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Akron, Ohio invests in Israeli technological incubator
Posted By David Brinn On February 19, 2006 @ 8:00 pm In | No Comments
The Targetetch incubator equips innovative startups with a vital catalyst for success.Just ten years ago, it was considered adventurous for American venture capital funds to back promising and innovative Israeli ideas in high tech – today, it is commonplace. On a government level, even some states like California have entered into joint ventures with Israeli companies and consortiums.
But now, for the first time, an American city has placed its faith in Israeli technology by investing directly in an Israeli technological incubator. The visionary city is Akron Ohio, which has earmarked a $1.5 million investment from local public and private sources in Netanya-based Targetech.
“This is the first municipality in the United States that has put together a public-private partnership that will invest directly into a foreign incubator,” Howard Gudell, president of the Ohio-Israel Chamber of Commerce, told the Akron Beacon Journal.
“Every city in Israel has a sister city that funds social programs or environmental efforts, but this is the first time an American city is putting up money for business,” said Targetech’s marketing director Brenda Zeitlin.
In exchange for the investment, Zeitlin explained, companies that emerge from Targetech will base their US headquarters in Akron, providing local jobs and income tax to the city, plus dividends from part ownership in the companies. The consortium that made the investment is called the Greater Akron Investment Partners; which includes the city, but also business leaders in the community. The deal gives the consortium anywhere from a third to a half-ownership in the incubator, which retains approximately half ownership in the companies it sponsors.
“It creates a direct pipeline of companies coming out of the incubator in Israel directly to Akron,” said Gudell.
Long known as a tire-manufacturing center, Akron’s economy has suffered in recent years as many companies shifted their production facilities to Asian countries. But it has recently rebounded by focusing on companies related to polymers, advanced materials and biomedical applications.
The idea of attracting an American city to invest in Targetech has been on the incubator’s agenda for a while. Founded in 1991 – under the Israeli government-run and funded technological incubator programs – Targetech has helped dozens of companies over the years develop from their infancy stage into successful private companies.
And then in 2003, they did it themselves, led a by a group of private investors in Israel and the US.
“We knew we had to develop business relations in the US – that’s where the market is, and the marketing knowhow. I absolutely agree that Israelis are great at developing cutting edge technology, but less adept at identifying markets and targeting audiences for their technology,” said Zeitlin.
“We needed someone to invest in our ideas and in turn to be a launching pad for our companies in the US. It’s a win-win situation, and a city that would see the potential there would naturally understand how mutually beneficial it would be. And Akron was that city.”
Gudell organized a mission to Israel in January to seal the deal, led by Akron Mayor Don Plusquellis, which included representatives of 21 public and private Akron-area institutions.
“Mayor Plusquellis was just incredible,” Zeitlin told ISRAEL21c. “When he came to visit our offices, he saw the vision. We didn’t even have to explain that much, the ball just dropped,” she told ISRAEL21c.
At a gathering last month in Akron’s Jewish Community Center announcing the investment – attended by 300 people representing area businesses, universities, hospitals and local governments – Plusquellic said he jumped on the idea after originally visiting the incubator in April 2005 and learned about their interest in investors.
“It was fascinating to me,” Plusquellic told the crowd. “The bells and whistles went off in my mind,” the Beacon Journal reported.
The impetus for the visit came while Plusquellic was in the country for the US Conference of Mayors, and received an invitation from one of the companies housed at Targetech – ACE Cognitive Engineering.
The company has developed the ACE IntelliGym Trainer – an innovative software-based system that dramatically improves real-time decision-making and execution. According to its makers, it strengthens the brain, just like the weight room builds muscles. That’s why it has been dubbed ‘The Brain Gym,’ and numerous NCAA college basketball teams have purchased the system to train their players.
Plusquellic got a look at some of the other companies under the Targetech umbrella, and was hooked. According to Zeitlin, the incubator is currently housing six companies – and has equity in many others. She enthusiastically counts off some of the highlights that she hopes will soon be entering the marketplace.
“Jettable has a very innovative technology that has never been done, that we’re very excited about. They’ve developed an inkjet system, which can print tiles, porcelain and glass. Right now they’re in negotiations with potential distributors,” said Zeitlin.
“VaryFrame is revolutionizing the billboard industry by creating a billboard that is actually a printer. It prints digitally from a central location and can erase on site. This means that a billboard can be directed to a particular audience at a particular time. For instance, the ad can be geared in the morning towards women, and then in the afternoon switch towards one for students,” she said, adding that the company has developed a prototype and are looking for investors to develop it.
“That’s one aspect that never ends,” the Connecticut native said with a laugh.
Other companies working with Targetech include Medidermis – developing effective topical treatment for acne, drug development solution company Biolog, and Optiway, which produced state-of-the-art optical devices.
Zeitlin said that much of the credit for Targetech’s success goes to its CEO Azriel Kadim, who has a rich history with startup companies and patents, spending seven years working with Yeda – the commercial arm of the prestigious Weizmann Institute of Science. With those credentials, finding the right ideas to develop at Targetech has gone smoothly. And now, Akron will enjoy the benefits.
“Bringing Israeli technology to Akron will create jobs there,” said Zeitlin. “It will create a high tech environment that hasn’t really been developed, and enable them to attract other companies to the area.”
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