Entrepreneurs: Learn How Companies Made Bold Changes In Wake Of COVID

Carrie Rubinstein, Apr 28, 2020

“Somewhere out there is a bullet with your company’s name on it,” said management consultant Gary Hamel long before Corona days. “You can’t dodge the bullet – you’re going to have to shoot first. You’re going to have to out-innovate the innovators.”

In this age of COVID, most startups are beginning to understand that the bullet is already headed their way, and unless they innovate and adapt fast enough, it could hit them. 

In many cases, startups recognize a major shift in market needs, others simply must shape and change products completely. 

Charlie Federman of  SilverTech Ventures, who has taken multiple startups under his wing, explains that as events began unfolding, this NYC venture fund and accelerator had one-on-one conversations with each of the CEOs about how the new realities will affect their companies and especially their customers. “We prefaced each discussion by acknowledging that we did not know if company leadership planned to make changes in response to COVID. However, if so, we emphasized the importance of working quickly, even at the risk of being imprecise. No one fully understands the severity and duration of this crisis, and there are simply too many variables to formulate an accurate plan.”

The fund’s portfolio raised over $100MM in the last 90 days, enabling many of the companies to use their expertise and resources to help the communities greatly affected by the crises. 

The companies that Federman and his team mentored are great examples of the many different changes that most startups had to make. 

SQream is a great example. Founded in 2010, the company provides enterprises with large datasets and important insights through SQream DB, a massive GPU accelerated analytic warehouse that handles complex queries. 

In the past 10 years, the company has rapidly expanded its services across industries. “The COVID-19 crisis almost blocked us all together from visiting our business prospects and clients,” says CEO Ami Gal. “We had to take some immediate steps, such as cutting expenses and non-core activities.” 

While the company took these measures, it turned to assist others in need: “As our technology can significantly help in the fight against COVID-19, we are collaborating with governments, cities, and healthcare institutions around the world. Our technology enables critical insights from huge datasets and different sources that are critical in the fight against this virus.”

Today, the company uses its platform in a very different method than originally attended. It helps prepare for the next COVID-19 wave, by predicting, among other things, how certain cities will be impacted and how different regions will behave in normalization stages. In addition, Sqream’s technology helps in the detection of people’s movements: “Putting privacy issues aside, it is clear that containing the infection will require the collection of data on zillions of human movements, locations and interactions in order to locate the main source, reduce infection and alert individuals to possible exposure. When datasets are huge, and large populations are involved, then we can help.”

Visit.Org is a platform that helps companies curate social impact team experiences, helping employees to have a hands-on impact on their local communities wherever they are around the world. Just before the crisis struck, the company raised seed funding and reached 25 enterprise customers, including 5 Fortune 500s, within 12 months since launch. In the face of current realities, the company had to make a quick and significant shift. Founders realized their market now has very different needs: “We had to adapt quickly. Companies will now be looking for ways their employees will engage the community online in order to enable team bonding around the greater good,” says CEO and cofounder, Michal Alter. “Companies are  under immense pressure from employees to give back to the community and support those who were hit the hardest by the virus.”

The company adjusted quickly and launched its new post-corona services to companies: “Volunteering from home with your team or individually can be as impactful for people in need as on-site volunteering.” Not only did its existing clients use these new services, but the company was also able to generate new clients across the country.

“You Can't Use an Old Map to See New Land”

Cinch is another SilverTech company that realized its client base had been affected and therefore decided to address the changing market needs. Since 2017 Cinch has been creating neighborhood commerce networks where businesses, brands, and neighbors collaborate around daily commerce and community functions. It has raised $10M for the purpose of creating new opportunities for local businesses by leveraging their proximity and relationships in the community. “The COVID-19 crisis forced us to change our principles and priorities to connect neighborhoods not just offline but online as well,” says Founder Maya Komerov. “We believe this crisis highlights the power of, collaboration is the key to neighborhood prosperity and health.” 

Within two weeks, the company set up a new service to complement its network of neighborhood businesses where consumers can order from one site items from many local vendors and get same-day consolidated delivery, minimizing the number of people who touch the delivery. 

The ability of some companies to adjust their services and assist in the fight against COVID-19 helped them raise millions more in funding.  

Igentify for example successfully raised $12.5M through current and new investors. Founded in 2016 by Dr. Doron Behar, this Israeli deep-tech company aims to become a global leader in digital health in the field of genomics. "Our expertise involve analyzing, interpreting, and transforming complex genomic, molecular results into personalized medically supervised genetic reports in a fraction of the time and cost," says Dr. Behar. In the last few years, the company promotes the scaling of genetic counseling abilities by combining clinical and genomic data and establishing machine-generated personalized counseling sessions.

As the crisis struck, the company analyzed the processes used to screen, triage, and report results for patients under investigation for COVID-19. “After identifying inefficiencies in the process, our teams worked to repurpose our platform to serve healthcare providers and diagnostic companies who wanted to focus more on their patients”. It is unprecedented that we will shortly have tens of millions of monthly tests and have healthcare providers in a position to properly communicate results and actions to people across a great demographic swath. Dr. Behar  insists, “our clients can quickly engage patient volumes at scale through digital multimedia and help the overtaxed health system to triage and provide information to patients.” 

The healthcare and the genomics industry are at the forefront of the battle against COVID-19, and the company seized this opportunity. “In times of mass medical needs, digital tools overcome time constraints, alleviate health risks, and allow medical teams to scale their patient intake and focus on patients in need."

Some companies whose services are becoming more essential for their customers are identifying new opportunities. “These firms are increasing their investment in product and sales,” adds Federman. Many were able to do so simply because what they are offering is in line with the new market needs. City Hive, which provides an online presence for wine and spirit stores has experienced nearly 25x growth in revenue and now serves thousands of stores across the country. Much of this growth came within the last 6 weeks.

Talisa, a platform for personalized jewelry, made by artists from all around the globe, has become very popular. “At a time when people are looking for ways to connect with their loved ones, sending families personalized jewelry and pieces of art is more meaningful now than ever,” said the founder, Lisa Silverstein. The company experienced tremendous growth during the month of April and has already sold more than it did in the first six months of 2019.

Aquant is another SilverTech company that adapted its services to meet new and immediate market needs. 

Aquant, founded 4 years ago, uses its unique AI-powered platform to provide field service professionals, who have various levels of experience, with the tools to solve problems correctly on the first try. 

The COVID-19 crisis has had a significant impact on the field service industry and the company has had to meet emergency needs right away. “Original equipment manufacturers (OEMs) and independent service providers (ISP) are taking precautions to keep their field service technicians safe and healthy while on the job,” explains CEO and cofounder Shahar Chen. “Many clients have shifted their main focus to critical issues instead of routine maintenance of equipment. There are varying ramifications across many fields. In the long term,” he adds, “the Coronavirus will increase existing industry challenges. A smaller workforce makes strain service teams that are already resource-strapped. As health and safety precautions continue, companies will need to shift and focus more on a remote resolution of customer problems. The need for technology that aids service workers in solving issues efficiently became even more critical.” 

The company immediately created a new line of services: a free self-service customer tool that supports the healthcare industry and helps reduce the number of in-person service visits made by field service teams, and a Service Leader Series with content and webinars that explores how service leaders are making short term pivots while planning recovery. “During this time of crisis, we’ve focused our marketing efforts on providing value for service leaders,” says Chen. “We’re offering free tools to keep their workforce safe, providing educational resources to help them make challenging decisions, and fostering connections across the field service community.” 

Making immediate changes, risking funds, and letting go of a successful idea is not easy, but when reality presents no other alternatives, it can lead to a surprising new path.  

The World Trade Center Startup Accelerator That Will Not Let You Fall

Carrie Rubinstein - Jan 20, 2020

Silvertech Ventures Is Committed To The Active Cultivation Of Entrepreneurs 

New York is undoubtedly a concrete jungle where dreams come true, but even the famous song doesn’t promise it is going to be simple. Thousands of startups joining the Big Apple crowd every year; although motivated and confident, they have little experience and only a small network of connections. 

These key components of success usually take years (and multiple failures along the way) to develop. Unless you are lucky enough to grab the attention of Silvertech Ventures. If they believe in you, not just your idea, they will work to open every door for you, support you in every crisis and make sure you make the very best of your time in the crowded NY arena. Their approach is founder focused. “Companies change, sometimes rapidly,” they explain. “We care about people.”

An accelerator and venture capital firm, Silvertech Ventures supports entrepreneurs as they grow their companies, offers them, what seems to be, an incomparable network of connections and experience and most importantly, makes sure to be there when needed. 

“Being the CEO of a technology startup is lonely,” says Silvertech’s co-founder, Tal Kerret. The 49 -year-old native Israeli started his tech career in the late 1990’s after completing a bachelor’s degree in computer science and math from Tel Aviv University. His first startup, the e-commerce technology company RichFX Inc., formerly Webglide, brought him to New York. It was acquired by NYSE-listed ChannelAdvisor Corp. in 2002, the same year Kerret married Lisa, daughter of Silverstein Properties founder and chairman Larry Silverstein. A year later, Kerret co-founded another startup, a game developer called Oberon Media and in 2011, he joined the family business as president, working to rebuild the legendary World Trade Center. 

“My father-in-law repeatedly invited me to join the firm, telling me he was getting old and wanted me on board,” Kerret said. “I told him I wanted my own company to first reach the $1 billion mark. At the time, his company had 11 offices employing 750 people.  In response, Silverstein told him that almost every single Silverstein Properties project was worth more than $1 billion. Kerret took the job.

With an entrepreneurial mindset, Kerret is leading as the president of Silverstein Properties (SPI). After a random encounter with an old acquaintance, Charlie Federman, at 7 World Trade, he suggested they join forces and use their knowledge and years of experience to create Silvertech. They wanted to create a unique platform and offer exciting new startups an efficient path to success; some might even call it a shortcut. 

Federman is considered a brand name in the Israeli and New York high-tech world. In the ‘90s, he was the Chairman of Broadview, an investment bank that was involved in a quarter of the high-tech mergers and acquisitions in the U.S. After leaving Broadview, Federman joined Nir and Eli Barkat, who founded BRM Technologies, which invested in high-tech startups such as Check Point Software Technologies. Federman invested in Payoneer and earned a tidy profit.

Silvertech is now managed by three people; Federman, who is considered the spiritual leader, Larry Wagenberg, a veteran venture capitalist, and Kerret.

Hand In Hand

25 thriving startups – 16 of which Israeli and 9 of which are run by women – have been working out of the 10th and 46th  floors of the new World Trade building. “You get advice from all directions, investors are constantly putting on the pressure, and you're mostly unsure of what to do. Over the years, I've seen the tremendous sacrifices made by CEOs and entrepreneurs along the way and we wanted to eliminate this obstacle in the process," says Charlie.

As opposed to many accelerators that support startups for a period of 10-12 weeks, Silvertech companies stay for a year and often more. After a 'no commitment' period of three months, the companies can stay in their offices, enjoy the support and networking that Silvertech provides; in return, they commit a single digit percentage of their equity to the accelerator.

“Most of our portfolio companies join Silvertech after they have already raised capital and have a product in the market; some join us earlier and others have joined after raising substantial capital. People are more important than stages,” Federman reminds us.

Silvertech is presently collaborating with startups such as Aquant Inc., a company that developed artificial intelligence platform giving enterprise service professionals twenty years of experience in twenty seconds and Rentigo Ltd. which developed an app to help landlords and rental management companies manage and track tenant payments. Both companies were founded by Israelis.

Beyond space, a supportive shoulder and expert advice, entrepreneurs receive concrete financial help from Silvertech. “They get access to capital: in 2018 alone, the companies raised $110 million and in 2019  over $150 million,” says Kerret. “They also benefit from our contacts. For us, the most important thing is to come to work every day and ask them how we can help, in any way.”

Gil Eyal, founder of Hypr, one of Silvertech’s first companies, says, “What they established here is really cool, and what is unique is that there is no structured plan. They are with you during the hard times and that is what's important. Many don’t understand this, but the first years of a startup is a search for the self. You have an idea, you are sure the market will go crazy over it but as it turns out, it doesn’t work like that. At the beginning you raise money from people who are far from being professionals, like family and friends, and promise them you will be using their money for a certain project. But then you discover that the best thing that you can do with their money is — in the best case scenario — something a bit different, and in the worst case, something else altogether. They don’t understand this, and a lot of them are hung up on the first promise, are in love with the idea and can’t give it up. Then along comes Silvertech; there they understand that the first years are a search and they back you until you find your path.  Tal even accompanies you to meetings if you need him to. I once missed a tender and Tal picked up the phone and reopened it up for us. We also won that tender in the end. They are here for us, and we wouldn’t be here if it wasn’t for them. Period.”

Michal Alter, CEO of Visit.org, stops to chat with us on her way to a meeting and after being briefed by Charlie. “We have been here for two years, she tells us, Charlie is king of the floor, and I stay close to his side. They help with everything, including raising capital and business opportunities, and are always there to help and advise like good friends. There are people here with experience, knowledge and connections and we have their attention.”  

“Having an idea is not enough, “says Tal. “Google was the 18th search engine to the market , but today who remembers the other 17? Many companies are in love with their excellent technology and solutions, but you must be open to learning. Americans understand that the problem is what’s important and the solution comes after. Others are in love with their product and then they find out that it isn’t a real solution to the current market problems.” He concludes, “It’s critical that companies move fast. First-time entrepreneurs come here with brilliant ideas, and everyone thinks his or her idea is the ultimate one. Moving forward quickly, with people who can help you adopt the right perspective, set the right objectives and make the right moves, gives you a real chance.” 

The Israelis Bringing Innovation to New York Real Estate

Real estate companies prefer a mediocre product by an established company over an advanced product by a startup, says Israeli entrepreneur Tal Kerret

Carrie Rubinstein 12.18.2019

When it comes to innovation, real estate is one of the slowest industries by nature, according to Tal Kerret, president of Silverstein Properties Inc. (SPI), the company that owns much of the World Trade Center in New York. Kerret spoke to Calcalist during a tour of the complex, which houses, in one of its towers, the juggernaut’s innovation hub and investment arm, Silvertech Ventures.

 Kerret, 49, was born in Tel Aviv suburb Bat Yam and started his career in tech in the late 1990s with a bachelors’ degree in computer science and math from Tel Aviv University. His first startup, e-commerce technology company RichFX Inc., formerly Webglide, brought him to New York. It was acquired by NYSE-listed ChannelAdvisor Corp. in 2002, the same year Kerret married Lisa, daughter of SPI founder and chairman Larry Silverstein. A year later, Kerret co-founded another startup, game developer Oberon Media, and in 2011, he joined the family business.

“My father-in-law asked me time and again to join the firm, saying he was getting old and wanted me on board,” Kerret said. “I told him I wanted to expand my company first, to bring it up to a $1 billion valuation.” At the time, his company had 11 offices employing 750 people, he said. In response, Siverstein told him every single SPI project was worth more than $1 billion. Kerret took the job.

Constructing a building, from blueprint to ribbon-cutting ceremony, could take five years, even ten in Israel, but in tech, business interactions are done on a quarterly level and years of planning are simply not an option, Kerret said. This is why he believes it is difficult to integrate tech into the sector. Just talking about innovation within a real estate company is in itself innovative, Guy Vardi, SPI’s chief innovation officer, said.

“A startup looking to inject real estate companies with new technologies will find very conservative companies looking for proof that the development has worked elsewhere,” Kerret said. In most cases, real estate companies will prefer a mediocre yet proven product by an established company over an advanced, superior product by a small startup, he added. “That is our main advantage as a big company, since we are open to innovation and willing to take risks.”

Kerret and Vardi, both Israeli-born, are working to advance the use of innovative technologies in the company, specifically in the field of property technology, or proptech, which focuses on addressing the industry’s market failures, making it more efficient. The two run the SPI tech hub, alongside Charlie Federman, a former managing director at BRM Group. Hub member startups raised a collective $110 million last year, and it appears that in 2019 this sum will go up to $150 million, Federman said.

According to Federman, of the 26 companies working out of the hub, 20 are Israeli and nine are led by women. Israelis are generally highly motivated which is good but one of the biggest mistakes that many of them make is failing to educate themselves on the local culture, he said. Israeli business culture is messy and based on trust and personal connections and this is not the way it works in the U.S., he added.

Among the startups SPI is collaborating with are Aquant Technologies Ltd., which develops machine learning software intended to shorten machinery downtime, and Rentigo Ltd. which develops an app to help landlords and rental management companies manage and track tenant payments. Both companies were founded by Israelis.

New York is currently undergoing a building spree, with buildings filling up very quickly, Kerret said. However, while there is less demand for high-end luxury apartments, they continue to be built, while the city is experiencing a severe shortage in regular apartments for rent, he added.

"The needs of both private tenants and office workers are changing, which leads to the development of new tech,” Kerret said. WeWork is a good example of technology that originated from change in the customers’ needs, he said. “You can argue against its business model and other elements related to the company, but the need was real,” he added. WeWork’s downfall did burst the co-working bubble, but there is still a need for shared office space and short term contracts, he said.

Silverstein founded SPI in 1957, together with his father Harry Silverstein, when they bought their first property, an industrial loft building on Manhattan’s East 23rd Street. As of 2018, SPI had over $9 billion in assets under management, including 1 million square meters of office space and about 2,300 apartments. Among the company’s assets are the Four Seasons hotels in Manhattan and at the Walt Disney World Resort in Orlando, Florida, as well as properties across the U.S., Poland, and China.

Most recently, in 2018, SPI attempted to set up a Tel Aviv hotel in collaboration with hospitality chain Four Seasons Hotels Ltd.The $2 billion project is currently held up in a bureaucratic mess. At 88 years old, Silverstein says he cannot wait for the project to be underway. Others would have given up but we are still trying, he added.

SPI leased the World Trade Center for a 99-year period paying over $3 billion in July 2001, just six weeks before the September 11 terrorist attack. SPI currently has three towers on the property, an additional one under construction, and two giant holes in the ground, commemorating where the iconic Twin Towers once stood.

According to Silverstein, he could have walked away from the property but decided to stay and rebuild. After the attack, SPI ended up paying $11 million a month on a hole in the ground for seven years, without seeing any income or even a cent of insurance money, Kerret said. Years of legal battles later, SPI managed to rake in $4.55 billion in compensation, in addition to $95 million from the airlines whose planes were flown at the towers by the terrorists. As part of a settlement, SPI got to keep towers three, four, and seven, as well as two, which is scheduled for completion in 2022.

The Israeli startups taking NYC property-tech by storm

The property technology vertical, uniquely both Israeli and New Yorker, is fast growing through the strong relationship between these two locations.

By Jonathan Frenkel JULY 21, 2019, 7:00 AM

Technology and real estate are industries in which Israelis in New York have excelled over the past 20 years. So, it’s no surprise that the hyphenated vertical of real-estate (property) tech — or “prop-tech” – in the city is being led by Israeli entrepreneurs and investors using technology to address problems in this trillion-dollar largest asset class on the planet.

Below are some of the notable entrepreneurs and investors helping to build the New York-Israel prop-tech ecosystem. We’ll focus on the Israeli startups solving problems in New York that could be scaled globally.

New relationships with tenants

When thinking about New York-based Israeli-founded real estate startups, it’s worth noting those that are serving the needs of customers in hospitality (Selina) and community building (Venn City).

Many of the startups, however, are solving problems in the traditional residential and commercial real-estate industry.

A good example is Rentigo, an AI-powered startup changing the traditional property-management ecosystem by combining payments, marketing and operation decisions for real-estate operators and tenants on one platform.

Rentigo solves two problems in prop-tech: the need to streamline rent payments and the lack of a tenant-facing digital solution.

Community is an important part of the prop-tech scene. Rentigo’s founder, Sivan Blaseheim, created a digital community between New York and Israel to help founders learn from and help each other.

As he states, “With the prop-tech scene growing and prop-tech companies growing in number and value, I decided to create a place where we can empower our journey, and share experiences, ideas and needs. This community includes many Israeli-American startups who are very active in this industry and use it to learn, help each other, and even meet VCs and real-estate groups.”

Active investor Charlie Federman says, “There has been a paradigm shift with landlords having a difficult time adding more intangible value to their properties.

As such they’ve been following WeWork’s model of creating services which promote a direct relationship with the tenants.” WeWork fundamentally changed the game and launched a whole industry of workspaces and related amenities for millennial and small business workers. As Maor Cohen, CEO of Pickspace, a global coworking space directory, notes, “75% of working spaces are not profitable because of overhead costs.”

In order to solve a major problem for this industry, Pickspace is using technology to reduce coworking spaces’ overhead and white-labeling the platform for their use. Like many Israeli entrepreneurs in prop-tech, Maor splits his time between Israel and the market in New York.

Robotic window cleaners and smart cranes

Aside from being good problem-solvers, Israeli entrepreneurs also see opportunities where few have existed before.

Skyline Robotics tackles a problem in modern cities that affects real estate: keeping the windows of skyscrapers clean (particularly when tenants are paying a premium for the view) without the dangers involved in human window cleaners.

As Skyline Robotics CEO Yaron Schwarcz states, “Many businesses are not putting human safety first. … We created Skyline Robotics as a safe solution that is also competitive on quality, cost and time.”

Interestingly, far from putting the remaining window cleaners in New York out of business, Skyline Robotics is training and employing them as robot operators.

An initial concern was that people would be worried about their privacy while the robot cleaned their windows. The exact opposite has happened as people are interacting with the robots (by taking selfies), and as such, the Skyline team is currently working on ways for the onlookers to increase their interactions.

Diversity has been a focus in prop-tech, but sectors such as construction-tech don’t offer a major female founder presence. Which is why startups such as Versatile Natures are so important.

Construction tech is a particularly Israeli sector; with the amount of construction going on in the country there are many problems to solve in this traditional industry. Versatile Natures is enabling control over the most fragmented and non-structured place of all: a construction site.

Versatile Natures offers a crane-mounted, noninvasive data-collecting, analytics and insights system that monitors and learns the site via the crane-operation process. Data provided by the proprietary device is used to save time, reduce costs and improve operations and safety.

Founder Meirav Oren, who splits her time between Israel and New York, wrote, “I am committed to supporting more female founders in both tech and construction. Building a great company is about team, execution, market understanding and strong technology. The rest is what the founder, of any gender, makes of it.”

Prop-tech investors

Silvertech of New York has been actively investing in Israeli founded startups over the past few years.

There are numerous funds based in New York that have invested in Israeli prop-tech companies that have migrated to New York, but the Silvertech VC and accelerator is committed with more than just financial resources. Silvertech only takes on prop-tech companies in which US real-estate giant Silverstein Properties is a likely customer.

Charlie Federman, Partner at Silvertech Ventures, states, “We have 22 companies in our portfolio, 18 of them from Israel, and nine are female-founded. In prop-tech there is a real need; it’s a trillion-dollar industry and behind in innovating services around actionable data, and Israelis are very attuned to that data.”

He adds that “in 2018, our portfolio companies raised $110 million in 15 financing events, and five of those companies are in prop-tech.”

New York-based venture capital funds such as MetaProp, the first and most active VC in the prop-tech space, have also taken notice of the strength of Israeli prop-tech.

As Aaron Block, one of the cofounders of MetaProp, stated: “The connection between Israel and New York in regard to prop-tech has a precedent; there are historical connections and existing infrastructure.” He believes this will continue as the market continues to grow.

What does the future of Israeli prop-tech startups hold? Just look at the growth of WeWork, the New York-based international phenomenon founded by a kibbutz-raised Israeli, Adam Neumann.

From a work-culture perspective, WeWork has been the most disruptive company in this space, changing how we spend the bulk of our time, which is working. With a current valuation of $47 billion, it is also the first prop-tech “decacorn” (a company valued at more than $10 billion).

Prop-tech is a vertical that is both uniquely Israeli and New Yorker, and it will only continue to grow through the strong relationship between these two locations.

Jonathan “Yoni” Frenkel heads a digital marketing agency, YKC Media, that focuses on engaging millennial and tech professionals through content. He’s been involved in the New York-Israeli tech community for many years and previously held roles as a non-profit professional at both the IAC Dor Chadash and AIPAC.

The New York Incubator That Can’t Get Enough Israeli Tech

Of the 21 companies in the startup incubator Silvertech Ventures, 17 are Israeli, proving that Israeli loyalty is an asset too, the hub’s ‘spiritual leader’ says

By Haim Handwerker (New York ) May 17, 2019

NEW YORK — One cold New York morning a few weeks ago, a motley group of businesspeople got together at the offices of the startup incubator Silvertech Ventures. They included Charlie Federman, a seasoned high-techie, Maya Komarov, an Israeli who’s always shuttling between Tel Aviv and New York, and two Satmar Hasidim named Yedi and Abe, who arrived holding a bag of cookies.

The two came to Silvertech’s offices, at a new skyscraper at the World Trade Center, to consider investing in Cinch, Komarov’s high-tech venture that operates under Silvertech’s hood. Yedi and Abe long looked for a way to invest their community’s money in technology, but they needed someone reliable, they say. In the past, their community invested in many areas but either fell victim to swindlers or the vagaries of the market.

The two are now putting their faith in Silvertech. Over the last two years they have invested $10 million in startups linked to this incubator, most of them Israeli. They say they’re happy with Silvertech even if they still haven’t made profits.

The incubator is managed by three people; Federman is considered the spiritual leader, while Larry Wagenberg is a veteran venture capitalist, and Tal Kerret is an Israeli high-techie who in 2010 was appointed president of the U.S. real estate giant Silverstein Properties. That’s the firm that redeveloped the World Trade Center, where companies such as Spotify and Goldman Sachs are renting space.

A key company at Silvertech is Cinch, which was founded two years ago and is managed by Komarov. Through an app, Cinch, which has raised $9 million, lets business owners be in direct contact with local people. The Hasidic investors got to know the company a year ago when they visited Silvertech to invest in the Israeli company Hypr, which belongs to Gil Eyal, a startup veteran. The fact that Komarov is a woman didn’t bother these Hasidim; business is business.

Israeli high-tech is very active in New York, where some 380 startups from Israel or with Israeli connections are operating. Many of these youngsters are in the Flatiron District.

“Most startups have no choice but to be in New York, or in the U.S. in general, because investors want you close at hand. It’s easier to raise capital here, and there are many more sources of funding for small, midsize and large companies,” Eyal says.

“In Israel, the venture capital market and other funding sources are relatively small. How small? You’ll wind up a capital-raising round tapping all capital venture funds and investors in two or three months. Here, if you met three investors a day, you’ll still have a lot left over after a year.”

As Eyal puts it, “New York has become a lodestone for startups and technology-related companies, bit it’s still considered the stepsister of the West Coast and Silicon Valley. To be perceived as a company with significant tech, you’re expected to have investors from the West Coast.”

Roi Kliper is CEO of City Hive, a Silvertech e-commerce platform for wine and spirit shops across the United States; Kliper says 750 stores have registered so far. The company employs 11 people but is expected to grow to 18 this year. City Hive recently raised $3.6 million.

“First we were at Cornell Tech, a new institute associated with Cornell and Israel’s Technion, but then we moved to Silvertech,” Kliper says. “We’ve been there for two and a half years. They let companies remain under their wing until they’re ready to operate on their own. On the one hand, there’s support, but on the other it’s like a young man still living with his parents after university. You’re not independent until you leave.”

Kliper, who hails from Kibbutz Lotem in the north, says working in New York is preferable for several reasons. “In Israel, regulatory rules require startups to hire a lawyer, an accountant, a salary assessor, an insurance broker dealing with pension benefits, a trustee and a comptroller, and that’s before you’ve written one line of code. That’s expensive and unnecessary,” he says.

“In the past you could argue that corporate taxes were significantly lower in Israel than in the U.S., but that’s no longer the situation. Israel’s investment infrastructure isn’t sufficiently developed or balanced. We received many offers there that in retrospect seem strange or aggressive.”

Still, there are challenges being in New York. “The real difficulty is the lack of a fabric of family, social and professional life,” Kliper says. “It’s a lonely job managing a startup, and it becomes that much harder when your family, friends and most of your team are in Israel.”

As far as the human capital is concerned, Kliper says “Israelis have nothing to be ashamed of in comparison to American candidates for jobs, including graduates of the best universities. Americans excel in presentations, and their resumés are impressive, but their actual abilities are less impressive.”

Father figure

Twenty-one companies operate under Silvertech, which was founded four years ago. Seventeen of these are Israeli. In 2017, the companies in Silvertech’s portfolio raised $86 million. In 2018, this increased to $110 million. The development hubs of most Israeli companies are in Israel. Each startup manages itself, but all the CEOs are connected to one another and the managing team at Silvertech.

Federman is considered a brand name in the Israeli and New York high-tech world. “He’s the father of these companies,” says one Israeli CEO. “He listens to you, and at the end of the conversation you come out with a strategy. If he wants to link you with somebody, he picks up the phone and everybody answers.”

In the ‘90s, Federman was the deputy CEO at Broadview, an investment bank that took part in one-quarter of the high-tech mergers and acquisitions in the United States.

After he left Broadview, Federman joined Nir and Eli Barkat, who founded BRM, an investor in high-tech in startups; they invested in Check Point Software Technologies. Federman invested in Payoneer and earned a tidy profit.

“I was quite enthusiastic when I met Payoneer’s CEO Yuval Tal eight years ago ... that was my best investment in Israel,” Federman says. “When Nir Barkat decided to go into politics I decided to leave BRM. I thought that most of the group’s operations would be in Israel, and I had nothing to contribute there.”

Silvertech’s Kerret, meanwhile, was born in Bat Yam. His father worked for Motorola and was sent with his family to Ghana. They lived there for four years before returning to Israel. Kerret studied computers and math at Tel Aviv University and served in the air force for six and a half years. He met his wife Lisa at a business meeting at the offices of Silverstein Properties; her father is real estate magnate Larry Silverstein.

Federman and Kerret say they meet 50 companies a month on average; these outfits reach them through word of mouth. Of these, they choose one company every month or two. “We don’t specialize in any area and don’t relate to what stage any company is at,” Federman says. “What’s important for us is mainly the people and idea behind the company.”

He says “companies that join us get office space, but our relations at first aren’t about money. We only start investing at a later stage. In each of these companies we invest up to half a million dollars.”

Unlike other incubators, where companies are followed for only 10 to 12 weeks, at Silvertech it’s at least a year, with most companies remaining for several years. In exchange for office space, connections and Silvertech consulting, these companies “pay” 1% to 5% in equity.

Another arm of Silvertech is Guy Vardi, the chief innovation officer at Silverstein Properties. Vardi, who once worked for a Kerret startup in Israel, founded two startups of his own later. His uncle is Yossi Vardi, a founder of the Israeli high-tech sector.

The companies in Silvertech’s incubator haven’t reached the exit stage yet, but Federman is optimistic. “It’s true, up to now we’ve had no exits, and for me that’s the crucial test of success, but each one of our companies has finished a round of capital-raising, bringing in between $1 million and $27 million. A few companies are at the cusp of profitability. In the startup world, one second you’re successful and another second everything can turn upside down.”

Rambunctious roster

One of the most successful companies at Silvertech is SQream, an Israeli creator of analytical databases for large amounts of data in finance, retail and the telecom industry. Most of its employees are in Israel, while its sales department is at Silvertech. So far SQream has raised almost $40 million, a large portion of which has come from the e-commerce giant Alibaba.

Another successful Israeli company at Silvertech is Vi Trainer, founded by its CEO Omri Yoffe. He’s a former helicopter pilot and the grandson of Ezer Weizman, a former Israeli president and defense minister. The company, which launched a personal trainer app, has raised $38.

Gil Eyal’s Hypr, another Silvertech company, is showing promising numbers. It helps companies to identify online “influencers” and communicate with them with a few clicks. The company was founded in 2013 and has raised $8 million.

“We built a business that brought in millions of dollars but very little profits,” says Eyal, Hypr’s CEO. “But then I met Charlie and he told me: ‘You’ve built a good company for your family, but you could build a bigger one that will still be making money for your grandchildren.’ He gave me space in their offices.

"There were four of us, including Guy Tamir, who once headed a programmers’ course at the army’s center of computing and information systems. We were looking at raising $1.5 million, but then Charlie took over. Ultimately, he raised $5 million. That gave me peace of mind. We changed direction and changed to a model of subscriptions and now we’re on the brink of profitability.”

According to Eyal, “even when you’re in a supportive environment, not everything flows smoothly. For example, we had a capital-raising round that fell flat, as did an acquisition offer. These things test your psychological mettle. They say that four out of five developers suffer from depression. That’s understandable, because you’re always on a roller coaster.

“At Silvertech they told me: ‘We won’t let you fall, we’re with you through hell or high water.’ Still, they expect you to learn and change, if needed, and adapt to circumstances. Charlie says that nine out of 10 startups he invests in end up doing something different than what they planned on doing and promised investors, with the 10th flopping. The greatest asset Silvertech gives us as entrepreneurs is the feeling that it’s okay to make mistakes.”

Nine out of the incubator’s 21 companies are led by women, seven of whom are Israeli. One is Michal Alter, one of Israel’s first female cadet pilots — until she was injured. She’s currently the CEO of Visit.org, which helps companies attract and keep the millennials among their employees.

The objective is to give these workers a sense that their job has significance beyond making money, Alter says. The company employs 14 people, six in New York and the rest abroad. It was founded in 2016 and has raised $2 million. Among its clients are Moody’s rating agency and BuzzFeed.

“We offer companies platforms, providing operations, services and connections to nonprofit organizations,” Alter says. “We also provide data analysis based on artificial intelligence, such as what interests a specific employee.”

Regarding the relatively high proportion of women at Silvertech, she says: “I don’t think the high number of female CEOs is a result of a wish to increase their numbers. Charlie looks for people with motivation and good energy, and that resulted in a large number of companies run by women.”

Often there are investors who complain about working with Israelis, but Federman takes a totally different view. “I gave a lecture at Yeshiva University and was asked if it was hard to work with Israelis. They expected to hear criticism,” he says.

“When I go to Israel I don’t go as a tourist; I feel I’m coming home. All this talk about aggressive behavior is BS. There are good people here and there are good people there. The loyalty of Israelis is something special. For me, the greatest fun is working with Israelis.”

Source: https://www.haaretz.com/israel-news/business/.premium.MAGAZINE-the-new-york-incubator-that-can-t-get-enough-israeli-tech-1.7249409?v=09B1E861CF63A8339CBC40D8AE9443DB