Mentor networks are not as developed in Israel as they are in the U.S. As Uri Goldberg, an expert on Israel's high tech ecosystem told me in August 2017, "There is a growing network of angel investors in Israel. But many startup CEOs wonder what value besides capital these angels can add. The CEOs tell the angels, 'thanks for your capital, leave me be.' I know a few investors who really believe they are going to be good mentors. But it is hard to match founders with mentors [who truly add value]."
Compared to Silicon Valley not as many Israeli entrepreneurs have built unicorn-sized companies. As Dror Berman of Israel's Innovation Endeavors said in 2015, "Over the growth stages in particular, Israeli entrepreneurs need access to mentors that can deliver contextual insights and ask tough questions about scaling up in the United States." U.S. mentors the relevant growth-stage investors and investment bankers and can help with an IPO or acquisition, The U.S. also has more companies and MBA programs that train managers. Since most Israeli entrepreneurs have not built a company from start to exit, those that have are valuable.
A Tel Aviv-based maker of software that helps control autonomous vehicles has built a global mentor network. As Igal Raichelgauz, cofounder and CEO of Cortica, explained in an October 2017 interview, before starting the company he served in the signal intelligence section of the Israel Defense Force's 8200 unit. In his last year there he worked in a short messaging service startup that "got a lot of traffic and was an interesting experience - but not a success." From there he went to the Technion where he worked with electrical engineering professor Yehoshua Zeevi and at Intel.
In 2007, he cofounded Cortica to do "deep learning and computational neuroscience. We saw a major explosion in the flat model of unsupervised learning. Now we have over 100 employees - mostly PhDs, have raised $60 million in venture capital from Li Ka-shing and Samsung among others, have 200 patents and are licensing our technology to autonomous vehicle companies. We are the brains behind autonomous vehicles. We help sensors to recognize what is in the vehicle's environment and predict what will happen in the next few seconds. For example, a car is going forward and the sensor sees a ball on the road. Our software predicts that a child is going to be there [to retrieve the ball] and recommends that the car should stop. We will grow through development partnerships. And we have found different mentors in different domains. Professor Zeevi provides mentoring in technology and strategy. We have an advisor who was vice chair of GM who helps with automation strategy and others that help in financial strategy and building the company's value long-term. Most of the mentors are from outside Israel since most Israelis do not have business strategy expertise. Our outside mentors also help us tap global markets in the U.S. and Asia."
CyberArk, a $217 million (2016 sales) maker of information security software, has been a leader in moving to Boston and an outlier in going public (in September 2014) instead of being acquired -- a common path for Israeli companies. As CEO Udi Mokady told me in August 2017, "Israelis need somebody local to get help in the first couple of steps in coming to Boston. Eyal Shavit, an angel investor, was in Boston and he helped arrange for Seed Capital Partners (part of Softbank) to invest in us. Now that we have gone public, we are well-known in Israel and help bring startups here."
Now CyberArk mentors other Israeli companies that want to move to Boston. As Mokady said, the nature of that advice is "20 percent technical and 80 percent business. I provide non-commercial help to Israeli companies with technical matters like office location and providing employee healthcare which is new for Israel since the government there provides healthcare for everyone." A common business question is how to manage Israeli R&D from Boston. "I also tell them that they may need to leave a technical founder behind in Israel to make sure the R&D team is well-managed. I tell them that whoever is in charge of the Israel operations should be a person of integrity -- which can be known from prior joint mileage -- with the ability to lead. In our case, we appointed someone who had demonstrated leadership in the Israeli Defense Forces," said Mokady.
Being in Boston helps CyberArk in many ways. "Here we are embedded with our most strategic group of customers. We have access to talented people from the universities for our technical services and inside sales departments who come in as interns and join us full-time," Mokady noted. And unlike many Israeli companies, CyberArk went public rather than being acquired. As he said, "Many Israeli companies find it too hard to scale to the point where they can go public because they do not have the sales and marketing executive talent to create a strong brand. Our customers told us that we were mission critical for their operations so that they wanted us to go public to remain independent. To do that we were able to hire the marketing talent here and got our final round of investment from Goldman Sachs which was balance sheet money." To be sure, CyberArk still has its R&D operation in Israel; however, it is currently integrating its acquisition of Conjur, a DevOps security software developer. "The company moved to Newton, Mass. from Waltham so now we have some R&D in the U.S.," said Mokady.