Why aren’t there more Arab start-ups? It’s not racism, say entrepreneurs

Why aren’t there more Arab start-ups? It’s not racism, say entrepreneurs

Lack of experience, cultural and language obstacles, and confidence issues face intrepid Israeli Arab start-up entrepreneurs – but they are determined to succeed

Ambassador of Belgium, Mr. John Cornet d’Elzius, Beta Group, Investors, VC's and Entrepreneurs visit the Nazareth Business Incubator Center, May 12, 2015 (Courtesy)
Ambassador of Belgium, Mr. John Cornet d’Elzius, Beta Group, Investors, VC's and Entrepreneurs visit the Nazareth Business Incubator Center, May 12, 2015 (Courtesy)

It’s not easy to get a million and a half fans on Facebook, and it’s even harder when the page in question is not dedicated to a popular culture icon or sports team. Nevertheless, MeddyBear, which shows medical students what life is like on the job as opposed to the perhaps sanitized version of hospital work they get in medical school, has pulled if off. Currently, the site and Facebook page has over 1.6 million followers.

MeddyBear hosts videos, articles, and other useful information that shows doctors, nurses, surgeons and even cooks and janitorial staff how to handle themselves when faced with emergencies in real-life situations that may not have been covered in medical school. It also provides a social network for medical staff in hospitals around the world – the only network dedicated to that group – and engages with over 15,000 users a day

By rights, MeddyBear should be a major attraction to investors, considering its reach and expertise. But that has not been the case, according to Dr. Hanna Nawatha, a Nazareth native who, after living abroad (in Serbia) for years, returned home to start his site and service. While MeddyBear serves a currently open market – one that is well-educated and well-paid – it has not yet merited the attention of investors, said Nawatha.

“This site is self-funded, and I have not yet been able to attract investors,” Nawatha told The Times of Israel. “I think I may not have been approaching funding properly, because everyone who has seen MeddyBear is blown away.”

One factor that Nawatha is positive is not at play in his failure to attract funding is that fact that he is an Israeli Arab – and his attitude was reflected by others who spoke to The Times of Israel at an event in Jerusalem last week, in which Arab entrepreneurs from Nazareth and East Jerusalem met with top figures in the Israeli tech ecosystem, spoke with investors, and collaborated with Jewish entrepreneurs from Jerusalem and elsewhere.

The collective opinion of entrepreneurs who expressed one was that the difficulties they are facing in getting their projects off the ground are due to a lack of experience in the Israeli tech ecosystem, language issues (not in speaking and presenting in Hebrew, but in English), and a general lack of support – financial and social – in their own communities, where family members and influential (and wealthy) figures in Israeli Arab communities just don’t “get” start-ups.

The event involved a whirlwind tour, sponsored by the Hybrid accelerator and Made In Jerusalem, who brought 15 entrepreneurs from the Arab sector to meet investors from crowdfunding firm OurCrowd, as well as venture capital firms Jerusalem Venture Partners, Cornerstone Venture Partners, and Jumpspeed Ventures. They also had the opportunity to visit high-tech success stories MobilEye and OrCam (both based in Jerusalem), and ended the day pitching their ideas to investors at Siftech, a Jerusalem workspace for early-stage start-ups.

Dr. Hanna Nawatha (Courtesy)
Dr. Hanna Nawatha (Courtesy)

Many of the entrepreneurs were working with the Nazareth Business Incubator Center (NBIC), which is hosting Hybrid – a new program of the Ministry of Economy in which Arab entrepreneurs get help with tech, business plans, and introductions to the investor community by members of the 8200 Alumni Association – in other words, ex-IDF soldiers who are giving of their time and “social currency” to help integrate Arab entrepreneurs into Israel’s tech ecosystem.

Hybrid is the next logical step for the further development of the Arab start-up scene, according to NBIC director Fadi Swidan. “There are already a number of programs to help start-ups in the Arab sector, and many of the companies get initial funding from the Office of the Chief Scientist in the Economy Ministry, but for various reasons many of those start-ups don’t get to the next stage, raising A-round and further stage funding from venture capital firms.”

Hybrid hopes to bridge that gap, and the Jerusalem event was the first of many similar ones that the organization plans, said Hybrid director Eitan Sella.

According to Rami Khawaly, CEO of Internet of Things security firm Mindolife, that’s a priority for Arab entrepreneurs. “We were part of a program in the Office of the Chief Scientist which funds Israeli Arab start-ups, in which we got $500,000. We were unable to raise the $300,000 of our share of the matching fund program.”

Mindolife is another idea that investors should be interested in, he believes – especially because they are working on several pilot projects in Europe showing off their technology. “Our IoT intelligent platform provides a software platform for highly secure communication, dynamic network management and an SDK,” said Khawaly. “The data sent between smartphones and IoT devices is generally not protected, and we provide the localized security needed to prevent hacking of those devices.” Among the devices Mindolife will protect are medical devices, many of which are controlled by Bluetooth and wifi, with a hacker-engineered malfunction possibly proving fatal.

Rami Khawaly (Courtesy)
Rami Khawaly (Courtesy)

It’s a rather unique system; according to Khawaly, there are no other companies providing security in the manner Mindolife does. And what is even more unique is the fact that the company was formed by Khawaly and partner Rami Younes, both of whom live in Nazareth – along with Yoav Rosenthal and Noam Levi, two graduates of 8200, the IDF tech and communications unit that has been the incubator for many of the successful entrepreneurs in Israel’s tech economy.

“There’s an interesting dynamic in a situation like this, and especially when there is a lot of political tension or after a terrorist attack,” said Khawaly. “We do not avoid talking about these matters, and we even joke about the differences between ‘Arab work’ (often used as a pejorative among Israelis to connote second-rate results) and ‘Jewish work.’”

But that’s just “all in good fun,” said Khawaly; the four are have much more in common than they have dividing them. “The hardest thing was for all four of us to give up good jobs, and to convince investors to take a chance on an early-stage start-up like ours.”

Interestingly, the only investors who do express an interest are from Tel Aviv; despite the fact that there is significant investment money in Nazareth and in the Arab community in northern Israel. But despite trying, Khawaly has been unable to get funding from his landsmen.

“The older people, the ones with the money, don’t really get the start-up world,” he said. “They are much more comfortable with investments their generation is used to, like real estate, factories, construction – things you can touch. It’s going to take some time for the community to get caught up with the investment trends favoring start-ups.” There is some recognition among kids in the Arab sector of the importance of the start-up economy, but nowhere at the level there is in the Jewish sector, he added.

Dr. Anan Copty (Courtesy)
Dr. Anan Copty (Courtesy)

Anan Copty, a Jerusalem-based entrepreneur who has invented a unique medical device to treat cancer cells using heat, agrees with that assessment. “Arab investors are usually self-made, and they are not as rich as Jewish investors, who have more access to capital, so they are naturally more conservative in their investments,” said Copty. “They also do not have the training to understand what makes a good start-up, and they realize it, so they stay away.” Arab investors would do best, he said, with a crowdfunding investment program, where managers make the decisions on where to put money.

Copty also does not believe that the difficulties he has had raising money for his company, NIMD Ltd (Noninvasive Medical Devices), is due to anti-Arab discrimination among Jewish investors. “If there is any reluctance among Jews it is strictly a business decision. A lot of Arab entrepreneurs don’t even know how to write a business plan, and what scares the Israelis off is the lack of experience. Over time I think that will change, especially with programs like Hybrid and Chief Scientist’s funding program.,” Copty said.

Copty, whose start-up was a part of one of Chief Scientist’s programs, managed to raise his matching funds “from an angel in the Jewish sector,” he said. What may have impressed the investor was the huge life-saving potential of Copty’s invention. “It’s well known that heat kills cells, and heat ablation, as the technique is called, has been used successfully to kill or weaken cancer cells. After many of the cells are killed or damaged, chemotherapy is much more effective against the remaining cells. We applied principles of nanotechnology, tagging cancer cells with metallic particles which specifically attract the microwaves we are using to target them. Thus, we can heat just the cancer cells and leave the normal cells alone, unlike with other thermal ablation techniques.”

Nawatha is hoping that enthusiasm for medical technology will spur interest in MeddyBear, too. “MeddyBear is a one of a kind site. We have medical articles and videos showing medical students what procedures are like in hospitals, which is usually unlike what they learned in medical school. It’s also a social network platform to connect medical personnel, enabling students to reach out to others in schools and hospitals around the world for help in dealing with questions or issues. My vision is to create a full reference site for medical personnel, where they will be able to upload videos and articles, and allow others to search for the information they need and connect with colleagues.”

To do that, however, he needs a business plan – a document that Nawatha has yet to author. “I left Israel to go to Serbia and was away for ten years, and there was no start-up scene when I left, so I am still getting used to the new reality,” he said. “That’s one reason I’m participating in this program – I know I need help, and I am hoping the guys from 8200 will be able to provide it.”

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