Touro Incubating Israeli Innovators

Fledgling startups looking to set up shop in Manhattan, a city teeming with venture capitalists prowling for the next Google, have traditionally hooked up with university-linked incubators. In addition to nurturing entrepreneurial companies by providing office space and facilitating connections with investors and potential clients, university-affiliated incubators offer intellectual capital in the form of access to professors (many of whom are experts in their chosen fields) and the cheap labor of hungry MBA students.

But until now, finding such an incubator here was difficult — even more so for Israeli companies. Pace University’s Second Century Innovation and Ideas Corp. (SCI2) has stopped accepting applications since its incubator threatens to be closed this August. Columbia’s Audubon Business and Technology Center remains at or close to full capacity. And New York University’s The Stern Incubator is a shell of its former self, currently operating solely on a virtual scale.

Since 2002, the percentage of the 1,115 U.S.-based incubators that are sponsored by an academic institution has dropped from 25 percent to 20 percent, according to the most recent State of the Incubation Industry report published by the National Business Incubator Association.

“There is a need for the hands-on business support that a good incubator provides, but it’s difficult to run one in New York City,” says David Hochman, executive director of the Business Incubator Association of New York State. “The opportunity cost for any piece of real estate is very high.”

So it’s no wonder that Touro College Graduate School of Business’ recent announcement that it is launching a business incubator aimed at helping Israeli startup companies get their feet off the ground — with offices in the heart of the Financial District — is generating buzz among young startups.

The Center for Israeli Innovation, as it will be known, is the first and only incubator in the United States focused solely on Israeli companies. It is a joint partnership between Touro College’s Entrepreneurial Institute and youngStartup Ventures, a fundraising advisory and consulting company that organizes popular conferences in the venture capital community. Like many university-linked incubators, it will assist young startups when they’re at their most vulnerable, by helping entrepreneurs refine their business plans, develop a marketing strategy, locate customers, obtain funding and gain access to university resources, including faculty expertise.

There’s a growing appetite for Israeli companies among venture capitalists, says Joe Benjamin, founder and CEO of youngStartup. “Israeli companies are great innovators, but they lack the marketing savvy and cultural understanding.”

Entrepreneurship is a decidedly Jewish value, says Charles Snow, dean of Touro’s business school. “We’re strong believers that Jews can fare very well in the business world,” he says. “You have a little more flexibility when you work for yourself, and can set aside time for what a Jew feels is important.” (Although the center’s primary focus is geared at Jewish and Israeli firms, the school is “not at all discriminatory” and will consider proposals from anyone, regardless of race, religion or nationality).

The Center for Israeli Innovation is part and parcel of Touro’s efforts to beef up its entrepreneurial offerings and make a name for itself in this area, at a time when other New York-area business schools are diverting funding from their own business incubators.

“Entrepreneurship is to be a major component of Touro’s Graduate School of Business,” says Snow. The business school, which is a few months shy of its third birthday, currently offers its 83 students the opportunity to earn an MBA in management with a specialization in entrepreneurship, as well as four advanced entrepreneurial courses.

Touro already physically incubates one company, Smartfish Technologies, and virtually incubates another, Keyboard TOWN PALS. It recently added its first Israeli company, Craze Productions, to be incubated under the auspices of The Center for Israeli Innovation.

“The Center for Israeli Innovation helps an Israeli company look like an American company; it gives us a face and makes us much more respectable,” says Sam Kleinman, who runs Craze Productions, a Tel Aviv-based company that specializes in selling digitalized urban music using mobile phone networks. With the help of the incubator, Kleinman plans to refine his business plan to grow his company on an international scale and meet investors who will pony up $2 million in capital. (“It could be a multimillion dollar business,” Snow says ).

Plans are already underway to add a roster of additional startups to the Center for Israeli Innovation’s portfolio. In September, Touro hopes to complete construction on a 10,000-square foot space in the basement of its building at 65 Broadway. The school will then gain an additional 11 private offices devoted strictly to startups, as well as secretarial space, a library and conference rooms.

Startups interested in being incubated must have a comprehensive business plan and a product or service that can be commercialized in about 15 to 36 months. They can apply using the four-page application posted on The Center for Israeli Innovation’s Web site (http://www.touro.edu/cii/apply.html). Touro has already turned away four potential incubatees whose business plans didn’t seem promising enough to the selection committee. “We know the market,” Snow says. “If we don’t think the business has potential for success, we won’t take it.”

The incubator is a win-win, Snow says. Entrepreneurs get the mentoring, office space and connections they desperately need. “They lack marketing know-how and access to capital, and that’s exactly what the Center will be giving them,” Snow says.

“I knew it was the right place when I got my business plan back with 1,000 red marks all over it,” says Jack Atzmon, CEO of Smartfish Technologies and a licensed chiropractor who turned to Touro’s Entrepreneurial Institute to help him market the ergonomic keyboard he developed.

Touro’s MBA students, in turn, will have easy access to real-life businesses and gain hands-on experience through a variety of internships and part-time jobs. And, should one of the businesses being incubated at Touro be acquired for millions of dollars — a possibility Touro is banking on, Touro will profit big-time. Together, the school and youngStartup Ventures share a small slice of equity in each company, ranging from 1 to 5 percent.

“Like any business, we’re a business too,” says Larry Bellman, co-founder and managing partner of the Center for Israeli Innovation. “Once we become more robust and have a revenue flow, we will be able to allocate more resources. We’re in a growth process, too.”

Tamar@jewishweek.org