Israeli Arabs and ultra-orthodox city, is already home to the Nazareth the Al Bawader Fund (Arabic for Jews—in the start-up nation, Business Incubator Center as well “early signs” or “buds”), the first innovative, high tech economy. as nazTech, an accelerator program Israeli Venture Capital and Private “Digital Israel”, a public-private for Arabic-speaking entrepreneurs Equity fund investing in minorities.

18 Headquartered in Nazareth, it raised USD 50 exist, and have proven successful for regional in- million in 2013, and has invested so far in seven tegration, economic growth and social inclusion. portfolio companies. Chemi Peres, Managing Cisco Systems, twice rewarded by the U.S. State General Partner and Co-founder of Pitango, serves Department for its corporate responsibility poli- as Chairman of the Board of Al Bawader. For him, cies, has engaged Israeli engineers to train Pales- the move is logical: the Arab private sector has tinian workers while it outsources some of its Is- great potential to deliver high value products and raeli activities in the West Bank. For Boaz Maoz, services to the expanding the head of Cisco Israel, markets of the Middle East. “We believe we can bring economic engaging in corporate re- Also, it can leverage its access peace to the region through sponsibility programs to to Israel’s highly developed and technology and through our socially favor inclusion go beyond export driven economy and giving something back to infrastructure. Statistics show responsible activities.” communities. He explains: Arabic is the fastest growing Boaz Maoz “we saw that there was language on the Internet and plenty of talent in the CEO of Cisco Israel by 2015, Arabic will be the West Bank that could fourth most-used language on the Internet. Israeli help Cisco. Consequently we launched a collabo- Arabs are the bridge from the start-up nation to ration project between Israel and the West Bank.” the start-up region, and the Internet is its natural The project was marked by the promise of USD channel since, unlike traditional commerce, digital 10 million from John Chambers to President Mah- activity, information and transactions can easily moud Abbas of the Palestinian Authority to estab- cross political lines. For instance, Panet, a leading lish a high-tech industry in the West Bank. Judging Israel news portal in Arabic hosted at the URL by Cisco’s involvement in the region, he includes http://www.panet.co.il gets 46 percent of its 1.4 the role of economic players as fundamental for a million daily hits from abroad. growing region: “Because we feel this sense of re- A proponent and active player in one start- sponsibility, and we have the [economic resource] up region is Erel Margalit. Now a Member of capacity, we believe we can bring economic peace Knesset for the Labor Party, he is the Founder to the region through technology and through our of Jerusalem-based venture capital firm JVP—and socially responsible activities.” He concludes with was its managing partner until his election in 2011. an optimistic note: “In the Middle East, Cisco is At that time he set a goal to multiply by five the playing a key role to drive economic peace until we number of Arab entrepreneurs within five years, have real peace.” through several JVP programs. Nowadays, as a In Israel, the sentiment Maoz shared is growing in politician, he continues with this goal, and seeks to the business community. Although international and set the basis for a region-wide, knowledge-based local critics highlight the failure of a peace deal, many economy, rather than one that is resource based. have seen the need for a resolution backed by strong Its center would be Jerusalem, serving as a place of economic foundations, in which they can be key play- unity rather than a divisive space. He asserts, “we ers. Israel’s high-tech godfather, charismatic and hu- need to offer new ideas to the Israeli public about morous , together with the Palestinian what we can do with the Palestinian Authority, and construction entrepreneur Munib al-Masri, created new models to create a win-win situation.” The an initiative under the auspices of the World Eco- start-up region will be realized through technology, nomic Forum in 2012 called “Breaking the Impasse”. education and business partnerships between Israel Today with over 300 business leaders representing and its neighbors. The start-up region, in his words, 30 percent of combined Israeli-Palestinan GDPs, this “could be a hub of creativity with a multinational apolitical movement demonstrates the strong sup- and multicultural contribution.” port of players from all industries, to a negotiated Such business and education partnerships already two-state diplomatic solution.

19 FOCUS: INTERVIEW WITH OFRA STRAUSS, Chairwoman Israel-US Chamber of Commerce; Chairwoman Strauss Group

The Strauss group is first and the world. Today, we are one of ing in partnerships just brings in foremost a family business the ten big companies in the cof- more ideas. that was started with two fee sector worldwide – actually, When each party contributes its cows in 1936, before the State number four. added value – the outcome serves of Israel was established. The second step of becoming everyone. This promises top stan- international was to join with dards for the quality of our prod- My grandparents moved to Is- a local entrepreneur. Here the ucts, the quality of the manage- rael from Germany, just before partnerships motive repeated ment processes, of successions, of the Nazis came to power. I do itself in a slightly different way. governance in our boards and of not think they ever dreamt they This is what we did with hum- course – serves the consumers. would have to leave everything mus in the U.S. with a company We believe that the combina- and become farmers. My grand- named Sabra. Sabra was founded tion between our expertise and parents were firm believers that by a Rabbi who wished to manu- know-how with our partners with a good business, you can facture hummus for the kosher that better understand their help create a country. My grand- market in the NY area. He asked markets, allows us to build bet- mother’s recipes were the foun- us to join him and together we ter businesses together, share dation of what was sold. developed the business, adding the success and share the risks, We were lucky to keep our knowledge and implementing together. A sustainable business continuity in ownership. At technology we used for fresh model is what we strive for. Strauss group, this means that food. Technology is very impor- the company is here to serve tant in the food industry. Several We spoke about the im- more than today’s purposes, that years later, we partnered with portance of values in doing it is part of society. PepsiCo, one of the most suc- business. What are the fam- I believe the foundation of a cessful American companies and ily values you are trying to business takes all these years to today, we are the largest hummus spread globally? really be built. And then every- manufacturer in the world. We are very much in favor of mak- one adds something to it. Now, Basically, we look at categories no ing the Strauss group companies we embrace technology, we use one else looks at, we make them inclusive businesses. For example, it with our infrastructure all the our own and develop expertise, and in , where the Strauss time, to compete with other then hopefully lead the category. story started, we have always companies here in Israel, and we made sure Arab Israelis and Jews are open to the world. What is your idea of an ideal would work together. This in spite partnership? of the many attacks the factory Strauss Group is one of the The diversity of capabilities is en- has faced during times of conflict. few global Israeli businesses. riched through successful part- To keep this amazing relationship How did your international nership, when each party con- between all Israelis is really part expansion start? tributes its strongest elements of our legacy. We have been able Overall, the partnerships plant- to create a joint venture. The to make it part of our HR philoso- ed the seeds for our interna- joining of several companies into phy and business philosophy. Our tional growth. We started with one mission creates innovation, basic mission is to improve peo- coffee. While other companies creativity and an added value ple’s lives wherever we operate. like Nestlé brought what they to consumers. This is grounded We think of both the short and knew, we actually understood in an 80-year-old understanding the long term Our experience is that people drink coffee in dif- that working with others, shar- strengthened with ambition and ferent ways in different parts of ing your vision and participat- willingness to take risks. 20 A Strauss Group initiative, Alpha-Strauss As the Chairwoman of the Israel-America gathers technology in the food and water in- Chamber of Commerce, overseeing the busi- dustry. What do you think Israeli technology ness sector in Israel, how do you view the can bring to the food industry worldwide? role of the Israeli business community? We developed open platforms to register the Israeli The Israeli-American Chamber of Commerce is technology around food. We think we can create a doing great things here in the Middle East on bring- hub in Israel through open communities. Today, at ing together the business community. the global level, the world doesn’t have enough food If you look at most of the conflict areas in the world and enough water. We want to bring the world, in- today or in the past - such as Ireland and South Africa vestors and multinational companies to look at Is- - business communities play an amazing role towards raeli technology in the food sector. Why? We be- peace. We have to start before the politicians: once lieve that the more they invest in it, the better for the peace agreement is signed, it’s all about economy, the country and of course we will benefit from it. employment, GDP, infrastructure, tourism etc. As a As Israel is the “start-up nation”, we believe it could Chamber, we try to contribute to this process. We become the food-tech nation which can provide the assist governments in bridging the existing gaps. We solutions for the world’s problems when it comes also act through other initiatives, such as Breaking to what everyone must provide for themselves- the Impasse, initiated by the World Economic Forum. food and drink. I think the business community in Israel is ready to Alpha-Strauss is about sharing, about believing in be a bridge for peace. And, learning from running a diversity: the more you share - the more you get. company, I can say for sure - we can do it. There is Creating a food-tech industry in Israel will have something about business that makes things simpler. positive impacts on both the short and long terms. And whether it’s through Alpha-Strauss or all the I think food technology offers the whole Middle other initiatives, yes, we can enhance the peace pro- East a great platform for a dialogue. cess, especially with the Palestinians.

A Country Strategic feature (countrystrategic.com) Publisher: Stephen de Vasconcellos-Sharpe; Global Director: Taylor E. Russell; Art Director: Anastasia Caramanis Israel team: Country Director: Carolina Nuñez; Editorial Coordinator: Julie Mandoyan; Editorial Assistant: Stanislas Albert

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