Israeli Biotech Start-Ups Flock to Ohio on Funds, Expertise

A Bridge from Tel Aviv To Cleveland
Government incentives and an Ohio venture capital fund focused on Israel have drawn Israeli biotech companies to the state. Illustrator: Oliver Munday/Bloomberg Businessweek

As the Tel Aviv representative of the Ohio Department of Development, Rick Schottenstein said he’s barely able to keep up with his e-mail.

“It’s a total avalanche,” Schottenstein said, as Israeli biotechnology companies seek to link up with Ohio medical experts, clinics, and investors, Bloomberg Businessweek reports in its Nov. 19 edition. “Each week I meet two, three companies interested in finding a connection. It just doesn’t stop.”

Buttressed by state incentives and an Ohio venture capital fund dedicated to investing in Israel, biotechnology companies from that nation are flocking to Ohio, the seventh-most-populous state in the U.S. In the past eight years, at least 14 Israeli technology start-ups raised funds from Ohio-based backers, and at least six of these opened offices in the state, said Michael Goldberg, founder and managing partner of Cleveland-based Bridge Investment Fund LP.

Israel and Ohio are helping each other in ways that may link them as business partners for decades. Ohio’s health-care industry more than doubled during the past four decades, to more than 600,000 employees. The Cleveland Clinic, a multispecialty academic medical center, alone has 2,000 physicians and scientists, according to its website. While Israel has almost 200 biotechnology companies, it doesn’t always have a big enough market to consume these products or raise funds.

About five Israeli biotechnology companies have plans to move to Ohio, and dozens more cooperate with Ohio-based groups in clinical research, Goldberg said.

“While many Israelis still look to Boston or Silicon Valley for support, Ohio has done more than other states to attract Israeli start-ups,” he said.

Innovation Center

Israeli biotechnology companies have also benefitted from funding and recruitment efforts from government-backed foundations and Ohio-based health-care institutions.

The Global Cardiovascular Innovation Center, a partnership backed by the state of Ohio that funds development of health-related products, invested at least $3 million during the last eight years in five Israeli health-sciences companies, said Thomas Sudow, director of the center.

“Israeli companies provide the leading hospitals here the opportunity to work with leading innovators,” Sudow said. “For Israeli companies, they get connected to the top doctors in the U.S.”

BioEnterprise Corp., founded by Cleveland research institutes to support biosciences in the region, helps connect the Israeli companies with capital, medical expertise, and management teams in the state. The group helped Simbionix USA Corp., a maker of medical devices, transfer its headquarters to Cleveland from Israel in 2002. The company, with about 80 employees, has enlarged the base in Cleveland and moved into an expanded research center outside Tel Aviv.

Treating Tumors

With an office in Tel Aviv, Goldberg’s Bridge fund invested in five Israeli companies. IceCure Medical Ltd., based just north of Tel Aviv, plans to soon start U.S. sales of a device for treatment of benign tumors. The closely held company plans to open a U.S. office and hire four employees there, Chief Executive Officer Hezi Himelfarb said.

“For us, Ohio is an area where there are very reputable hospitals and institutions,” Himelfarb said. “There’s a high level of medical care with lots of small private clinics and hospitals.”

EarlySense, the developer of a device that helps nurses track crisis situations, dispatched a team of researchers to Cleveland for clinical trials.

Bridge has “been instrumental in introducing us to hospitals that are potential partners,” said EarlySense Chief Executive Officer Avner Halperin.

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