The Start-Up Nation is starting to include more of its citizens.
Israel, which has earned the title of Start-Up Nation for its disproportionate international role in high-technology advancements, most launched by Jewish Israelis and Army veterans, is slowly bringing Israeli Arabs into the high-tech fold.
In recent years, such initiatives as Nazareth-based New Generation Technology, an entrepreneur-training program that supports 20 start-up companies in the northern Galilee region, and similar programs named Al Bawader and Tsofen, also from Nazareth, all of which support Arab-founded high-tech companies, have reached out to Israel’s Arab population, which has been underrepresented in the country’s high-tech revolution.
A new start-up incubator, which is supporting fledgling Israeli Arab companies in order to help both the minority population and the wider economy, recently brought its message of inter-ethnic cooperation here.
Itzik Frid, an Israeli Jew who had served as vice president of the world’s leading provider of content adaptation and browsing solutions for online carriers, and Imad Telhami, an Israeli Arab who had served as a senior executive with the Delta Galil Industries textiles firm and founded a successful call center and software development company, attended the Israel DealMakers Summit last month in Manhattan; the two held separate meetings with other potential investors to promote Takwin Labs (Takwin is Arabic for “genesis” or “start”), which will offer seed money to Israeli Arab entrepreneurs.
“We will also invest in promising candidates in the West Bank,” Frid said.
Takwin’s model of Arab-Jewish cooperation serves as a tacit rebuke to Prime Minister Benjamin Netanyahu’s remarks in the closing days of his successful re-election campaign last month that warned of a growing Arab vote and threatened to worsen Arab-Jewish relations.
Takwin, whose initial goal is $20 million, found a high level of interest here but no investments yet; Frid said he is optimistic that financial support from U.S. investors will come. He had lined up some $5 million in investment funding from Jews and Arabs in Israel before coming to the United States. Such entrepreneurial investments typically take several months to arrange, he said. “It is still in process.”
“I see excitement for what we are doing in Israel,” Frid told The Jewish Week; he said he has found some interest among Palestinians who live across the Green Line, but was reluctant to discuss details.
Frid said the Israeli government has offered moral support to Takwin, but no financial support. All the funding is private, from Jews and Arabs in Israel. “On both sides” of the ethnic divide — “we see the excitement,” he said.
“The vast majority of initiatives for Arab economic development in Israel are focused on access and integration into employment,” Frid said. In other words, finding jobs. Takwin’s emphasis is on helping companies that will create jobs. “Takwin Labs is the first private venture capital fund and incubator investing solely in Arab high-tech start-ups.
“We believe that this will inspire a high-tech entrepreneurial culture in Israel’s Arab society that will be vital to economic development in Arab society,” Frid said.
He and Telhami established Takwin in partnership with Chemi Peres, a veteran of the venture capital field and son of former president Shimon Peres, and Erel Margalit, founder of Jerusalem Venture Partners, who served as a Knesset member.
Tawkin has already provided funding to one Israeli Arab start-up (Frid and Telhami decline to reveal the recipient’s identity, or the exact size of the financial investment), and expects to provide money to several other firms in the next several months. Each investment will be “a few hundred thousand dollars,” Frid said.
Once fully underway, Takwin will fund four to six Israeli Arab firms a year, he said. About 100 potential recipients have taken part in the initial interview process. Most of the firms are located in northern Israel, where most Israeli Arabs live. Takwin will also offer mentoring advice, Frid said.
While the participation of Israeli Jews, many of them one-time members of Army intelligence units, in the country’s high-tech entrepreneur activities has accelerated in recent years and achieved legendary status around the world, Israeli Arabs have remained largely outsiders.
Several factors have discouraged Israeli Arabs’ high-tech role: they largely do not serve in the Army, and lack that inside track; some Israeli firms are reluctant to hire Arabs who have an engineering or similar high-tech background; many ambitious Israeli Arabs opt for traditional career paths like physician or teacher; few Israeli Arabs who have achieved financial success have a tradition of making entrepreneurial investments.
“There is a huge gap,” Telhami said. “Arabs are not part of Israeli high-tech, not part of Israel’s start-up [ethos].”
Takwin is starting to change this culture, Telhami said. “We have received a lot of cooperation from Arab businessmen. For the first time in their life, they invest. We believe that in 10 years we can make a big difference.”
Overall, Israeli Arabs, who constitute 20 percent of Israel’s population, have a higher unemployment rate than Israeli Jews.
“For those who overcome barriers to attaining the necessary education and experience, the two biggest obstacles to launching a start-up are access to early-stage capital and connections to the rich high-tech ecosystem that has developed in Israel over the last 15-plus years,” Frid said.
He and Telhami stressed that the success of programs like Takwin is likely to improve interethnic relations within Israel, and serve as an example for Arabs in the Middle East.
“Whenever people spend time together at work, create companies together, invest together, develop relationships, stereotypes do not hold,” Frid said. “When people feel they have good jobs, opportunity, hope, and a sense of inclusion, they are more likely to seek stability and cooperation.”
Arab-Jewish relations in Israel are part of Takwin’s short-term goals, Frid said. An influence on the region’s majority Arab population is long-term, he said.
“The Israeli Arab can be a real bridge to peace in the Middle East,” he said.