One of the most acute problems in Israeli society today is the increasing dichotomy between the center of the country, encompassing Jerusalem and the greater Tel Aviv area, and the peripheral regions of the Galilee and the Negev. In addition to the clear socio-economic disparity, the periphery also attracts a disproportionately low number of entrepreneurs, with many small-to-medium sized factories in the Galilee and Negev lacking sufficient resources to fulfill their business potential. In particular, many find it difficult to obtain proper bank loans in order to grow their businesses.
More than just loans
The Daroma-Tzafona fund, founded in 2007 by Mr. Eitan Wertheimer and the Jewish Federations of North America through the Jewish Agency for Israel, provides financial loans of up to NIS 2 million to enterprises, along with long-term and unique business support.
Giora Baran, the CEO of Daroma-Tzafona, explains that there is a set of criteria for accepting companies to the program: they must be manufacturing companies with annual turnovers between $1 million and $30 million, and they must be located in the periphery. We also give a clear preference to those that export their products.
Although most factory owners come to Daroma-Tzafona in order to request a loan, the majority also take advantage of their other services, such as subsidized management consulting, business mentoring by senior businessman-volunteers and help with exhibitions abroad. Furthermore, Daroma-Tzafona runs an Academy – a professional training program consisting of academic lectures and practical workshops – designed to educate managers in a variety of fields that will help them run their businesses more effectively. At the end of each Academy, there is a competition among the participants, explains Baran. They have to present their next project and Eitan Wertheimer heads the panel of judges. The prizes are large sums of money.
Although they deal with hundreds of companies that are spread out in Israels northern and southern regions, and are in regular contact with all the managers they support, the Daroma-Tzafona staff consists of only four people. In addition to Baran, who is the CEO, and an administrative assistant, there are two regional managers, one for the Galilee and one for the Negev. The organization is headquartered in the Galilee (Misgav area), while the manager of the southern region works out of an office in Omer, near Beersheba.
The original flood of loan requests has petered off, as there is a finite number of eligible factories in the relevant regions, but Daroma-Tzafona still receives requests from about a dozen new clients every month, and approximately 85% receive a loan or some other form of support. Some businesses are still in touch with us even though they have already finished paying back their loan, notes Baran.
The 400 companies that have already benefited from the unique opportunities offered by Daroma-Tzafona can attest to the organizations immense impact not only on the businesses themselves, but also on the economic health of the outlying regions where they are located. So far, Daroma-Tzafona has provided a total sum of NIS 570 million in preferred loans to businesses in the periphery. According to the annual survey conducted by Daroma-Tzafona, there is an average annual growth of over 8% in business activity and over 2,500 additional jobs so far. This is a very impressive growth rate, especially relative to the total industrial sector in Israel. The more funds we have, the more we can do, insists Baran.
Ofer Azran, CEO of Crystal Optics, Akko, Northern Israel
What does your company do?
Azran: Our company manufactures ophthalmic lenses. We use the worlds most advanced technology. Our specialty is manufacturing multi-focal lenses, which we manufacture from the very first to the very last stage of development in our factory in Akko. My brother and I founded the factory five years ago with one machine that could only complete the first half of the manufacturing process.
At the time, my brother and I would fly to Belgium or Turkey in order to complete the anti-reflex coating stage. We would do half the work in Israel, fly to Belgium or Turkey on Tuesday, come back on Wednesday, and put the completed lens on the market. It was like this for eight months, until I met Daroma-Tzafona. Thanks to the loan from Daroma-Tzafona I was able to buy my own anti-reflex coating machine and complete the entire manufacturing process in my own factory in northern Israel. Today I have 70 workers. Before I met Daroma-Tzafona I could barely afford 16.
How did you hear about Daroma-Tzafona?
I heard about them through word of mouth about four years ago. I think I may have been the first or second loan they ever gave out. At the time, the bank wasnt willing to give me a loan, and a machine like that costs about NIS 3.5 million. I received NIS 2 million from Daroma-Tzafona. From the moment I had the ability to complete the entire manufacturing process at home, my profits jumped two and three fold.
How has Daroma-Tzafona helped your business?
Money is great, yes. But even more than the money, Daroma-Tzafona has provided incredible support. Giora as CEO, Eitan as a person who is involved and updated all the time about the company – they are the people who provide the motivation and inspiration to really succeed. Daroma-Tzafonas Academy was also an incredible asset to me. I was in their first session, and it gave me so much. It exposed me to things I never would have encountered on my own. They also provided me with a mentor and with a subsidy to hire an accountant who completely organized the companys finances. Our relationship began financially, but every time I met with them I was humbled by their interest, support and care about our companys future. They are still very involved in the company.
Why did you decide to locate the factory in the Galilee?
I felt it was my mission to open the factory in Akko and not in the center of Israel. Im originally from Nahariya, and my goal in starting the factory in the north was to hire local people to come work for me. It was very important to me to hire people from Akko in order to provide more work. Still today, 70% of our workers are from Akko. Of course its a challenge to start a company in the periphery – go try and find an engineer in the north. Its almost impossible to find good, computer-oriented people in the north. Theyre all in the center, where they earn three times as much as they would in Akko. Theres very little motivation to stay here. But thanks to Daroma-Tzafona my factory can stay in the north, employ people from Akko, and even hold export exhibitions overseas.
Today, Daroma-Tzafona is with me every step of the way, with moral and professional support. If I need financial support in order to take part in an exhibition or print a catalog, they will help me. Next year I have five exhibitions in Europe, and Giora has already reassured me that they will try to help. Its amazing. It warms the heart. More than money, the support and desire to see us succeed is something incredible. Without Daroma-Tzafona I would not have survived.
Menachem Galant, CEO of MDC Plastic Industries, Sderot, Southern Israel
What does your company do?
Galant: Our company was founded in 1989. We have three main focuses: the first is the manufacturing of components for medical applications, the second is for irrigation applications, and the third is the raw materials – high quality PE and vinyl micro tubes. The raw materials we manufacture are solely for the Israeli market. The medical equipment is manufactured here and exported to China. We also export medical equipment to Mexico. Our irrigation equipment is exported all over the world.
We have 30 employees who work around the clock, all of whom are natives of Sderot. Our employees, taught professionally in-house, are primarily young people after the army. Half of our employees are women.
Why did you decide to locate the factory in Sderot?
I decided to start the company in Sderot for Zionist reasons. At the time, I received permission to open the company in the Palestinian territories, and later I asked to move my permit to Sderot. It was a good decision. I believe we need companies like this in the south of Israel to help spread high-level technological advancement, and good, educated people throughout the country. The companys biggest challenge is to be the leading company in the world in our field, on a technological level. We have very advanced technology and are developing and expanding all the time. We are also very involved in the local community. We dont bring workers in from anywhere other than Sderot. We also employ mentally disabled people who otherwise have difficulty finding work.
When did you begin working with Daroma-Tzafona?
Daroma-Tzafona entered the picture just as we were in a process of expansion and were in need of financial assistance. The result of their involvement was the establishment of micro-tube manufacturing for medical applications. They helped us with quite a large sum of money, and continue to provide courses in advanced studies in the field that keep us up-to-date with the newest technological advancements. They were our oxygen.
How has Daroma-Tzafona helped your business?
Their financial support was imperative for both our optimism and our ability to handle a difficult time. We are in constant contact even now. They organize advanced courses for those whom they helped financially in the past – its an excellent asset. Even though I have many years of experience, I participate in every course they offer. They come visit all the time to see how we use their help. We have excellent relations.
We were the first company to receive help from Daroma-Tzafona in the south. Bank Mizrahi introduced them to us and we began a relationship. Thanks to them we were able to establish the sterile room where we manufacture medical equipment that is now exported to China. Before we met them, we did not have financial stability. Today we are the biggest manufacturers of medical equipment in the country.
The people at Daroma-Tzafona are incredibly easy-going, understanding and flexible individuals. They are always available for assistance, no matter when we call or what we need. I have excellent personal relations with everyone Ive had contact with. There is mutual trust between us, and Im excited to continue our relationship with them.
For more information about Daroma-Tzafona, visit www.daroma-tzafona.org.il.