For Israeli Companies

 

Israeli companies wishing to inquire regarding business opportunities and potential strategic partners in their specific areas of operation to an Israeli trade office overseas must submit an application on the Ministry of Industry, Trade & Labor website.

 

Overview

New York offers tremendous opportunities for business. The economy of New York State is ranked 10th in the world with a GDP of $593 billion. Responsible for approximately 8 percent of the U.S. GDP, New York State is home to about 70 of the Fortune 500 companies. Therefore, it is no surprise that many international companies are looking to New York to expand their business.

With more than a trillion dollars changing hands on an average day through the stock exchanges, the city is considered to be the finance capital of the world.  New York's varied economy includes financial services, new media, information and communications, fashion, textiles, life sciences, marketing, electronic trade and more. 

New York's economic strength is based on its financial activity, business services and international trade. New York and its surroundings areas have the physical, business and technological infrastructure as well as experienced and educated leaders from the world's leading universities and institutes.

The challenges in New York are as large as the opportunities are. Companies should be prepared to work in an intense and fast-paced market.

General Guidelines for Start-up Companies Seeking to Raise Capital and/or Find Strategic Partners

The U.S.-- especially New York, Silicon Valley, Chicago, Boston and New Jersey-- offers many sources for  financing such as venture capital funds, private equity, investment banks, family offices and institutional investors.  Many multi- national companies in the fields of communication, electronics, life sciences, security networks, environmental technology and consumer products have chosen New York as their headquarters. The fact that Israel has gained international recognition as a leading center for business entrepreneurship and technological innovation may facilitate the access to investors and multinational companies.  Nevertheless, the competition for investor attention is difficult and requires preparation and familiarity with the domestic business culture.

Start-up companies seeking to raise capital or to build partnerships with American institutions might be interested to know that:

• Some U.S. funds and financial institutions will not respond to requests from companies that have no business presence in the U.S.
• Many American investors may want to see, as a precondition, that Israeli funds have already invested in the Israeli company.  American VCs with no business presence in Israel may be willing to invest in Israeli start- ups in collaboration with an Israeli VC.
• A company's stage of development, its technological feasibility and its potential for sales are central factors for fundraising and finding strategic partners. In some cases, American VCs may refrain from considering requests from companies that have not yet reached the revenue stage.

For these reasons, Israeli start-ups may also consider finding an "angel investor" who may be more willing to examine smaller requests for funding. There are many angel investors clubs on the East and West Coasts.

Additional factors to keep in mind:

• Protection of intellectual property: Start-up companies may seek legal advice to make sure their IPRs are properly protected.  The lack of protection may discourage investment.
• Management: U.S. investors carefully examine a company's management team to ensure that a start-up is run by experienced directors.
• Marketing: Does your company have a web site and presentation materials written in grammatically correct English?  Does your product packaging meet U.S. expectations and specifications? These are some of the considerations investors take into account.  NY is crucial for companies wanting to go public.  More than 70 Israeli companies are traded on NASDAQ and eight companies are traded on AMEX and NYSE.

The funding issue is very much related to the company's long- term business goals. 

Companies should consider if they want to raise money through venture capital funds whose goal is to go public or find a lucrative exit opportunity, or to keep the option of independent development by going with commercial banks, investment banks or private investors.

Establishing an office or operation in New York or other U.S. locales might be an expensive undertaking, but still one worth consideration.  There are a number of places to turn for assistance.  Law offices, accounting firms and business consultants can help you find a location and register your company.  State economic development offices often offer grants and other benefits to foreign companies who establish a business presence in their area.  Some of these benefits are geared to specific technology sectors.

Opportunities in Homeland Security

Following the events of September 11, the U.S. market for homeland security products and services has grown rapidly. Israel is considered a leader in security technology, a fact which has opened doors to individual Israeli security companies.   Located in the Economic Mission of Israel offices in New York City, the Representative of the Industrial Cooperation Authority works closely with U.S. companies to advance industrial and business cooperation activities between U.S. companies and Israeli entities. This office can assist you with developing relationships with many of the industrial companies in the U.S.

Media and Information Technology

Two good ways to learn about the market are to read market research and attend trade shows and exhibits.  Hundreds of professional exhibits take place in the U.S. during the year and it is best to decide in advance which ones to attend or participate in.

In the media field, the U.S. market might take more time to penetrate; there are dozens of providers spanning different states and periodic mergers between companies which can make it more challenging. In general, it seems to take longer to penetrate this market in the U.S. than it does in the Far East or Europe.  Israeli technology companies need to acquire a clear understanding of the process and be willing to invest time and money.

Consumer Goods

The U.S. is the world's largest market with 300 million people who, for the most part, still enjoy the highest amount of disposal income per capita.   It is a vast market composed of many ethnic groups, income levels and buying habits.  Because of its size, it should be viewed as a group of smaller markets with different buying patterns and tastes.

To successfully penetrate the U.S. market, manufacturers must first determine their goals, analyze their strengths, weaknesses and their production capabilities, and then target the market best suited to achieve maximum profitability.

Since the U.S. is a highly competitive market where companies from all over the world are striving to sell their products, to succeed requires a full-time presence, flexibility to adapt to market needs, ongoing commitment and perseverance, and high visibility.  Once orders are received, regardless of their size, they must be shipped according to buyers' product specifications and delivery schedules.

Consumer products are sold in the U.S. through one or more of the following intermediaries:

• Representatives work on a commission basis, showing manufacturers' lines and products in their showroom(s), at trade shows, and during visits to retail clients. Reps may specialize: some call on big-volume retailers, work with independent shops, or with manufacturers and re-labelers.
• Importers buy for resale and act as a means of distribution. They do not work on commission: as distributors, they mark up the merchandise from 25 to 50 percent -- whatever the market will bear -- and absorb the cost of distribution from their mark- up.
• Israel Buying Offices Several major U.S. retail chains and mail order catalogs are represented by Israel-based buying offices.  These offices provide an easy way to reach the market without a full-time presence.  Orders transacted through these buying offices are for large "private-label" programs. 
• Brokers play an important part in bringing the products to the market place in the food sector. They function as an independent sales force which performs the essential sales function and related services including negotiating the best deal and promotion for the customer, following up on orders to ensure delivery of product, ensuring that the product is properly displayed, monitoring the sell- through, arranging for product demonstrations, etc.  Brokers who work with retailers to help sell the product and services are retained by a commission fee.

Here is one important way to achieve high visibility in this highly competitive market:

Trade Shows provide excellent opportunities for networking and presenting your products to buyers, importers, representatives, etc. In the fashion, fashion accessories and jewelry sectors, independent retailers will place orders at these trade events. Mass market retailers, buyers of chains and department stores visit these exhibitions to meet with old and new suppliers and to search for new products and look for new market trends. To generate orders from these buyers requires continuous follow-up on the part of the companies' U.S. intermediaries.