- The Washington Times - Wednesday, August 2, 2000

An Israeli technology start-up is relocating from Tel Aviv to the Dulles corridor in Northern Virginia, the latest of roughly 50 Israeli companies that have skipped Silicon Valley and New York to establish a link to the Washington area.

Maximal Innovative Intelligence Ltd., which produces information-management software, already has moved its North American headquarters to Reston from Austin, Texas. Its senior executives will move to Northern Virginia in "a few months" from Israel, according to Eran Even-Kesef, Maximal's vice president for worldwide sales and marketing.

The Washington office, which will be home to 100 employees by the end of next year, drew Maximal's attention for several reasons, including the air links between Washington Dulles International Airport and the proximity of the East Coast to the Middle East and Europe.

"Austin was a great location, but it has its problems," said Mr. Even-Kesef, who heads Maximal's North American operations. "Access to the rest of the world via air is not very good."

Since Maximal plans to keep its research-and-development operations in Israel, it wanted a location in the United States that was as close to its programmers as possible. Maximal has recruited directly from Israel's military, which trains a large number of the top-notch engineers who have become the backbone of the country's technology industry.

"We have a [research-and-development] advantage in Israel, and we don't want to lose it," Mr. Even-Kesef said.

Northern Virginia's rich bounty of venture-capital firms also attracted Maximal. The 2-year-old company, which is privately held and backed by Israeli, European and American venture-capital funds, likely will seek a third round of financing before selling stock in the United States, he said.

Many of the deals between the United States and Israel in the technology industry are driven by the desire of Israeli companies to bring their products to market as effectively as their American counterparts.

"Israel has great technology, but its companies are not as savvy [as the Americans] in sales and marketing," said Harry Glazer, a lawyer with Greenberg Traurig in Tysons Corner, Va., who has handled deals between the two countries.

"Roughly 50" Israeli companies have links to the area, from subsidiaries with a physical presence to partnerships with local companies, he said.

Largely because of military needs, Israel has become a leader in secure communications, fire-wall technology that keeps secure and unsecured information separate, and encryption. Government contracts still keep many Israeli technology companies in business.

Groups like the United States-Israel Business Exchange and the state-funded Virginia-Israel Advisory Board have sought to cultivate ties between the Washington region and Israel. Officials from Virginia and Maryland also have visited Israel, and business leaders said the efforts to bring the region out from under the shadow of Silicon Valley are paying off.

"This area today rivals the California connections, although historically, there have been more relationships [with Israel] in New York and California than in the Northern Virginia corridor," said Richard Heideman, president of the District of Columbia-based America-Israel Chamber of Commerce Inc.

Mr. Heideman said that the worldwide reputation of Silicon Valley and Wall Street's presence in New York fostered business links with Israel. But the growth in the Washington region caught the eye of Israeli technology companies.

Sterling, Va.-based America Online paid $407 million last year for Mirabilis, an Israeli company that makes instant-messaging software. The acquisition, a large one by the Israeli standards, helped put Northern Virginia on the map in that country, Mr. Glazer said.

In addition, Gilat Satellite Networks, an Israeli satellite and communications company, bought McLean-based Spacenet Services from General Electric's GE Capital Services last year for $228 million, according to Mergerstat, which keeps tabs on mergers and acquisitions that involve U.S.-based companies.

Other companies, like Israeli Aircraft, have set up sales and marketing offices in the region.

Orckit Inc., a Nasdaq-listed manufacturer of equipment for high-speed Internet-infrastructure equipment, bases its U.S. operations in McLean. But Orckit, unlike Maximal, has kept its corporate offices in Israel.

The Greater Washington Initiative also is working with two other Israeli companies that want to open their first U.S. offices in Northern Virginia, according to Robert Sweeney, the group's director of business development.

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