It is almost like an opening line of a joke. Three investment scouts from Unilever, GE and Boston Scientific came together at the Jerusalem Business Networking Forum (JBNF) Biomed  this Tuesday. The aim – to explain what and why large conglomerates seek from Jerusalem-based bio start-ups.

There are over 250 multinationals in Israel with r&d centres. For many of them, Israel is as key focus point. For example, of GE’s 6 global centres, one is in Israel. Of the 50 firms in the GE Venture Group, at least 10 are Israel centric.

The panel was excellent. One key point that I picked up on was how conglomerates review young companies. The emphasis is no longer on the technology nor even the team. What counts today is a strong business model, reimbursement and the proof of potential revenue streams. Start ups – you have been warned!

However, what fascinates me even more is why these leading commercial heavy weights target Jerusalem as a bio growth zone. The city boasts less than one million inhabitants. It is a geopolitical nightmare. It is the centre of at least three religions, each imposing layers of conservative values on their followers. And yet….as the organisers of JBNF observed:

There are over 1,000 life science companies in Israel with over 110 of them based in Jerusalem. A major contribution to investment in Israeli life science are global companies, with over 15 global companies with R&D centers based in Israel with technology scouts, company acquisition and VC funding scorching the Israeli science. Over the last decade, over 15 major acquisitions took place in Jerusalem, with Oridion Medical acquired by Covidien, while Omrix was bought out by Johnson and Johnson.

Why Jerusalem?

• Bio Jerusalem, a branch of the Jerusalem Development Authority, has secured a large and growing number of grants for new biomed companies in the capital of the Holy Land. These include tax breaks, reductions in city rates, aid to recruit new senior workers and more. These benefits can be worth hundreds of thousands of dollars spread over several years.
• The Hebrew University of Jerusalem is quite simply an excellent campus. It is in the top 200 hundred globally, the leading Israeli university. Overall, Israeli campuses are ranked in the top ten for innovation. People literally spill out from their studies, straight into commercial labs, and that is no exaggeration.
• 820,000 people is a relatively small base from which to create a strong bio eco centre. However, it is important to emphasise that the very diversity of the population – Jew / non-Jew, Ultraorthodox / non-religious, Israeli born / immigrants from over hundred countries, etc – makes for a highly motivated and innovative dynamic. Just enter any of the bio hubs, such as the Hadassah Research Labs and you will hear a multitude of languages being spoken up and down the corridors.

The demand in Jerusalem for more, improved high-tech parks exists and is continually growing. One key explanation for that is the success of the biotech sector in the city, arguably in spite of all the restrictions it faces.