Israeli work – coming your way

Israel, only 64 years old and home to just 7.9 million people, has produced a staggering number of start-ups, earning Tel Aviv a reputation as a centre of technological innovation.

With a small domestic market, Israeli entrepreneurs from all spheres including IT, real estate, energy and pharmaceuticals focus their business strategy on richer consumer markets outside Israel.

Jaffa oranges now play second fiddle to exports of machinery and equipment, software, cut diamonds, chemicals and textiles. Israeli exports to the EU in the first quarter of 2012 added up to $3.7bn ($2.3bn), representing 33 per cent of all Israel’s exports. Interestingly for UK firms, these figures represent an astounding 84 per cent rise in exports to the UK, the main reason being pharmaceutical exports.

Israel, an OECD member since 2010, is a force to be reckoned with when it comes to R&D. Israeli companies invented the modern drip irrigation system, discovered the world’s most-used drug for multiple sclerosis, designed Pentium chip technology and Centrium microprocessors, created instant messaging, disk-on-key, IP telephony, and zip compression technology, and the ingestible pill-sized camera. The World Economic Forum has designated it as one of the leading countries in the world in technological innovation and it hosts the first R&D centres outside the US for companies including Intel and Microsoft.

With this level of innovation, overseas investors are finding it an attractive place to invest.

The result is a steady flow of cross-border transactions requiring co-operation between Israeli and foreign lawyers. In the past 12 months Coviden acquired Oridion Systems for approximately $346m and Super Dimension for around $300m, both Israeli medical device companies. Intel acquired Israeli biometrics computer security company IDesia, Facebook purchased Israeli company Face.com for around $60m, Apple bought flash memory controller start-up Anobit Technologies for some $390m and EMC acquired XtremIO, an Israeli software storage company, for around $450m.

It is not just technology, though. In the past couple of years the discovery of the Tamar and Leviathan gas fields off the coast - the latter the largest field ever discovered in the Mediterranean - has brought fresh attention to Israel. With many foreign corporations already showing great interest in participating in the Israeli gas story, increased international business is inevitable.

Israeli companies also favour raising capital outside Israel. Israel has more Nasdaq-listed companies than almost any country outside the US and Israeli companies have shown interest in the London Stock Exchange. There are clearly more opportunities.

The Israeli domestic market is simply too small for Israelis to reap the commercial potential of their skills and they want to expand. You do not need to entice them to the ­table; they are already there and looking for opportunities. You just need to look at this fast-growing market and see where there may be benefits for you. This small country will continue to punch above its weight internationally.