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Nazareth high-tech draws international investors
By NIV ELIS
23/03/2014
“When they come to events in Tel Aviv they don’t get the respect they deserve,” organizer says.
 

A day after Axis Innovation completed its two-day summit in Tel Aviv, where investors from around the world heard Israeli start-ups pitch their ideas, it did something it had never done before. It loaded the investors onto a bus and took them to Nazareth to meet Israeli-Arab start-ups.

“We saw that there were good companies, enough to attract people to come up North,” said Ed Frank, who founded Axis (which he spun-off of Bootcamp Ventures).
At the event, local entrepreneurs pitched their companies to investors from places as varied as India and Luxembourg.

“I saw their passion and some great ideas, and I realized that the Arab community share the passion for start-up activities with the Jewish community,” said Peter Chun, CEO of Korean Apex Investment & Company, who had never visited Nazareth during his previous dozen or so business trips to Israel.

“Compared to the Tel Aviv events, it was something quite unique.”

Clyde Hutchinson, founder of the Ireland Israel Business Network, saw some potential for companies cooperating in Ireland.

“Arab tech is very interesting, and it’s obviously starting to get more momentum, more people involved,” he said. “I wanted to see what kind of companies are out there, and see how we can assist, to connect these companies with potential investors in Ireland.”

Optima Design Automation, a company that designs an efficient system of protecting chips, made a particularly strong impression. According to its founder, Jamil Mazzawi, its targeted chip protection can reduce costs by several orders of magnitude. He is in negotiations with several major chip manufacturers, he said.

Many of the start-ups are part of a new trend of Arab Israeli companies creating Arabic-language content for consumption in the broader Middle East.

“Supply of high-quality [Arabic] Internet and applications is very low, which has created a significant content gap,” said Dona Haj Mana’a, the sector manager at the UK Israel Tech Hub, which helped organize the event.

Israeli Arabs “are gradually taking a role in the industry and taking a role in the great infrastructure that the start-up nation has to offer.”

Because doing business with Israel remains taboo in the Arab world, the start-ups asked that their details not be published.

Nazareth has been the target of numerous efforts to help integrate Israel’s Arab community into the hi-tech world, a goal that has both macroeconomic and social justice justification.

“We need them. We need those engineers. We’re always looking for the best talent, and they’re 20 percent of the population and we’re not touching them,” said Gai Hetzroni, director of corporate social responsibility at Cisco, which has invested $2 million over six years in an Arab hi-tech initiative called Ma’antech.

The coalition of 42 big companies, including Apple, Google, Microsoft, IBM and SAP, provides training to help prepare Arabs for job applications and interviews at start-ups, and garners commitments from its members to increase their focus on the Arab market.

“Three or four years ago when we started investigating, we saw that there weren’t any Arab entrepreneurs in the technology area. Things have changed recently. We see entrepreneurs and we see a lot of initiatives,” Hetzorni said.

Among them: hackathons, start-up weekends, accelerators and incubators have all made their way to Nazareth. Hans Shakur, a local entrepreneur, has taken the initiative to found a Nazareth chapter of

“Mobile Mondays,” a tech meet-up where developers can swap ideas.
These types of efforts have helped increase the number of Arab engineers in the market from 300 to 1,500 in the past five years.

Nazareth is also home to Galil Software, the largest employer of Arab engineers in Israel.

“We see huge potential largely because the community is increasingly well-educated,” said Galil founder Jimmy Levy, who runs Al-Bawader, a venture capital fund investing in Arab start-ups. “It’s developing slowly, but the point is that there is progress and that’s undeniable.”

Yet many of the entrepreneurs still have a long way to go.

In their critiques of the start-up presentations, several investors spoke of the importance of spell checking and proof-reading. Though some of the presenters shined, others were unprepared for the tough questions the investors lobbed at them.

“They need more information about investment in general and conditions overseas,” Chun said. “I think they need more similar events to upgrade their capabilities. I think they can have some great opportunities to find investments.”

Helping local entrepreneurs gain that kind of experience was a big part of the initiative, said Frank.
“When they come to events in Tel Aviv they don’t get the respect they deserve,” he said. “We thought if we could bring the international investors up to Nazareth to talk to them, there would be a little less pressure.”
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