Nazareth, Israel's Largest Arab City, Now Has a Budding Startup Scene

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Nazareth, the largest Arab city in Israel, has traditionally been the commercial and cultural center for Israeli-Arabs living in the north. Now, it is becoming a center for startup businesses, too.

With a relatively educated population, the city draws Arab entrepreneurs from all over the north, Haifa, the surrounding Arab towns and the Triangle region - and sometimes a bus even comes from Ramallah in the West Bank, where there is also a budding high-tech scene.

While it still lacks the size and scale of Herzilya Pituach or Tel Aviv’s Rothschild Boulevard, the city’s entrepreneurial scene is coalescing around the city’s business incubator, which today counts 13 firms. They each receive workspace and intensive managerial support for their projects. In addition, the program aids a similar number of outside companies that come to it for help.

The goal is to aid entrepreneurs who wanted to establish businesses in areas not well developed within the Arab sector, with an emphasis on technology companies.

Fadi Swidan, CEO of the Nazareth Business Incubator Center, says he focuses his recruiting on graduates of the Technion - Israel Institute of Technology , telling them that if they have an idea, they should pitch it to him and he will give them everything they need so as not to take a risk.

“The expenses are subsidized by the government. We work on developing the idea. In such a fashion...we will create the infrastructure to create startups in the Arab sector,” he says.

Incubator companies have already won financing from such sources as Jordanian investors and from the U.S.-Israel Binational Industrial Research and Development (BIRD) Foundation.

The incubator is an initiative of the Authority for the Economic Development of the Minority Sectors, which is headed by Iman Saif and enjoys a budget of 700 million shekels ($201 million). The business incubator was launched in partnership with the Small Business Development Centers (known as MATI in Hebrew), with the support of the Economy Ministry’s Israel Small and Medium Enterprises Authority.

The next stage of the project will be the nazTech Accelerator, which will feature a five-month program of intensive work with mentors for up to 15 entrepreneurs at a time. At the end of this period, the entrepreneur gets a crack at presenting their business plans to investors. Registration has already started.

“The process is simple: pick the best ideas, pair up the entrepreneurs with great mentors, equip them with tools and connect them with investors to launch wining startups,” nazTech’s mission statement says.

U.S. high-tech networking giant Cisco is funding 70% of the acclerator project. Gai Hetzroni, the manager of Corporate Social Responsibility at Cisco in Israel, says that three years ago, Cisco began looking to invest in Israeli-Arab startups. But after studying the matter at the time, he says, they found that there was a lack of appropriate firms.

The rest of nazTech's funding comes from the Economic Development Authority and MATI Nazareth. The social enterprise organization PresenTense Israel is also a partner in the project.

A view of Nazareth in northern Israel.Credit: Ofer Vaknin
In this Friday, April 5, 2013 photo, Palestinian programmers attend a Ramallah Startup Weekend workshop in the West Bank city of Ramallah. Credit: AP