Investors form new fund for ultra-Orthodox high-tech firms
Move indicates ‘a lot of goodwill that Israel’s high tech industry leaders have to help Haredi high tech,’ says KamaTech accelerator chairman
KamaTech, a start-up accelerator for ultra-Orthodox entrepreneurs, has become wildly popular not just with people in the Haredi community seeking to get their start-up off the ground, but among the people who invest in those start-ups. It’s so popular, in fact, that a dozen of the biggest names in Israeli tech investment are establishing an investor’s club to run a fund that will invest solely in KamaTech firms.
It’s unprecedented, said KamaTech CEO Moshe Friedman, “that such a group of prestigious investors would get together for this kind of investment. It is indicative of a lot of goodwill that Israel’s high-tech industry leaders have to help the Haredi high tech phenomenon, and a lot of trust they have for the Haredi emerging start-ups.”
According to Izhar Shay, a high-tech entrepreneur and managing general partner at Canaan Partners Israel and a member of the club, the inspiring activities of KamaTech are no less than a revolution and have already helped thousands of ultra-Orthodox Israelis integrate into the local high-tech industry.”
The members of the club are among the top investors in Israeli tech – among them Shay; Gigi Levy (serial tech entrepreneur, with over 67 investments under his belt); Dov Moran (founder and CEO M-Systems, the inventor of the disk on key); Adi Sofer Teeni (CEO Facebook Israel); Zika Abzuk (VP Cisco Israel); Avishai Avrahami (co-founder and CEO of Wix); Irit Israeli Kahana (managing partner Afterdox); Michal Tsur (co-founder Cyota & Kaltura); Chemi Peres (Pitango); Rami Kalish (Pitango); Rami Lipman (serial tech entrepreneur); Avi Shalel (CEO Plarium); and Ehud Levy (partner at Canaan, first investor in Waze).
KamaTech, established in 2013, is the latest in what is becoming a crowded field of projects aimed specifically at members of the ultra-Orthodox, or Haredi, community. After working with other organizations – most notably Microsoft, at its Ventures Accelerator – to recruit members of the community who had a good business idea but few technical or business skills, KamaTech struck out as its own entity in 2015.
Among the benefits for participants: Personal mentors from the top members of the Israeli high-tech Industry; free help from leading law and CPA firms on copyright, financing, and other issues; a free project development team (from among 500 Haredi women learning computer science at the Lustig Campus, a branch of the Lev Academic Center; assistance in hiring, financing, presentations, and other areas; and a Demo Day in Israel, along with a free trip to London and New York, where the start-ups will present to leading investors. At the New York event last December, said Friedman, “it was standing-room only at the Microsoft Technology Center in Times Square. The guests were just amazed at the quality of the technologies presented by the members of KamaTech who attended the event.”
Investors have been proving their enthusiasm for the program in the way they know best. “The companies in the program have already raised over $3.5 million from various investors, the Chief Scientist’s Office in Israel, angel investors and venture capital funds,” said Friedman. “In addition, the eight companies in the accelerator have hired nearly 50 employees, demonstrating that they are building great start-ups with tremendous potential. Beyond developing fantastic technologies, each of these entrepreneurs serves as a great example of bridging the gap between Haredim and other parts of the Israeli society.”
Once unthinkable, the idea of an officially sanctioned tech accelerator that is supported by the leaders of the ultra-Orthodox community has become much more acceptable in recent years, as the community realizes it needs to develop business leaders in order to maintain its lifestyle. “There is definitely much more support for this than there was in the past,” said KamaTech operations manager Ariel Finkelstein. “Breadwinners who have to feed their kids have found tech to be an excellent way to earn a good living, and the demand is growing.”
The Orthodox members of KamaTech themselves say they have had no problem being accepted in the secular world. “Sometimes people give me a second look, as if they are surprised to see me in a business setting wearing modest clothes and with covered hair,” said one of the female entrepreneurs at the KamaTech inauguration day event in Tel Aviv last May. “But as soon as they hear what we are offering” – in her company’s case, a platform to make corporate communications – “we get right down to business, and there are no questions as to my lifestyle. Nobody cares.”
What the investors do care about is the high quality of work being done by the KamaTech companies. Start-ups in the first round included Cognilyze, which uses big data to make product suggestions on retail sites; Pojo.me, which provides drag and drop WordPress themes for blog sites; WorkCapital, which makes an engine for granting credit efficiently; Prog, which provides tech training courses for ultra-Orthodox men and women; and EnglishOn, which helps non-English speakers learn the language better.
KamaTech was founded by Friedman, himself an entrepreneur, together with Cisco’s Zika Abzuk, with the guidance and support of Yossi Vardi as chairman of the advisory board. KamaTech operates a number of programs for the training and placement of Haredi tech works in cooperation with a coalition of tech companies, including Cisco, Google, Microsoft and others. Chairing the accelerator is Prof. Amnon Shasua, founder and chairman of Mobileye.
KamaTech charges no fees and does not require equity or any other contribution from start-ups, said Friedman. “KamaTech continues to be a nonprofit program in which we help entrepreneurs free of charge, as we have been doing for the past few years. The new investors club provides another layer of helping entrepreneurs. The club will follow the program and will enable any entrepreneur entering the program to receive seed investment in order to get their businesses started.”
“Hundreds of Haredi start-ups that have applied to the KamaTech accelerator over the last two years, and particularly those which have been admitted into the program, are the proof that the Haredi population can contribute in a significant way to the Israeli high-tech entrepreneurship eco system, and also that innovation is shared by all sectors of our society,” added Shay. “I am proud that I have been given the privilege to be part of the action at KamaTech and I am also convinced that angel members of the new investment club will not only encourage entrepreneurial activity within the haredi community, but will receive very good returns on their investments.”
