New York City skyline. Photo: wiki commons.

2011 was a good year for Israel’s technology scene.  $2.14 billion was raised for technology companies operating in Israel, up close to 70% from the previous year.

As the Economist noted in January, Israel’s technology market is in a period of transition as companies shift their focus to consumer based products, and away from pure technology.  This transition, along with average margin for Israeli technology companies is handcuffed by the fact that a consumer base for Israeli products has not been fully established to date.

“Specific to Israel is the market gap and many of the entrepreneurs here, although they don’t intend to target the local market, they end up optimizing to the local market and it hinders their appeal on a broader scale,” said Mitchell Golner, Managing Partner for Dreamit Ventures Israel.

Dreamit recently announced an unprecedented American-Israeli incubator for technology start ups.  Among the numerous objectives this initiative is hoping to achieve, front and center is providing Israeli entrepreneurs with a larger market opportunity for their products.

“I believe there is a great pool of early stage entrepreneurs in Israel and our goal is to help them, both with capital and the mentor program.  Probably most importantly, is access to the U.S. market.  We think that’s one thing that’s missing for early stage entrepreneurs in Israel, he said.”

Golner said that while Europe also provides great opportunity, the decentralized nature of the market for products and services there makes the U.S. more attractive.

“For any software, internet, mobile business, the goal for most companies is to scale, and they need a large target market.  Europe is a large market but it’s fragmented and there are very other large markets but the U.S. is the closest one for real possibility for penetrating, he said.”

The joint venture will provide the technology companies with up to $25,000 to help foster their ideas, along with leveraging the existing contacts Dreamit has made over the past 4 years, helping companies like SeatGeek and Adapt.ly get off the ground.

“I think it’s the right way to help entrepreneurs in this case because if you look at the big picture, there are two big issues they face.  This may be their first startup and they may have great passion, great technical skills and business acumen, but sometimes they lack the real world business experience to get things done.  By coupling them with mentors with years of experience, they can accomplish big things much faster, Golner told The Algemeiner.