KamaTech, an accelerator for ultra-Orthodox start-ups in Israel, and the Israeli investment network iAngels, launched the first VC fund exclusively for Haredi entrepreneurs in Tel Aviv on Wednesday. In the next three years, the fund, called 12 Angels, will invest some $5 million in about 30 companies focusing on education technology, e-commerce, artificial intelligence, cybersecurity and fintech.
The initiative will help entrepreneurs establish their businesses in the rapidly growing ultra-Orthodox start-up scene, said KamaTech co-founder and CEO Moshe Friedman.
“For the first time, investors – not philanthropists – are putting their faith in the talent and commitment of Haredi entrepreneurs,” Friedman said.
KamaTech was established in 2013 as an accelerator for Haredi entrepreneurs. The organization helps members of the community who have a good business idea but few technical or business skills. Benefits for those who participate include personal mentors from leading entrepreneurs in the Israeli high-tech industry, help from law and CPA firms on copyright, financing and other issues, a free project development team, and assistance in hiring, financing and presentations.
iAngels, one of Israel’s leading investment networks, was established three years ago, and now employs 20 professionals. It has raised $50 million and invested in over 60 start-ups, according to Mor Assia, who founded iAngels with Shelly Hod Moyal.
“We understood they were looking for a software solution to help them build their business,” she said. She sees the effort as providing value to the Haredi community and Israel at large.
Friedman, 37, is from an ultra-Orthodox family in Jerusalem and is the great-grandson of a chief rabbi of Jerusalem. He studied in yeshivas growing up, but decided to get into the start-up world at the age of 31. He soon realized there was a need to better integrate the ultra-Orthodox into the Israeli high-tech scene.
“There was no successful Haredi start-up or role model,” he said. “Thousands of people wanted to build companies but didn’t have the opportunity because they were outside of the ecosystem.”
He launched KamaTech to address the need. The accelerator found only five Haredi start-ups when it launched, Friedman said. Now, there are over 500, he said.
Chedva Kleinhandler said the guidance she received from KamaTech was invaluable in building her start-up, Lean On. The company runs a mentoring app for women and other diversity groups.
Kleinhandler was born in Brooklyn and raised in the Israeli ultra-Orthodox community of Bnei Brak. After she had her son at age 20, she started blogging about lifestyle and design issue while working as a translator. She set up Lean On in 2015 after her blog took off and was then introduced to Friedman and KamaTech through friends.
“Mentorship was a huge game-changer for me, having come from a different background,” Kleinhandler said. “They’re there for us and they support us, teach us processes on angel investors and VCs and how to operate in this ecosystem.”
Many of the start-ups connected to KamaTech are based in Jerusalem, Bnei Brak and Beit Shemesh, Friedman said at Wednesday’s event. The 12 Angels launch event was organized in part by the non-profit the Israel Project and attended by Rabbi Yisrael Meir Lau, the Chief Rabbi of Tel Aviv-Yafo. It was held in a sukkah on posh Rothschild Boulevard in Tel Aviv.
According to Friedman, the Haredi start-up sector is growing rapidly, partly due to economic pressure. “People need to live, build houses, and the Haredi population is very poor,” he said.
Now that there is interest and momentum, the next stage is funding, he said. He stresses that he has the support of rabbis in the community, who consider it a mitzvah to help people find work and support themselves.
The start-ups do not focus on the ultra-Orthodox niche, he said, but compete with the wider market.
“They bring a fresh mind, a fresh perspective, different thinking. Innovation comes from diversity,” Friedman said.