Ultra-Orthodox

SILICON VALLEY IN BNEI BRAK?

Ultra-Orthodox Jews and high-tech startups have long been mutually exclusive. But not anymore. In the last four years, the number of Haredi-owned startups has ballooned from just five to 450

 

Ultra-Orthodox men
A Haredi high-tech forum in Bnei Brak

It sure didnt seem that way just a few years ago, when Roth and her business partner, Tzvi Cohen, began trying to raise funds for Bontact. The startup, launched in early 2015, is aimed at helping businesses get more customers and communicate more easily with them. What potential customers see is a widget on business websites allowing them to contact the company by email, chat, Facebook message or other means; what businesses see is a single communication dashboard so they dont have to check each platform separately.

Roth had already founded a similar but more limited business with Cohen, but she had no venture capital contacts, and found investors surprised to find a woman in a wig asking them to believe in her startup.

We encountered a lot of slammed doors, said Roth. They were concerned about us being different. They told us we had no chance of raising money.

Those first potential investors responded with dismissive comments like You wont answer emails on Shabbat and you wont come to our events, she recalled.

Haredi high-tech
Employees at work at Bontact, one of Israel's first Haredi startups

Sure enough, Roth doesnt answer emails on Shabbat. She also doesnt shake hands with the many men she meets, instead using smiles and laughter to politely fend off one handshake at a time. But nowadays she not only attends high-tech events, she is getting used to being the guest speaker. As the CEO and co-founder of one of Israels first Haredi startups, she has raised $2.1 million in seed funding and employs 12 people, and her software has been installed at 11,000 websites.

The past two to three years have seen a major increase in ultra-Orthodox, or Haredi, involvement in the startup world, say those on both the entrepreneurial and investment sides, and Roth has been among the trailblazers.

One of the major forces behind this change is KamaTech, a project launched in 2012 to help Haredim break into Israeli high-tech – especially its startup culture. It was founded by Haredi entrepreneur Moshe Friedman and two powerful allies: Yossi Vardi, one of Israels high-tech pioneers (see interview, page 10) and Zika Abzuk, the business development manager for Cisco Israel.

Bontact software
Bontact's software for multi-channel business communication has been installed at 11,000 websites, including Weebly

Through KamaTech, Haredim interested in high-tech have access to a job placement program, training sessions on topics like mobile apps and online marketing, and lectures from successful startup founders. These laid the groundwork for an accelerator for Haredi startups that opened last year, with Bontact and seven other startups in the first round. The startups have collectively raised about $7.5 million and employ nearly 100 people.

The startups in the accelerator – there are another eight now in the second round – are planted inside successful local startups like website builder Wix and content discovery platforms Outbrain and Taboola for four months, to provide space and mentorship. This makes it possible for the accelerator to operate on a tight budget, and provides Haredi startups with the intangible benefit many say they most need: integration into Israels high-tech ecosystem.

The plan to familiarize the Haredi community and the startup world with one another appears to be working. When Friedman, Vardi and Abzuk began Kamatech in 2012, they started off by looking around the country to see if there were any Haredi-owned startups already in existence, Friedman said. They found five, all of which were in the initial pre-seed stage. In 2015, after three years of KamaTech programming, they announced a competition to see which startups would get into the accelerator, and were surprised to find 224 startups had entered the contest. This year, that number swelled to 450.

Other programs meant to increase ultra-Orthodox involvement in Israeli high-tech include the Haredi Hi-Tech Forum, which provides courses and networking for Haredim and was launched in 2012 by Yitzik Crombie and Racheli Ganot, both Haredi startup founders in their own right. Crombie is also opening a hub for Haredi male entrepreneurs in January in Jerusalem, near an existing hub for women.

And more Israeli investors are getting involved as well. A few months ago, a venture capital fund was opened for Haredi startups that go through the Kamatech accelerator. It has raised about $3 million so far from about 50 investors, and Friedman hopes it will close in December with $10 million.

Increased ultra-Orthodox involvement in high-tech could benefit Haredi society by raising the income of one of Israels poorest segments of society and benefit the Israeli high-tech scene by providing a new source of ingenuity and labor, said Ciscos Abzuk. Fifty-eight percent of Haredim live below the poverty line, compared with 10 percent of the non-Haredi Jewish population, according to a 2016 report on Haredi society in Israel by the Israel Democracy Institute and the Jerusalem Institute for Israel Studies

Just as the Russian aliyah strengthened high-tech in the 90s, this can be seen as a Haredi aliyah that will strengthen the Israeli high-tech industry for the coming years, said Abzuk.

To some extent, the greater involvement of Haredim in the world of high-tech reflects wider trends in Israels ultra-Orthodox population.

Though higher education rates remain low and poverty rates remain high, things are changing. The past decade has seen an increase in ultra-Orthodox employment, with rates rising from 36 percent to 50 percent for Haredi men between 2003 and 2015, and from 51 percent to 73 percent among Haredi women in that period, according to the 2016 report on Haredi society. Due to the value placed on mens Torah study, it is not uncommon for Haredi women to bear primary responsibility both for earning a living and for raising many children, though the birth rate has decreased slightly, from an average of 7.5 children in the early 2000s to 6.9 children now.

In many ways, Friedman, who is 37 and lives in Bnei Brak with his wife and four children, embodies the ongoing transition from Haredi segregation to Haredi integration. Friedman is the great-grandson of Rabbi Yosef Chaim Sonnenfeld, a founder of the Eda Haredit, a separatist anti-Zionist ultra-Orthodox faction based in Jerusalem. Until he was 30, Friedman studied Torah all day and had plans to be a great rabbi.

Friedman remains committed to being Haredi, but embraces working for a living as a component of Jewish tradition. In 2010, after his curiosity pushed him to buy a computer, connect to the internet and start learning about the high-tech industry, he built a not very successful video editing startup. I decided that I live here in the startup nation, and I want to build a startup too, Friedman said.

But potential investors told him he was the first ultra-Orthodox founder to ask them for funding, and ultimately turned him away. One told him that being Haredi was an added risk factor. And one, Friedman recalled, said Haredim were incapable of launching startups, telling him: Saying that a Haredi person is going to build a startup is like saying a secular person is going to write a commentary on the Talmud.

Though much has changed, there are still obstacles to Haredi integration into the world of high-tech.

The education gap, especially in subjects such as math, science and English, remains a problem. And within the Haredi community, there is pressure to make sure the entrepreneurs religious behavior stays above suspicion so the rabbinic leadership wont speak out against it.

But overall, now that Haredi startups have the backing of major players in the Israeli high-tech industry – in other words, now that Haredim are being brought into the high-tech fold instead of being shunned as outsiders – the cold shoulder Friedman and Roth encountered when they first started out has turned warm. All of Israeli high-tech is helping us, said Friedman. It has changed from one extreme to another. There used to be a lot of suspicion, and today everyone wants to help.