- The Washington Times - Monday, September 25, 2000

When Lucent Technologies paid $4.5 billion in June to buy Chromatis Networks, a 2-year-old Israeli-based company with U.S. operations in Herndon, some Israeli start-ups shifted their focus from Silicon Valley to Northern Virginia.

"As soon as you have a major success like that, it raises eyebrows. You want your start-up where there is going to be a lot of activity and a lot of money," said Daniel Bar-lev, co-founder and vice president of Redux Communications, an Israeli maker of computer ships for high-speed modems that has opened its U.S. headquarters in Fairfax County.

Redux is one of four Israeli technology firms that have moved to Fairfax County since August. An Israeli venture-capital fund, Yazam, also has opened U.S. operations in the county since last month.

With the new companies, 17 Israel-based companies have established operations in Fairfax County.

Extent Technologies, in Reston, ISEG Technologies, in McLean, and Maximal Innovative Intelligence Ltd., in Reston, are Fairfax County's other new Israeli tech firms.

Ituran Washington Corp., an Israeli-based tech firm that opened a Fairfax County office last year, has grown from five workers two months ago to 20 workers, Chief Executive Ron Shamai said.

Israel has become a leader in developing computer security and technology to provide secure telecommunications, said Harry M. Glazer, a lawyer at Tysons Corner law firm Greenberg Traurig who has worked on deals involving U.S. and Israeli tech firms.

But Israeli tech firms have a small market in their country and want to tap the market of U.S. companies. In Fairfax County, the firms have easy access to telecommunications companies, Internet service providers and the federal government.

"This is the epicenter of the ISP world," Mr. Bar-lev said.

Even before Lucent bought Chromatis, Sterling, Va.-based Internet service provider America Online Inc. bought Mirabilis, the Israeli company that developed the "ICQ" instant-messaging software that AOL has made wildly popular.

That was in 1998.

"That's when Israeli firms woke up and saw they had zero revenue," Mr. Glazer said.

Groups like the Virginia-Israel Advisory Board have established ties between Israel and the Northern Virginia region. So have Fairfax County officials, who traveled to Tel Aviv and Jerusalem in June and returned with 14 potential deals companies that are considering opening U.S. offices in the county or considering partnering with Fairfax County companies that would market their products here.

None of those prospects have produced results yet.

Fairfax County's four new Israeli-based companies have a total of just 45 workers. Ituran, the company that opened in Fairfax County last year and markets radio-frequency vehicle tracking and location service, has 20 employees. Venture-capital firm Yazam also has 20 workers.

Not all Israeli tech companies that open U.S. operations in Fairfax County will turn into a large employer like Gilat Satellite Networks, the Israeli satellite and communications company that has about 125 employees, said Gerald Gordon, Fairfax County Economic Development Authority president.

That's because most Israeli-based firms keep research and development facilities in Israel.

"I think that by and large the Israeli-based companies will be smaller companies, with 10 employees or so," Mr. Gordon said.

But every little bit helps.

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