In Israel, a country of about 6,000 startups and just over 9 million people, executives are looking to newer, larger U.S. sites as a focal point to showcase their tech companies to Americans.
But instead of Silicon Valley or New York City, Israeli companies are settling in Texas.
According to YTexas, an advocacy group that promotes Texas as its headquarters, at least five Israeli companies have opened their US headquarters or moved their global headquarters to Texas in the past five years. That’s more than any other international company the organization tracks, even more than the UK, which comes in second with four.
But Israeli-American business experts suspect the number is much higher, possibly in the dozens, due to the number of one-person Israeli startups moving to the US and Texas in particular.
“Texas and Israel actually have a lot of cultural overlap. That can be a little unexpected for people at first glance,” Toba told Hellerstein. Bisnow.
Hellerstein, executive director of the Texas-Israel Alliance, which advocates stronger business ties between Texas and Israel, excitedly described the similarities in Texan and Israeli values. That includes everything from their shared sense of entrepreneurship to a kind of cowboy spirit.
“The fundamental values are so similar that it’s like a first bump.” [to translate company culture]’ said Hellerstein. “Israelis are doing very well in Texas, they are very well mixed together. They take it like water.”
Israeli companies eager to do American business want to plant US headquarters flags, and they choose Texas for its large Jewish population, its business-friendly policies, and its equal eagerness among Texans to do business with Israel.
While Silicon Valley may be the most obvious choice for a tech startup, experts like Hellerstein say it’s too expensive. Israeli companies in Texas also experience less restraint than those with political disagreements with the nation-state. While a common pro-Palestinian source of protest — the boycott, divestment and sanctions movement — has gathered some steam from businesses in other states, Texas has made such protest illegal for any contractor and even maintains a public list of companies, such as Ben & Jerry’s, who are actively boycotting Israel.
Portnox, a cloud-based cybersecurity company originally based in Ra’anana, Israel, is a company that has found a new home in Texas.
When it completed a $22 million Series A funding round early this year, it opened its new global headquarters in Austin’s Oak Hill neighborhood. Austin’s status as a new national tech powerhouse attracted the company, as did its proximity to its largest venture capital backer, Elsewhere Partners, also based in Austin. Portnox still has an Israeli presence, where most of its Israeli workers still live, but it has dramatically ramped up its workforce in the US, growing its workforce by 60% in the past nine months. Half of the US workforce works in Austin, while the other half works remotely in the US
“You’re usually looking for areas that you’re already familiar with that landed on site,” said Portnox Director of Product Marketing Michael Marvin of the company’s site selection process, which he was not directly involved in. “I think it just makes sense for other technology to surround yourself with the best and brightest species to improve ideas.”
Other recent transplants from Israel to Texas include BackBox, the former Tel Aviv-based network automation company, which opened a headquarters in Dallas in 2021, and energy software company Sensoleak, which came to Houston from Haifa in 2018. Like Portnox, REE Automotive and Quali have launched operations in Austin.
Although Austin is quickly becoming more expensive, it is still cheaper than Silicon Valley, according to those involved in bringing Israeli companies to Texas. Some, seeking an older, more family-friendly environment, turn to Dallas, or less commonly, Houston. But Austin hasn’t lost its trend yet.
“You guys Googling houses in the Bay Area, I mean it just doesn’t compare…I can see how maybe in the future [unaffordability] could be the case, but for now that’s all still very attractive,” Hellerstein said. “In Israel, it’s such a saturated country in terms of population, there’s so much traffic, so people are used to driving an hour and a half to get to go to work. [There’s] a whole social life built around, ‘I’m going to call you on my ride.'”
By contrast, she said, transplanted Israelis can drive up to an hour, say in San Marcos, “and it’s nothing to them.”
Cybersecurity firms are among the larger Israeli companies moving to Texas, but Hellerstein also pointed to Israel’s history of creating water technology, such as desalination plants. The vast majority of the country’s water supply comes from the sea, meaning there is a huge drive to make water drinkable. Those same water technology companies are now coming to dry West Texas.
Medical technology is also popular, with companies eyeing the Texas Medical Center in Houston to work in digital health technology, medical devices, pharmaceuticals and more, shunning life science hubs like Boston.
Israeli-American experts say the trend will only continue.
“We had a networking event in Austin for Israeli companies. We had over 100 registered people, 60 people coming. The majority of them have moved to Austin, Texas in recent years,” said Orna Avraham, a Houston-based Israeli who leads the US Economic and Trade Mission to the South and Midwest in the Israeli Foreign Trade Administration.
While Austin is a huge focus for companies, Avraham said she sees many companies showing interest in Houston and San Antonio.
Texas Governor Greg Abbott will receive a Friends of Zion award in Jerusalem in January 2020 for world leaders who have supported Israel and the Jewish people.
“There are a lot of things Texas has to offer that other cities can’t,” Avraham said. “The number of companies that work here, the amount of collaboration you can create here, the atmosphere – Texas is very welcoming. I can see it getting bigger. As direct evidence, we’re getting more and more work. They come to us.”
Marvin reiterated that Texas will continue to see more Israeli companies.
“There is a huge market opportunity in the US and amazing innovation is happening in Israel. So that will continue to happen,” he said.
While modern US policy has generally been kind to Israel, Texas Governor Greg Abbott is very supportive of the country. He will lead an economic development mission to Israel in January 2020, rejecting both companies and individuals boycotting the country.
During that trip, Abbott was awarded the Friends of Zion award, awarded to world leaders who support Israel and the Jewish people. Former US Presidents George W. Bush and Donald Trump also received the award. According to the Friends of Zion Heritage Center in Jerusalem, Abbott has led several economic trade missions to Israel.
“Companies continue to invest in the Lone Star State because of the business environment cultivated by our state’s leaders,” said Robert Allen, CEO of Texas Economic Development Corp. in January 2020 on such a trade mission. “Governor. Abbott’s commitment to partnering with CEOs and executives around the world plays a critical role in ensuring that Texas remains a global economic powerhouse and creates a more prosperous future for our great state.”
That support is ingrained in the policy, as contractors working with the state of Texas are required to sign documentation stating that they are not boycotting Israel. A federal judge earlier this year ruled the law unconstitutional in a case involving a contract with the city of Houston, but stopped blocking the law.
Pro-Israel sentiment among state leaders has given some companies a level of comfort that other states cannot provide. Hellerstein said some Israelis, however, have questions about US violence, such as school shootings, a fear she considered exaggerated.
“It just depends on the person, the way it would depend on the person in Texas,” she said. “It’s a very idiosyncratic country. They say, if you have two rabbis, you have three opinions. It’s very difficult to categorize them as a monolith in terms of what their political views would be.”