The campus of the Technion-Israel Institute of Technology on Mount Carmel, Haifa. Photo: Wikimedia Commons.

According to the Israeli Ministry of Health’s 2020 report on health workers, Arabs and Druze in Israel – who make up about 20% of the country’s population – received 46% of new licenses issued, up from 18% in 2010 and 11%. In 2000.

For Israeli venture capital fund Takwin, which only invests in startups led by at least one Arab founder, this trajectory is a good sign that Arabs will play a growing role in the country’s startup ecosystem.

“The future is very bright for Arab high-tech entrepreneurship and for the integration of Arabs into Israeli society and its economy,” said Itzik Frid, Managing Partner and CEO of Takwin Company. The Algemeiner in an interview. “I am very sure that the same thing that has happened in the medical field – that almost 50% of new medical licenses have been issued to Arabs – the exact same thing will happen in high tech.”

Considered to be the main growth engine of the Israeli economy, the high-tech sector today is made up of less than 3% Arab citizens, while no unicorn founded by Arabs or significant exit from an Arab company has not yet taken place. There are currently around 120 active Arab startups, according to Takwin, compared to the nearly 6,900 registered Israeli startups cited by the Start-Up Nation Central organization.

At the same time, Frid pointed out that around 20% of students at top technological institutions like the Technion in Haifa, Tel Aviv University and Hebrew University in Jerusalem are now Arabs.

“We are now seeing the start of a trend, which is accelerating day by day and will erupt once we have the first successful exit from an Arab-led startup – because then the mother of every young person in the company Arab will tell them to enter high technology, ”said Frid. “It will be similar to what happened to Jews who 20 years ago aspired to be doctors and lawyers, and after some great successes like ICQ, their Jewish mothers began to understand that the next door neighbor is earning money. tons of tech money, more than they earn as a doctor.

“The impact on the Israeli economy will run into tens of billions of dollars,” he added.

Founded in 2014 by Imad Telhami, Haifa-based Takwin makes start-up investments in tech companies run by Arab entrepreneurs in Israel. The venture capital fund describes itself as a ‘travel enabler’, which brings in smart money and acts as a platform for innovators in various fields such as autonomous vehicles, agriculture, seismology and earthquake. nanotechnology. To do this, Takwin has partnered with the founders of Israel’s two largest investment funds: Chemi Peres of Pitango Venture Capital, who is also the son of the late President Shimon Peres; and Erel Margalit of Jerusalem Venture Partners (JVP).

“We invest to earn money, because we believe that only economic successes will encourage young Arabs to become entrepreneurs,” said Frid.

A recently published survey examined the persistent gaps between Arabs and Jews when it comes to the sector, highlighting opportunities to be part of the Startup Nation entrepreneurial space. In the survey conducted by PresenTense, with support from Citi Israel, Arab and Jewish respondents were asked about their awareness and exposure to entrepreneurship and high tech. 64% of Arab Israelis surveyed said they were unfamiliar with Israel’s high-tech industry, entrepreneurship and innovation, compared to 88% of Jewish respondents who responded that they had heard of the industry or had been exposed to it.

78% of Israeli Arabs said they had no personal connection to contractors or employees in the industry, compared to 62% of Jewish respondents. Only 1% of Arabs reported working in the sector, according to the survey.

One obstacle has been the importance of the army, which does not enlist Arabs, as a route to future work in the sector. Arab Israelis living in the outskirts of Israel may also be further removed from the technological hub of the Tel Aviv area.

“We are building a bridge to provide them with the tools that young Arabs who want to become high-tech entrepreneurs when they graduate from college, lack the tools,” Frid said.

Besides funding, Takwin also provides foundational tools, support and mentorship from experienced investors on how to start a startup and grow a team.

“I have personally seen over 1,000 Arab entrepreneurs in the six years we have been operating,” said Frid. “We don’t ask anyone for a prior requirement. People can come to us and talk about an idea they have in mind.

The venture capital fund has so far raised $ 12 million from Arab and Jewish investors, as well as others in New York and Boston, and has invested between $ 500,000 and $ 1 million in eight companies . One of the fund’s first startups, Imagry – a vision-based self-driving company into which it initially poured less than $ 1 million – raised funds at a valuation of $ 80 million, proudly said. Frid.

Another company in the fund’s portfolio is Seismic AI, which focuses on technology for predicting earthquakes. SooS, a third, has developed sound vibration technology to change the sex of chicks from genetic males to functional females during the hatching phase.

“Among our eight companies, we have eight PhDs and four professors,” Frid said. “It’s not something you’ll see in Jewish-run startups, because people start after their military service or after a first college degree.”

“We are also very proud of the fact that 25% of our businesses are run by women,” he added.

The aggregate valuation of the fund’s startups was once less than $ 8 million and now stands at over $ 170 million. The companies started with a workforce of 14 entrepreneurs and now employ a total of nearly 200 Arabs and Jews.

Takwin is currently preparing to raise funds for a second fund of up to $ 100 million, with Frid planning a road show on the west coast of the United States to meet with investors. Although none of his startups have had an exit so far, the head of the venture capital fund is optimistic.

“We think we can reach a value of hundreds of millions of dollars, with some of our portfolio companies doing very well,” he said.