How Israel Is Working to Improve Entrepreneurship Among Arab Citizens

Intentional Action Begun A Decade Ago Is Yielding Results

This week, I am a guest of Israel’s Foreign Ministry, learning about social impact with a delegation of content creators. I hope to share three reports from my visit this week, with future reports likely. I will not share any podcasts this week.

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Over the past decade, Fadi Swidan, an Arab Israeli who worked in the Ministry of the Economy, led the creation of a program that put the country’s ambition to have “one county, one economy” into action.

Arab Israelis and, surprisingly to outsiders like me, ultra-orthodox Jews are not fully participating in the country’s prosperity.

Fadi met our delegation today; he explained how he built and launched a Silicon Valley-style incubator to facilitate the development of tech entrepreneurs from the Arab community spread around the country.

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As an aside, note that this article discusses the treatment of Arab Israeli citizens; it does not address the treatment of Palestinians in Gaza or the West Bank. I haven’t visited those areas and won’t remedy that deficiency on this trip.

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With the population of Arabs a bit denser in northern parts of Israel, including the area around Nazareth, the Fadi decided to launch the effort there.

The Ministry of Economy funded the launch of twin initiatives, a business incubator for Arab Israelis and a hybrid accelerator to support businesses led by teams including both Jews and Arabs. Fadi took the position as head of the paired efforts.

The first challenge was to find Arabs interested in tech entrepreneurship. Fadi began by visiting large tech company operations looking for mid-career professionals who might have the courage—with a nudge and support—to launch their own tech businesses.

The plan worked wonders. From about 2015 through 2020, the programs formally helped launch 70 businesses that included Arab entrepreneurs. These companies created 600 jobs and raised $250 million.

As he worked on this effort, he got to know the team at a small venture fund called Takwin which was the only one focusing on investing in businesses like these. The relationship developed to the point that when Takwin raised its next fund, Takwin hired Fadi as vice president of marketing and business development.

With his help, the fund continues investing in promising, high-tech ventures with both Arab and Jewish entrepreneurs. Here is a sample of three companies in the Takwin portfolio:

• Mirage Dynamics: “Mirage Dynamics is developing an automated, real-time, scalable and personalized platform for In-Video brand replacement for producers, content owners and publishers.”

• Soos: Soos is developing technology to determine the gender of chicks using environmental controls to prevent the wasteful destruction of 73 billion economically worthless day-old male chicks.

• Seismic AI: Seismic AI is commercializing a public warning technology that predicts earthquakes by seconds, potentially saving lives and money and accurately predicting tsunami risk.

As you can see, the companies are doing interesting things with tremendous value-creation potential. While some businesses include social impact, the fund focuses on impact through the entrepreneurs it supports.

Israel is filling the pipeline of Arab technologists who are potential entrepreneurs. The country’s universities include rapidly rising numbers of Arab students, at least representing their proportion of the population. Notably, about 70 percent of the Arab STEM students are women.

A visit with Moana Maroun, vice president and dean of research and development at Jaifa University, which has the nation’s highest proportion of Arab students—approaching half—demonstrated the promise of the rising generation.

Fadi points out that the one element of the program’s success is that Jews and Arabs working in partnership on challenging, high-potential businesses brings them together, overcoming traditional social barriers.

He describes the reactions of mixed teams to flare-ups of conflicts in Gaza, saying, “Our entrepreneurs continue working together. It was for them much easier to sit and to discuss these issues, I would say, and to accept each other and their ideas and their ideology, whatever it is, because, at the end, they have something in common.”

The model Fadi shared may have direct application for replication in the United States for helping under-represented communities gain access to capital. Perhaps, one day, it can be deployed as part of a solution to the challenges in Palestine.