MassChallenge Chooses Jerusalem For Next Startup Accelerator Outpost

MassChallenge’s international expansion continues with today’s announcement that the Boston-based startup accelerator will launch a new outpost in Jerusalem next year.

The move establishes a stronger connection with Israel. MassChallenge has had a “feeder program” for three years that has so far brought 32 Israeli startups to Boston and London to participate in the nonprofit’s accelerator programs in those cities.

But the new accelerator program will give MassChallenge a presence on the ground in Israel, which has an established tech industry that has produced many startups in sectors like cybersecurity, online maps, automotive software, and water-related products.

The sponsors of MassChallenge Israel include EMC, The Kraft Group, the Ministry of Jerusalem and Heritage, the Jerusalem Development Authority, the City of Jerusalem, Combined Jewish Philanthropies, Bank Hapoalim, and law firm Herzog Fox & Ne’eman.

The announcement brings MassChallenge closer to its goal of expanding to 10 cities outside of Boston by 2019. Its leaders also hope its programs’ graduates will create 20,000 new jobs during that period.

MassChallenge probably wasn’t ready to launch an accelerator in Israel three years ago, when it instead opted to bring Israeli startups to its other locations. The London accelerator, MassChallenge’s first full program outside Boston, held its inaugural session this year.

“MassChallenge is a more mature organization now,” says Israel Ganot, the founder of electronics trade-in site Gazelle, who was hired earlier this year to lead MassChallenge Israel. “We’re more capable of supporting multiple locations. We’re going to expand to more locations next year.”

But why choose Jerusalem instead of Tel Aviv, a more cosmopolitan city that seems to have a more vibrant and well-known tech scene?

“MassChallenge is really all about impact, in terms of economic development and encouraging entrepreneurship and building the community,” Ganot explains. “You want to be early to a market that’s really showing growth, momentum, and all the pieces are coming together—and is really ready to get to the next level.”

“We think we can go there, partner with the local ecosystem, and take it to the next level,” he adds.

There are around 500 startups in Jerusalem, MassChallenge and its funding partners estimate. The city’s tech companies include Mobileye, which makes software for driverless cars and raised $890 million in a U.S. initial public stock offering last year—the largest U.S. IPO by an Israeli company ever.

MassChallenge also picked Jerusalem because it’s centrally located within Israel and is becoming easier to access than Tel Aviv, which has more car traffic. Jerusalem is also being connected to a high-speed train line that will run to Tel Aviv, and MassChallenge’s office will be located a short walk from the train station, Ganot says.

As for operating in a city often dealing with dangerous political unrest, Ganot says MassChallenge takes safety seriously, but that the political situation in Jerusalem wasn’t “going to deter us from going into that market.”

“We feel very strongly about it. But we’re going to be cautious and be sure that we provide a safe environment for startups and employees to work in,” he says.

Startups accepted into MassChallenge’s programs get four months of office space, mentorship and business training, and access to investors and other resources. At the end of the sessions, MassChallenge awards cash grants to the companies judged as most promising. The 128 companies in the current Boston program are competing for $1.5 million in total prize money, which will be awarded tonight. The 90 in the London program are eligible for more than $763,000.

MassChallenge hasn’t decided how many startups will be accepted into its first Israel accelerator next year, but the plan is to create a program similar in size to its other locations, Ganot says. It will try to attract startups from across Israel and the world, he adds.

“Our goal is to make it as big and as full of impact as possible for next year,” he says.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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