High-tech Haifa: A Start-up Hub in the Old Port Is a Magnet for Entrepreneurs

Start-ups in the city tripled in the last year, from 20 to 60, according to the city's new Youth Authority. Although Haifa's multinational high-tech giants are still a major pull for Technion graduates, many young trailblazers are landing here.

For most high-tech entrepreneurs in Israel who operate in Tel Aviv or its surroundings, the decision to move to Haifa to establish a start-up is not a natural choice. For several years now, the northern city has been identified with Israeli high-tech, but mostly in association with global giants such as Google, Phillips, Intel, Microsoft and, lately, Apple, rather than with local start-ups. Haifa has produced high-tech entrepreneurs such as Eyal Gura, who set up several companies and is now an independent partner in Pitango Venture Capital, and his brother Ron Gura, who set up The Gifts Project which was sold to eBay. Another example is Shai Wininger, one of the founders of Fiverr. However, all of them opted to set up business in the country’s center.

Tel Aviv and its surrounding areas are a magnet for young high-tech entrepreneurs, with their ubiquitous free Wi-Fi internet connection at every café, and where talk of exits – selling out to bigger multinationals – is all the rage. Funding is also concentrated in Tel Aviv, with its so-called angels (private investors) and venture capital funds, as well as service providers. Nevertheless, the last two years have witnessed the appearance of several start-ups in Haifa, which are in no hurry to change their area code. The initiative is led by entrepreneurs who reside in the north and are fed up with getting on the train every morning and heading south. In the last few months there has been a flood of events and conferences taking place in Haifa.

Over the last year there have been numerous accelerators and new initiatives appearing at an impressive clip. Haifa had only two incubators last year, but since then six new targeted initiatives have sprung up. There are currently three incubators and two accelerators in Haifa, along with a joint work space for entrepreneurs, with another one opening soon. The number of related events has risen from two or three a month to 10, with the number of participants rising from 10-15 to around 60 or more. A third of these come from outside Haifa, especially from the greater Tel Aviv area.

In short, the numbers speak for themselves: The number of start-ups in the city has tripled in the last year, from 20 to 60, according to the Youth Authority of the Haifa Municipality.

A mere five minutes’ walk from the central train station is the Port Campus, an area where most of these initiatives are based. We were welcomed there by Maya Raz, the energetic marketing director of the Youth Authority at City Hall, who took us to the youth center for the first stop on our visit.

The Haifa Municipality has played a key role in orchestrating the changes in entrepreneurship in the city. The Youth Authority, devoted to meeting the needs of 13-40 year olds, was established 10 months ago. It includes a youth center which was set up two years ago near the port, with the assistance of a Haifa-Boston partnership and of the Joint Distribution Committee Israel. The center serves as a meeting place for entrepreneurs and provides consultation services, as well as organizing events and workshops. It serves as an information intersection and connection crossroads for entrepreneurs and their start-ups in the city.

The projects associated with start-ups are led by Noa Belhassen. She told us that since its inception, the center has accompanied 20 new start-ups in their development and fundraising. In contrast to other municipality departments, the walls of the youth center are painted in pastel colors, with transparent partitions between the rooms. The employees all look to be under 40 – if not much younger.

The awakening of this entrepreneurship coincided with an investment in the renewal of the port area in Haifa. On our way to the next stop, we see dozens of young people on a break from their studies at one of the academic institutions which have sprouted up in the area. The whole district is lively with restaurants and pubs, stores and galleries, as well as student dorms. According to veteran Haifa residents, the area was a rough and dangerous neighborhood until very recently –a place to avoid. Now, they say, one can spot tourists walking through the area, coming off the big boats that anchor in the harbor.

Not far from there, across the road near Ha’Atzmaut Street, on the ninth floor of Zim House, we visit the hiCenter business and technology start-up center. This center was established at the initiative of the municipality following the Second Lebanon War, with government aid flowing to the municipal economic company. The center is located in a building which is atypical of the port area – a glass-covered state-of-the-art building that has recently undergone a renovation and left no trace of the original structure.

Yael Mittelman, CEO of hiCenter, says that most of the building was empty when they first arrived, except for some pigeons. It’s hard to imagine that in the same old-fashioned rooms once occupied by clerks of the national maritime carrier, there now sit young start-up entrepreneurs working on tomorrow’s technologies, such as shoes that help elderly people maintain their balance, technologies for transferring information between smart phones and an advanced engine for price comparisons.

Some of these companies are more advanced and have attracted investors while others are still taking their baby steps. hiTech employees lead us through the rooms, revealing yet other companies and technologies. As part of the area’s development, prices shot up and the building was purchased by a real estate investor. The center will therefore soon move to a new location, and will be located in a building that once housed the National Insurance Institute's offices.
“Start-ups in the very early stages of development try to cut costs on things such as rent and transportation. Haifa, with its easy access to the center, provides these advantages,” says Mittelman. However, Haifa-based entrepreneurs that we spoke to said that most students who graduate from the Technion Israel Institute of Technology prefer to find jobs with the big companies at Matam, the Scientific Industries Center – a high-tech park – and not with start-ups.
 

Yael Engelhart
Avishag Shaar-Yashuv