Two Israeli Firms to Build NY’s Cybersecurity Centers

SOSA and Jerusalem Venture Partners aim to turn the Big Apple into a magnet for cybersecurity entrepreneurs

A simulation of JVP's New York hub.

NEW YORK — Wherever you go in New York, you can find Israelis in high-tech. According to Guy Franklin, the general manager of SOSA New York, who surveyed the presence of Israeli entrepreneurs in the Big Apple, there are 400 Israeli high-tech firms in the city, most of them startups — this is a city of 7,000 startups all told. Every week, says Franklin, one or two Israeli companies join the list.

“Almost every startup in Israel is now trying to decide whether to operate to some extent in New York,” says Alon Alroy, a founding partner of Bizzabo, which has about 100 employees, half of them in Israel and half in New York. According to Ran Harnevo, CEO and co-founder of the Homeis app, which brings together communities of urban immigrants, there are several thousand Israeli high-tech people in New York. Most, he says, have arrived in the city over the past decade. Several Israeli companies, or companies with connections to Israelis, have made it big here, including WeWork, Taboola, Outbrain, Playbuzz and others.

A simulation of SOSA's NYC Cyber Cneter.

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When Donald Trump was elected president, there were fears in the Israeli high-tech sector over a crackdown on immigration to the United States. But now there has been a dramatic development that is actually likely to strengthen the connection between the Big Apple and Israeli high-tech. Two Israeli firms, Jerusalem Venture Partners and SOSA, an open innovation platform, were the successful bidders on a project initiated by the City of New York to start a global cybersecurity center designed to make the city a world leader in the field.

This is an impressive achievement by any measure for the two Israeli companies. They will work with several universities, including Columbia, New York University and Cornell Tech (a New York-based technology institution jointly run by Cornell University and the Technion-Israel Institute of Technology that was initiated by then-New York Mayor Michael Bloomberg). The intention is to attract companies from all over the world to the city and to recruit about 10,000 employees in the field over the next five years. According to New York City officials, SOSA will build a global cybersecurity center, develop cooperative projects among large corporations in the city and link them to startups and advanced cybersecurity technology from Israel and elsewhere.

JVP will set up the first international center for cybersecurity entrepreneurship and investment in New York. The goal is to create opportunities worth $1 billion. The project will be part of a new complex called HUB.NYC that is being launched by JVP in the Big Apple. It’s an innovation and international investment center that will focus on establishing companies, strategic partnerships, and business and strategic development opportunities for cybersecurity companies during their growth stage. The initial goal is to establish 10 new cybersecurity firms in the city within a year.

The SOSA compound in Tel Aviv.
Amit Garon

SOSA and JVP have each leased a building for their high-tech operations in New York. SOSA, which has worked since early 2017 out of temporary offices near the Flatiron Building, has 25 companies, most of them Israeli startups, and seven investors. At the new building in Chelsea, which used to be the location of the upscale Barney’s department store, SOSA will have 4,000 square meters (43,000 square feet) of space on eight floors, to be home to about 70 companies. Half of them, according to the plan, will be connected to the cybersecurity industry.

JVP has leased a building that has been designated for historic preservation in the city’s SoHo neighborhood. The building is also home of the International Culinary Institute. JVP’s 5,000 square meters of space are currently being designed by a firm that also designs Apple’s stores.

Originally the plan was to house startups from Israel and other countries in the building, but now, after the two Israeli firms were the successful bidders to carry out the city’s plan, the building will become part of the plan to turn New York into a cybersecurity powerhouse. “The choice of two groups from Israel to lead the task of building an international cybersecurity center in New York is a vote of confidence in Israeli high-tech and recognition of the capabilities it has built,” said Uzi Scheffer, the CEO of SOSA.

>> Read more: New York's 'Silicon Alley' Gets an Israeli Makeover

It’s understandable why New York officials chose Israelis to be part of the leadership of their cybersecurity industry. According to Scheffer, investments in Israeli startups accounted for 16 percent of the $814 million invested in the cybersecurity industry worldwide last year. Israel is ranked second in investments in the field after the United States.

The market will continue to grow in light of the increasing need on the part of corporations in almost every field for cybersecurity solutions, Scheffer adds. The new center will therefore provide a major opportunity to Israeli entrepreneurs for exposure and access to the large firms in the United States, as well as for cooperative business, professional and academic projects.

Erel Margalit, founder and chairman of JVP and a former Knesset member, says after he left politics a year ago, he decided to focus on strengthening his fund’s Israeli-U.S. business ties. “We are facing a big change. Five years from now, half the world’s brands will disappear and new ones will replace them. The strengthening ties with New York will bring Israel into a very important business-technology world. If Israelis want to turn their companies into huge companies by themselves, and not just sell them, they need New York as a springboard to the American market. Israelis have learned that it’s not good to work alone. We need help in translating our inventions into useful products in the business world. There’s no better place than New York for that purpose. High-tech grows better in a large city like New York, and less so in an isolated place like Silicon Valley.”

Scheffer doesn’t believe there’s a danger of a brain drain from Israel as a result of the increased Israeli activity in New York. “The Israeli high-tech industry is in need of a direct connection to the global market,” he says. “The cybersecurity center in New York creates significant business opportunities for Israeli entrepreneurs and cybersecurity companies. It will help connect them to the huge American market and accelerate their growth and their global expansion. In my opinion, the way to keep the brains in Israel is to create conditions that support the building of companies and development centers in Israel and encourage local industry [in New York] to connect and to use Israeli innovation.”

Several events have been scheduled in New York this week where it is expected that it will be noted that the two successful bidders on the city’s cybersecurity plan are Israeli. The events should reflect the extent to which Israeli high-tech has put down roots in the city, only to expand further in the future. It might be a good idea to add a few more flights to the already busy Tel Aviv-New York air route.