February 29, 2016

Cultured Growth: CT’s economic, cultural siren song attracts Israeli firms

PHOTO | Steve Laschever
PHOTO | Steve Laschever
Israel’s Biological Industries last fall opened a distribution-storage depot in Cromwell for its line of cell-culture media in which human and animal stem cells are grown.

Connecticut's coordinated recruiting efforts to lure more international firms to the state are resonating loudest among nascent technology firms in Israel, observers say.

At least two Israeli technology firms have opened doors in this state in recent years, and dozens more are exploring opportunities to lease or buy real estate and employ workers to ply the broader U.S. market with their products and services.

One, Biological Industries, last fall opened in Cromwell, where it stores and distributes cultures used to grow stem cells. In March 2014, Israeli software developer Applango opened its U.S. headquarters in Stamford, with financial backing from the state Department of Economic and Community Development (DECD).

Their arrival, says the state's top economic-development promoter and others, illustrates Connecticut's successful efforts at taking its message to commercial corners around the globe.

Along with job prospects, the Israeli transplants' heavy technology focus — biopharma, medical devices and software development — augments Connecticut's deep technology and manufacturing roots, observers say. Connecticut, in return, offers them a gateway into the vast, lucrative U.S. marketplace.

Looking to crack the US market

"They're a country that doesn't have a big marketplace,'' said Jason Giulietti, vice president for business recruitment with the nonprofit Connecticut Economic Resource Center Inc. (CERC). "What they're looking to do is get into the largest marketplace, and that's the United States.''

Giulietti said he expects that one of every five of the 50 Israeli firms he is currently pursuing will eventually establish operations in Connecticut sometime within the next 18 months. Some of those, Giulietti said, are weighing uprooting and relocating entire operations to Connecticut from Israel.

Rebecca "Becky" Nolan is vice president of business development at MetroHartford Alliance, the region's business promoter. Nolan has worked closely with CERC, DECD and other state agencies and nonprofits since 2011 to elevate Connecticut's economic visibility among U.S. trade allies globally.

That Israel has emerged, along with Germany, the United Kingdom, Italy, as well as several other Middle Eastern nations, as Connecticut's economic partners partly reflects the synergies of both, Nolan said.

For example, Connecticut is home to biopharmas such as New Haven's Alexion Pharmaceuticals and German drugmaker Boehringer-Ingelheim's U.S. arm is in Norwalk; medical-device maker Covidien has a manufacturing facility in North Haven. Software development, particularly products for protecting online access and information, are the province of many Connecticut and Israeli startups.

Making connections

Genesis for Connecticut's mounting interest among Israeli entrepreneurs can be traced to a series of "summits'' coordinted by MetroHartford Alliance and others, including Connecticut's Jewish diaspora, to match those Israeli firms, many of which coveted doing business with or in the U.S., with Connecticut entrepreneurs who could facilitate them.

Held annually in various Connecticut locales starting in 2011, the summits also featured Connecticut Innovations Inc. — the state's quasi-public venture capital investor — the state labor department, plus this state's leading research universities, UConn and Yale.

The first summit, held in May 2011 at East Hartford's Goodwin College, drew between 80 to 100 attendees, along with Israel's economic minister, according to Laura Zimmerman, planning-community development vice president for the Jewish Federation of Greater Hartford.

The second, in June 2012, at East Hartford's Rentschler Field, drew more than 150; the third, in June 2013, drew more than 200 to Wallingford's Oakdale Theater, Zimmerman said. This year's summit is set for May 11 at Infinity Music Hall & Bistro in downtown Hartford.

Spurred by response to and attendance at those summits, DECD Commissioner Catherine Smith in Dec. 2013 led a group of fewer than a dozen people on an economic mission to Israel. Two months earlier, UConn President Susan B. Herbst and retired men's basketball coach Jim Calhoun led an academic mission to the country.

A highly entrepreneurial Israeli culture

"I got the idea that it was probably good to get over there right away,'' said Smith, who said she encountered a highly entrepreneurial Israeli culture, where business incubators "are on every corner, practically."

Connecticut and Israel, she said, share overlap in several technology spheres, including development of green technologies involving fuel cells and water treatment. They, too, have in common genomic, stem-cell and immunological research, as well as aerospace and advanced manufacturing technologies.

According to DECD, Connecticut's trade volume with Israel is growing. In 2015, Israel ranked 17th as a destination for state-produced goods, with commodity exports to Israel totaling more than $118 million, a 16 percent gain from 2014, agency data shows. By comparison, France, Germany, Canada, United Arab Emirates and Mexico were the top five destinations last year for Connecticut commodity exports.

Encouraging more Israeli firms to come to Connecticut, Smith said, fits with the state's broader strategy to enhance and promote its international-business development aims as much as the state advocates for advancement of its home-grown businesses. DECD has since hired an Israeli-based consultant to advocate on its behalf.

Efforts bear fruit

In March 2014, a few months after Smith and her trade delegation visited Israel, Applango debuted its U.S. headquarters in the Stamford Innovation Center. Founder/President Daniel Sarfati said one of Applango's Connecticut investors urged him to ditch rival pitches from Delaware, New Jersey and Pennsylvania to come here. The same unidentified investor also introduced Applango to DECD, which provided a $100,000 grant used to hire four workers in Stamford, Sarfati said.

Sarfati said an East Coast location, more so than one on the opposite coast, offered him convenient access to direct flights to and from Israel, via New York's Kennedy International Airport. Once a month, Sarfati or someone else at Applango must fly to and from the Israeli capitol, Tel Aviv. Also, a seven-hour East Coast time difference with Israel vs. a 10-hour West Coast lag makes it easier to conduct business, he said.

Moreover, Sarfati relocated his three school-age children to Connecticut, where he was encouraged to find a Jewish cultural infrastructure, including schools and synagogues, that could, he said, "help them with a soft landing.''

"It's a good place for us to be,'' Sarfati said.

Biological Industries chose Connecticut for some of the same reasons as Applango, said Marketing Director Tanya Potcova, including nearer access to its primary U.S. market. Founded 30 years ago, BI's catalog contains some 500 varieties of cell cultures used to grow human and animal cells for biologic research, of which about 489 are distributed from its 3,500-square-foot refrigerated storage-distribution facility in Cromwell, Potcova said.

Local ties and strong universities

Biological Industries has a local tie to the region through a Windsor business that owns a stake in the company, she said. But the opportunity to be nearer, Potcova said, to research schools and talent farms like UConn and Yale, plus having practically next door Jackson Laboratory, another producer-supplier of research media, and other health-research vendors close by was too good to ignore.

"It's time to brand build,'' she said of BI's plan to leverage its Connecticut presence to make its name and products more familiar to the U.S. market.

Currently, BI employs five in Cromwell but eventually plans to expand that to eight, with the hiring of more scientists and sales staff who would be stationed across the country, Potcova said.

A key partner in Connecticut's commercial Israeli recruitment has been the Jewish Federation of Greater Hartford, according to DECD's Smith and others.

Aside from a lead role in marshalling summit resources and participants, the West Hartford advocacy-education organization has eagerly awaited arrival to Connecticut of Israeli companies, said Zimmerman, the Jewish Federation vice president.

Cultural touchstone

The Federation, too, serves as a cultural touchstone for those Israeli firms that want to know more about the cultures and lifestyles in the Connecticut and U.S. before they leap, Zimmerman said.

"No. 1, it's about jobs for Connecticut. It's our home as well,'' she said. "We want a strong Hartford. We want a strong Connecticut.''

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