Silicon Valley Bancshares, which specializes in lending to start-up technology firms, has reached around the globe to capitalize on Israel's emerging high-tech market.
Harry W. Kellogg Jr., vice chairman of Silicon Valley, said the Palo Alto, Calif., banking company has invested about $750,000 in three venture funds targeting Israel.
The company, which has $3.9 billion of assets, said it is likely to invest more money this year.
"We're truly amazed at the sheer number of start-up companies in Israel," Mr. Kellogg said. He first visited Israel in April 1998 with Silicon Valley's chief executive officer, John C. Dean.
During the 1990s Israel has become a hotbed for high-tech ventures, and some have made it all the way to Wall Street.
Roughly 3,000 start-ups have been launched, not only by native Israelis but also by highly educated Russian immigrants. Twenty companies have debuted on Wall Street since 1995, or 30% of all the Israeli companies publicly traded here, according to the Israel High-Tech & Investment Report.
New firms developing software, Internet, and biotech products are mainly financed through Israeli government-sponsored incubator programs and Israeli banks. But venture capitalists have contributed more than $1.1 billion the past two years, according to PricewaterhouseCoopers research.
Those funds are feeding an industry that accounts for 40% of Israel's exports.
Mr. Kellogg said it is "highly unlikely" that Silicon Valley will set up shop in Israel. But it aims to forge alliances with Israeli banks for syndicated lending when and if a start-up establishes a U.S. office.
"We want to be the bank for Israeli companies when they move" to the United States, said Mr. Kellogg.
Industry sources applauded Silicon Valley's strategy.
Though hard data are lacking, they said that Israeli start-ups often seek a physical presence in the United States after putting a product on the market.
"Israeli entrepreneurs immediately look to the U.S. to sell their products and establish headquarters," said Larry Buchsbaum, a manager at PricewaterhouseCoopers.
And bank analysts are impressed.
"You'd expect Silicon Valley to have their hand in the action," said Joseph K. Morford 3d of First Security Van Kasper in San Francisco. "It makes sense."
"It's a great idea," said Steve Didion of Hoefer & Arnett in San Francisco. "'They're following the venture capital money."
