TECHNOLOGY-ISRAEL/ARABS Israeli Arabs seek greater share in country's tech start-up success

Record ID: 151061

  • Title: TECHNOLOGY-ISRAEL/ARABS Israeli Arabs seek greater share in country's tech start-up success
  • Date: 11th June 2015
  • Summary: VARIOUS OF PARTICIPANTS LISTENING TO A LECTURE
  • Embargoed: 26th June 2015 13:00
  • Keywords:
  • Location: Israel
  • Country: Israel
  • Topics: General
  • Reuters ID: LVA5YYUBYPUI5YCU3ZMU3B3SP4VX
  • Aspect Ratio: 16:9
  • Story Text: For decades, Nazareth has been more known as the centre of Christian pilgrimages rather than a hub for innovation.
    But things are changing in Israel's largest Arab city with a population of some 65,000 with new companies and projects being launched to support new technology start-ups.
    Director of the government-funded, Nazareth Business Incubator Centre (NBIC), Fadi Swidan says his company's goal is to support young Arab entrepreneurs to develop their skills and ideas.
    "We started the project in February, 2012. It aims to give an opportunity for youth in our Arab community who have innovative ideas to be able to find a place to kick-start their projects. We provide them with all that they need, all the services to develop their emerging ideas,' said Swidan.
    And it isn't always an easy task to compete in Israel, which has often been dubbed a "start-up nation."
    "The Arabs are not present in in the (Israeli) army. They are part of a minority that is not forced to serve in the military. You can hardly find Arabs serving in the military, while the Jewish youth are forced to serve in the military. After they finish their service, especially those in the special technology and technology development units, they become experienced in the field and have networks and contacts that can help them start any project and secure the funds for it," Swidan said.
    Over the past decade about 7,000 tech companies have been founded in Israel, where high-tech goods and services account for 12.5 percent of gross domestic product.
    But only 30 Arab-led tech firms- the majority of them in software- are generating revenues according to Israel's Economy Ministry.
    There are also several dozen, pre-revenue Arab start-ups focused on the natural sciences, medical devices, hardware, and Internet.
    Most of them are located in Nazareth.
    Since its founding in 2012, the NBIC has worked with 70 Arab companies, of which a fifth have secured outside funding.
    Swidan is trying to increase the visibility of Arab firms by attracting them to economically thriving cities in Israel, like Tel Aviv, to meet potential investors.
    One of the companies that NBIC has worked with is Optima Design Automation.
    "Optima company is an emerging company in Electronic Design Automation (EDA). We make programs that are used for companies that build electronic chips," said Optima's founder, Jamal Mazzawi.
    The company develops software to solve the problem of "soft errors" -- nuclear particles that disrupt the operation of electronic chips.
    Lack of funding is one of the main obstacles that many of Arab start-ups face, according to Mazzawi.
    "Usually emerging companies start with funding from investors. In our case, we didn't have investors. Therefore I had to fund the company with my own money to reach the point where we are now. Lack of funding is a general issue in our Arab community because there is still not enough trust between the investors in Tel Aviv and Nazareth," he said.
    Access to start-up funding, especially from key private sources, has often been the biggest challenge.
    Nazareth, is a 90-minute drive from Tel Aviv, the country's main commercial centre, but it's not on the radar of most investors.
    Last month, Optima secured a grant from the Israeli Chief Scientist's Office -- which funds 85 percent of research at Arab-led start-ups compared with the usual 50 percent it allocates to other companies.
    Its technology is being validated by a chipmaker in California's Silicon Valley.
    An official source said that from 2010-2015 the Israeli government budgeted $739 million to economic development of the Arab sector including tech entrepreneurship, of which the most notable initiatives are in Nazareth, Israel's biggest Arab town.
    One of the participants in the NBIC programme and graduate of Technion University in the Northern Israeli city of Haifa, Basila Kattouf, is designing a smartphone game application expected to be released in four months.
    Kattuf said NBIC has been very helpful in terms of meeting new people in the industry.
    "The centre helped me in the very beginning with courses that they provide. These courses help each participant on how to start from scratch, from lectures, and networking with people that can lead you where you are supposed to be," he said.
    Some 2,200 Arabs worked in high-tech in Israel at the end of 2014, many in the offices of large firms such as billing software provider Amdocs.
    Change can already be seen at the Technion University.
    Often referred to as the MIT of Israel, about 21 percent of its undergraduate students in 2014 were Arab - the same proportion as in Israel's overall population of 8.3 million, and up from 11 percent in 2001.
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