Israeli startups are leaving their comfort zones. If the classic startup entrepreneur was a young Tel Aviv tech wizard who served in Military Intelligence’s elite Unit 8200, people of more diverse backgrounds are breaking in.
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Entrepreneurship events have been attracting more ultra-Orthodox Jews, for example, and high-tech programs and startup workspaces are sprouting up outside the Tel Aviv area.
Last Thursday, the Economy and Industry Ministry – in partnership with the Arab Economic Development Authority in the Prime Minister’s Office – launched a program in the northern Arab town of Nazareth to promote the opening of startups by Israeli Arabs.
The project, called Hybrid, is designed to boost the number of Israeli-Arab entrepreneurs and help them link up with the country’s established startup gurus. The program, with an annual budget of 1.5 million shekels ($385,300), is being coordinated by the Economy Ministry division that serves small and midsize businesses.
“We’re working to shatter the classic image of the entrepreneur in Startup Nation,” said Ron Kiviti, the division's head. “Boosting employment and education in the Arab community requires entrepreneurship platforms and a vision that may be easily accessible to a graduate of a prestigious military program in upscale Tel Aviv, but they're more necessary in the north.”
Hybrid will run for a year, with an option for a second, held by the organization of Unit 8200 graduates, which successfully bid on the project. The alumni have run an entrepreneur program called EISP 8200 – open to Israeli entrepreneurs in all industries – for years now.
Hybrid's founders are Eitan Sela, who manages the program, and Fadi Swidan, the Arab director of the Nazareth business incubator.
Businesses that have joined 8200 alumni group and the Arab Economic Development Authority in supporting the program are Bank Hapoalim, Poalim Hi-Tech, Galil Software, EMC Israel, SAP Labs and the law firm Shiboleth.
Hybrid, for example, aims to help entrepreneurs overcome barriers preventing them from raising capital. They will receive workspaces and brainstorm with entrepreneurs and investors. The first class starts in April with about 10 participants.
Hybrid is open to Arabs with a technology degree who have carried out a final applied tech project. They must also have at least a year’s experience in high-tech. They will spend four to six months with Hybrid, with two rounds of participants expected to complete the program over the year.
Sela hopes the program will forge cooperation with as many Israeli high-tech leaders as possible. “It’s big news for an industry that’s very insular,” he said.
Last year, some 2,950 Arab entrepreneurs and business owners tapped the Economy Ministry’s small and midsize business agency for help. This includes Druze, Bedouin and members of the small Muslim Circassian community.
The agency spent about 20.6 million shekels on the effort last year, on top of 8 million shekels to set up business centers in the northern Arab towns of Baka al-Garbiyeh and Sakhnin.
Tsofen, an organization that promotes the integration of Israeli Arabs into high-tech, said only 2,800 Arabs were employed in the sector with the relevant tech degrees, just 2.5 percent of employees in the industry. But that first number was only 350 in 2008.
Still, the 2.5 percent is well below Israeli Arabs' 13 percent of the total workforce. On the positive side, Tsofen noted that during the 2014-15 academic year, Arabs made up 10.2 percent of higher-education students in science and technology.
Nazareth is an increasingly important tech employment center for Israeli Arabs. It is home to R&D centers for tech companies such as Amdocs and Broadcom, employing local people. And over the past year, the Economy Ministry’s Chief Scientist’s Office has invested in another project to encourage Arab startups.
“The partnership with the 8200 alumni organization wasn’t trivial even a few years ago, but now the Arab startup industry is developing significantly,” said Swidan, also the director of the Nazareth high-tech incubator.
“Our outstanding entrepreneurs have a real need for an entity with experience, knowledge and connections to take them forward, and it’s hard to quibble with the fact that 70 percent of exits in Israel are from 8200 graduates.”
Sela added: “While everyone is talking about politics, we’re trying to create real change on the ground. This Jewish-Arab partnership between Nazareth and Tel Aviv simply works.”