By Janis Siegel, JTNews Correspondent
When venture capitalist and Professor David Anthony speaks, his students at the New York Academy of Sciences listen, and savvy investors put their money in Israeli technology start-ups.
As the managing partner of 21ventures since 2004, Anthony’s venture capital company provides early stage and seed financing to high-growth technology companies.
Since 2002, Anthony has been the entrepreneur-in-residence at the University of Alabama–Birmingham School of Business. He teaches doctoral students and faculty from diverse academic disciplines including medicine, engineering, and the physical sciences.
His investment group also offers entrepreneurship training programs for technology developers and scientists.
Today, the fund has a $100 million investment portfolio that includes 20 businesses in Israel and the U.S.
According to Anthony, $70 million is in Israeli companies.
At a recent discussion, Anthony said, “I invest in Israel purely for financial reasons, and because my partners believe we can have a great return there.” The group was composed of nearly 50 “Microsofties,” as well as Israelis, Jewish leaders and other curious members of the Jewish community. The talk was given at the May meeting of the Washington Israel Business Council, and took place at the law offices of Garvey Schubert Barer.
“We look for three things as our investment criteria,” Antyony said.
“Is it real? Is it worth it? And is it unique?”
The New York-based company specializes in startups that feature physical security, clean energy and mobile software.
Anthony spends his time putting together big deals with would-be big ideas that, so far, have kept his partners very happy. Anthony had words of caution for investors considering Israel, however.
“It is the best place in the world to invest, but be careful not to mistake it for a ‘hub’ or a center of commerce,” warned Anthony.
Israel, he said, is a very fragile financial environment with a fragile eco-system that can be destroyed very quickly. If it doesn’t survive, said Anthony, Israel won’t survive.
“Right now, and for the next five years,” said Anthony, “the [security] wall has made Israel safe.”
So what does the Israeli financial eco-system look like?
“You have scientists, intellectual property lawyers, corporate lawyers, finders (people who locate the deals), venture capitalists, and angel investors (individuals who assume the risk of investing their own money),” Anthony said.
If any one of these fall out of balance, he added, the business culture will not thrive.
To make his point, Anthony asked audience members to name Israeli technologies. The group began to call out.
“Cell phones,” “security,” “IMs,” (Instant Messaging), “defensive electronics,” and “drop-irrigation systems,” were a few technologies named.
“[A] part of [Windows] XP was coded in Israel, and [Intel] Centrino chips were coded, created or designed in Israel,” offered others.
Anthony seemed pleased with his impromptu evening class. But a lesson in Israeli business requires some not-so-good news, as well.
The entrepreneurial guru said that, when it comes to investing, Israel has the best and the brightest minds, but that to remain successful, it needs to fix its schools.
“The K-12 educational system in Israel is broken,” said Anthony. “If we don’t feed them, in 10 years, we’ll be staffing the Weizmann Institute, the Technion, and Bar-Ilan [University] with foreigners — the Vietnamese and the Chinese.”
Some seemed stunned. Others appeared to be impressed with his honesty and his straight-forward approach. Either way, Anthony didn’t soft-peddle the problem.
“Israel also needs its ‘big brother,’ the United States,” he said. “The Israeli market has only had less than 20 years and the U.S. has had 60 years. We, as a big brother, have to understand how to help them.”
Good Israeli investments, he said, are mutual funds, bonds, and the Tel Aviv Stock Exchange.
But the most important asset Israelis have, besides their creativity and knowledge, added Anthony, is their improvisational attitude. If they need something done, they just figure out a way to do it — or create it themselves.
“Israel has the most sophisticated military in the world,” he said. “They have exposure to technology in the military…and they have a platoon mentality, where they have to trust every other person in their unit. I believe that’s the true value of that experience.”