Investment in Israeli Incubator Gives Akron International Flavor
Published Apr 13, 2009
When Akron Mayor Don Plusquellic visits Israel, he may look like any other American tourist.
But then he sits down for a meeting with the nation’s prime minister.
Plusquellic is the man behind Akron’s one-of-a-kind initiative to join public and private forces for a $1.5 million investment in a technology-based incubator located in Netanya, Israel.
The Targetech incubator is an endeavor by the Israeli government to stimulate technology innovation. The government offers tenants of the incubator start-up loans, which are paid back if the company is successful and forgiven if the venture doesn’t survive. In return, companies give the incubator a 50 percent interest in their firms.
As laid out by the Ohio-Israel agreement in 2007, Akron now has a 40 percent stake in the incubator.
“So indirectly, we own roughly 20 to 30 percent of each of these companies that emerges from the incubator,” says Marc Merklin, a partner with Brouse McDowell, the law firm that represented the city in the agreement.
The companies have also agreed that, when they are ready to establish a U.S. presence, they will do it in Akron. Most companies stay in the incubator for roughly three years. While no companies have come to Akron yet, the pipeline is full of promising ventures.
“It is very, very difficult to create economic opportunity strictly from the business and the economic base you have in your community,” says Howard Gudell, president of the Ohio-Israel Chamber of Commerce and a partner with the business-consulting firm that helped the city with development of the strategy.
“The only way we’re going to grow economically is to attract other businesses outside our borders that are looking for a U.S. presence. Otherwise, we will not be able to compete,” he says.
Israel was chosen as the location for the venture, Gudell says, because it has an international reputation for technology development, raising more than $12 billion in the last 10 years for new ventures. Israeli technology is already at work in Akron-area businesses and hospitals.
The partnership is so promising, he says, that the city is actively planning similar arrangements with incubators in other countries.
Gudell led a group of Summit County officials to India in November 2008 to explore possibilities in that country.
“If you can source and attract innovative technologies that will help our local companies become competitive,” says Gudell, “is this not economic development? Does this not create jobs?”
Story by Michaela Jackson
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