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Israel launches $70m program to promote tech entrepreneurship in Arab community

Initiative aims to integrate members of Arab communities into booming tech industry, where they are severely underrepresented

Ricky Ben-David is The Times of Israel’s Tech Israel editor and reporter.

Arab students take part in a Makeathon in 2020 at Tel Aviv University organized by Tsofen. A Makeathon is when teams work to build new products (Courtesy)
Arab students take part in a Makeathon in 2020 at Tel Aviv University organized by Tsofen. A Makeathon is when teams work to build new products (Courtesy)

Israel has officially launched a NIS 225 million ($70 million) program to promote entrepreneurship among Arab communities and better integrate members into the country’s booming tech industry, where they are severely underrepresented.

Israel’s Arab community makes up around 20 percent of the country’s population but accounts for just around 3.5% of workers in the tech sector, according to Tsofen, an organization that promotes tech activity in Arab cities and the integration of Arab-Israeli citizens into tech firms.

The program, led by the ministries of Innovation, Science and Technology, and Social Equality together with the Israel Innovation Authority, is part of a five-year initiative to advance high-tech and science programs in Arab communities, and a wider government plan to allocate over NIS 32 billion ($10 billion) for Arab communities in fields like education, economic development, health, and crime-fighting.

Karina Rubinstein, the director of business development in the startup division at the Israel Innovation Authority, told The Times of Israel in an interview Thursday that the ministries held multiple, extensive talks with community leaders, regional authorities, and tech professionals from Israel’s vastly different Arabic-speaking populations — including Bedouin, Druze, and Circassian minority groups — to create the tech-focused program according to their specific needs.

“Israel’s Arab communities are concentrated in specific areas, mainly the north and the south. The program looks at the diverse communities, we understand the challenges each community faces,” said Rubinstein. She cited three main underlying issues, namely the geographical distance from Israel’s central region and its economic hub Tel Aviv, a lack of access to investors, and — notably — the lack of relevant networking systems. Israel’s tech industry is overwhelmingly Jewish and male with strong connections from their compulsory military service.

The tech program will see the funds being rolled out over the next five years toward a number of initiatives such as the establishment of entrepreneurship centers, technological incubators and accelerators, and an investors’ club.

According to the announcement Wednesday, several entrepreneurship centers will be set up with operational grants of up to NIS 2 million ($630,000) a year in different areas across the country, with an emphasis on the social and geographic periphery (outside Israel’s central region). These centers are expected to “create a supportive economic and business environment” for local entrepreneurs and encourage innovation while working with local and regional authorities, as well as tech companies and potential investors. Centers that promote employment and training for the tech sector through the establishment of regional branches of tech companies, for example, will receive additional funding of up to NIS 1 million ($310,000) per year.

Technological accelerators, organizations with mentorship and educational components, will receive up to NIS 1 million per year to promote early ideas and help entrepreneurs develop them through market validation tools, business consulting, technical and legal consulting, access to investors, and media training, according to the details of the program. A previous report indicated that some 30 such accelerators will be established.

An expected incubator — a for-profit venture that supports early-stage startups — will be charged with establishing new companies founded by members of the Arab community which will receive up to NIS 6.5 million ($2 million) per firm. The Innovation Authority said it will not have a stake in the incubator.

The program will also seek to establish clubs of angel investors, individuals with means who provide capital for a business idea or startup, with funding of up to NIS 900,000 ($281,000) a year for up to three years. These clubs will recruit investors and promote investments in enterprises in the pre-seed/seed stage.

Rubinstein said there were currently ongoing talks with authorities, companies, multinationals, investors, philanthropists, and other players in the high-tech sector, as well as “huge anticipation,” as the Innovation Authority prepares to issue a call for proposals

Israel’s tech industry suffers from a chronic shortage of tech professionals, specifically engineers and developers. The government has been trying to address the issue by promoting programs and initiatives aimed at training or drawing in members of Israel’s underrepresented communities in the tech sector, including ultra-Orthodox and Arab professionals, women, workers over the age of 45, and those who live outside Israel’s central areas.

Innovation, Science and Technology Minister Orit Farkash-Hacohen has said the shortage was “a national challenge for the Israeli economy as a whole.” In the announcement Wednesday, the minister said incorporating employees from the Arab community into the tech sector was “a highly important social, financial, and strategic need.”

Israel’s Minister for Social Equality Meirav Cohen said, “The successful integration of the Arab population among others in the world of Israeli high-tech is in the best interest of the industry itself.

“Over the last few months, we have been working in partnership with high-tech industry leaders, who have indicated the need to encourage technological enterprises and initiatives in the field. The more that we succeed in integrating more Arab workers into the Israeli high-tech industry, the more we will succeed in bringing Israel’s economic growth to additional segments of the population.”

Rubinstein said the response from the tech industry has been overwhelmingly positive and “beyond [her] expectations.”

Israel Innovation Authority CEO Dror Bin said the program was “part of a government plan to promote entrepreneurship in the Arab sector…and to develop an entrepreneurial ecosystem in Arab society as part of the general strengthening of Israeli high-tech.”

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