Companies founded by Israelis in Massachusetts brought over $9 billion to the state last year, according to an independent study by Stax Inc., a global strategic consulting and research firm.
The study released Wednesday by the New England-Israel Business Council, has revealed that Israeli-founded businesses continue to make a major impact on the Massachusetts economy in terms of job growth and economic activity.
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The research findings were announced at an event with Massachusetts Governor Charlie Baker and over 300 business and government leaders in attendance at the MIT Sloan School of Management.
The study found that Israeli-founded companies in Massachusetts booked $9.3 billion in revenue in the state in 2015. When factoring in their economic impact due to their spending on goods and services – such as office space, accounting, marketing, and other business needs – their economic impact surged to $18.1 billion.
These companies employed nearly 9, 000 workers in 2015. Adding in the same multiplier effect based on their demand for local goods and services, they supported over 27, 100 jobs in 2015. The employee base of Israeli-founded companies in the Commonwealth grew five times faster than the state’s economy from 2013-2015.
Since the previous study in 2012, the revenue of Israeli-founded companies in the Commonwealth has grown two times faster than the Massachusetts economy overall, and now represents nearly 4% of the state’s Gross Domestic Product (GDP).
The massive growth in the study’s findings is primarily due to a significant increase in revenue and jobs at Israeli-founded companies in Massachusetts since 2012, as well in small part due to additional discovery of Israeli-founded companies since the 2012 study.
Also key to the findings, Israeli-founded businesses secured nearly $1.2 billion in venture capital investments from 2013-2015 across 48 companies, representing 10% of all venture investments in the Commonwealth during that time period. The pace is accelerating, with 2015 capital raised higher than any prior year.
Additional Key Findings in Brief:
Israeli investment deals are bringing new money to Massachusetts, with 67% of the investments coming from out of state, including from Israel and Silicon Valley among other places. Israeli-founded businesses also returned nearly $10 billion to investors in mergers and acquisitions from 1999-2015.
Top sectors for Israeli-founded businesses include app development and management, cyber security, data storage and management, medical devices, biopharmaceuticals, eHealth, energy and water tech, and 3D printing.
The whitepaper also identified numerous factors that continue to give Boston an edge as an attractive destination for Israeli businesses and entrepreneurs, including
1) Boston’s presence as a gateway to U.S. and global markets,
2) robust synergies in key sectors such as IT, Life Sciences, and most recently, cyber security
3) complimentary innovation driven economies and culture, and
4) world class educational institutions and workforce and
5) a convenient east coast geography with a nonstop flight to Tel Aviv.
The study also noted that Massachusetts faces increasingly significant competition from other states eager to form similar models of economic activity with Israel. Since 2010, thirty U.S. Governors have brought trade delegations to Israel courting business ties.
“Israeli businesses play a leading role in our state’s robust economy, in both tech and life science and we greatly value our special relationship, ” said Massachusetts Governor Charlie Baker. “The future looks bright for the Commonwealth and Israeli companies to bring even more world-changing innovations to global markets together.”
“Massachusetts continues to prove itself as a global model for economic cooperation with Israel, and as a premier destination for Israeli businesses and entrepreneurs looking to expand and grow in North America and beyond, ” said US Ambassador to Israel Daniel Shapiro in a video message to event attendees. “The people of Massachusetts and Israel continue to meet together at the epicenter of history, tackling the most intractable problems in health care, biotechnology and life sciences, cyber security, IT and water technology just to name a few.”
“Our state faces fierce competition – especially with New York and Silicon Valley — to win relationships with Israeli innovators and entrepreneurs, ” said David Goodtree, an expert on the Massachusetts-Israel economic relationship and author of the study’s whitepaper. “Our advantages in talent pool, cost, and other factors puts us in a strong position, but the Massachusetts story on the ground in Israel is often drowned out by the buzz around our two main competitors. While the mutual benefits are well-documented with the 2016 study, the state’s opportunity is to build on our success by cultivating new relationships and new areas of common interest between Massachusetts and Israel.”
“The Massachusetts-Israel innovation partnership is about more than just revenue; it is about improving the quality of life for Israelis, Americans, and the world as a whole, ” said Israeli Consul General to New England Yehuda Yaacov. “As illustrated by the 2016 Impact Study, the economic relationship between Massachusetts and Israel is a model for other US states to follow when collaborating with us. Israel will work tirelessly to ensure that the next study demonstrates even more growth.”
“The Israel – Massachusetts business relationship started over half a century ago and has grown ever since, ” said Dan Trajman, President and CEO of the New England Israel Business Council. “Looking towards the future, we can see in the next several years the addition of one hundred Israeli founded companies contributing to the local economy with the support of the innovative ecosystems on both sides of the pond.”
“Cybereason is proud to be playing a part in further strengthening the strong ties between the Boston and Israeli technology community. Boston offers a powerful combination of a deep, experienced, talent pool and world class universities that drive innovation and creativity, ” said Lior Div, co-founder and CEO, Cybereason. “Cybereason is proud to be building a world-class organization with a team that has built a detection and response platform that enterprises use to hunt adversaries such as nation-states and hacktivist groups in real-time.”