startupmania

Nearly all international IT megafirms operate some sort of special unit which works with local start-up companies. These units locate, develop, invest and help the small companies break into the worldwide market. A competition between such units in Israel exist, and they race to sign the most promising businesses and the ones which seem to have the most potential for success.

Israel is no exception and all the large companies which operate here, from Microsoft Israel, through Oracle Israel to IBM Israel offer young start-ups a varied goodie-filled package – if only these start-ups decided to use the firm’s proprietary hardware, or build services that mesh with preexisting products offered by the corporation.

Michael Oran, manager of IBM Israel’s Global Technology Unit (GTU), is the man in charge of maintaining and caring for the working relationships between the big blue giant and young Israeli companies who are just starting out. He manages about 45 employees at IBM Israel’s headquarters at Petach Tikva, some with business specialties, and some with a more technological orientation. It is Oran’s job to try and persuade as many Israeli up-and-comers to utilize and, in several years, sell IBM products.

So how is it done? How do you get a small Israeli start-up to become a future IBM partner (and assist IBM’s revenue growth)? At first it’s a simple matter of being there for the young company and helping it in any way possible. Whether it be through fund raising, opening corporate doors, endorsing overseas promotional campaigns and making sure it does indeed base its product on IBM components such as the DB2 database or IBM WebSphere.

When and if said company breaks into the international market, as evident by other Israeli success stories such as Amdocs, Comverse or Nice, then IBM and the start-up split the profits gained by the internal, IBM-made components the small company used to create its product.

These future profits, which lie within a successful software who may very well take the world by storm, are based on royalties. According to Oran, since the GTU was established in Israel in 2002, these royalty-fueled profits have yielded over one billion dollars, a byproduct of selling IBM components embedded in third party software products.

Oran relates that since the GTU was founded, the unit’s personnel have looked into over 1300 Israeli start-up companies, and roughly 150 of them have been marked by IBM as interesting enough and as having a collaborative potential with the global IBM. Some of these small companies garnered GTU notice through a distinct technological breakthrough while others, such as local start-ups eVigilo and Communitake, through a stand-out business potential which correlates with IBM strategy.

Alright, so this is the point where you start wondering where you left that IBM business card you got a while back, right? “But”, you stop riffing through your desk and ask, “what can I get from IBM now?” According to Oran, a start-up which catches the eye of IBM’s people can enjoy a fresh supply of hardware components and development tools for free, receive marketing and consultation services, and even help with raising sufficient funds via many bodies and venture capital funds.

Should a small business acquire the golden ticket to IBM Israel’s GTU lucrative program, they can work, free of charge, in one of 40 IBM Innovation Centers, located all across the planet. They are free to use the IIC’s infrastructure where ever they desire – be it the Far East, Europe or the United States. Furthermore, they can use the elegant and well-equipped demo rooms to hold important business meetings with big-name clients.

There is no doubt that a meeting with the IT manager of a large bank in a local coffee shop or hotel lobby is viewed very differently from one which takes place under the corporate sponsorship of IBM, with a local IBM marketing and sales person at hand to provide that IBM “umbrella”.

By now, you should be well and sold, googling your way to find out what can IBM Israel’s GTU do for you. Before you sign that lucrative contract, remember that currently there are 30 Israeli start-ups that managed to earn the prestigious title of “Industry Select” and these are ranked by the global IBM as the stand-out companies in their field. This title must be approved by an IBM global VP in charge of the specific industry in which the start-up wishes to do business. Try and find out if IBM thinks you can get such recognition – it’s a pretty good hint that your future product has that extra level of zing, and a nice bullet point in the presentation to potential investors.

Translated by Itai Rosenbaum