This week was a great one for the local high-tech scene. 35 years after it was officially incorporated, Apple decided to expand their engineering team and open a development center in Israel. Not only that, they are also acquiring a local startup, giving the new center a real project, and a good base for (hopefully) a successful journey.
As Apple (among other companies) is opening an R&D center here, it's important to look at some early stage companies, and see if the early-stage companies are also setting up their R&D teams here. The reality is that there are many Israeli entrepreneurs that are based in the US and are starting companies without hiring a single Israeli-based engineer.
As an observation, there are 3 types of "founding Israeli teams". The first type is the Israeli-based teams. In that case, they will always hire their development team here, and unless they relocate the whole team as the company progresses (Quigo as an example), these companies stay in Israel. The second type is the split-geography founding teams. One entrepreneur is in the US, the other one is in Israel. Outbrain (Yaron in the US, Ori in Israel) and Watchdox (Moti in the US, Noam in Israel) are two great examples from our own portfolio. The third type is the Israeli teams that are 100% in the US. The founder relocated through his previous venture, and is not starting a new startup with an Israeli-based co-founder. In those examples, the R&D center is usually set in the US.
The location of an R&D Center depends entirely on the initial location of the R&D manager. If one of the founders is the head of R&D, the team will always be built around him. If that VP R&D needs to be hired, it may make sense to hire him in Israel. In the past, the main reason was related to cost. R&D in Israel used to be cheaper. Unfortunately those days are gone. So why do it? It all relates to the ability to hire talent. Every founding team needs to assess their brand and network and think of they have the ability to hire a killer development team in the US. The reality is that a great business team in the US combined with a strong Israeli VP R&D will have the ability to hire the very best people from the Israeli startup scene. Hiring the best of Silicon Valley could be a lot harder. So if it's best in Israel vs. average in the US – I would vote for Best in Israel.
And talking about Best in Israel, no doubt that Apple will be hiring some of the best engineers.
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