jerusalem | A Harvard-educated Israeli businessman is teaming with some of the world’s leading business technology companies in what they say is the first investment fund for Palestinian high-tech startups.
Yadin Kaufmann, who invested in Israeli startups that gave the world the USB flash drive and satellite communications systems, and Palestinian software entrepreneur Saed Nashef recruited an initial $28.7 million from companies such as Google Inc. and Cisco Systems Inc. They said their aim is to boost the West Bank’s community of software entrepreneurs and build a robust economy for an eventual independent state.
“It’s not a political statement,” the U.S.-born Kaufmann said. “It’s an interesting business opportunity and an opportunity to participate in the creation of something very important … we’re all interested in seeing a knowledge-based economy develop in Palestine.”
The Sadara Fund, also called the Middle East Venture Capital Fund, boasts a list of high-profile backers, including the EU’s European Investment Bank and an investment fund of billionaire George Soros.
The fund intends to invest $28.7 million in about a dozen companies over the next five years.
That’s a modest sum by international venture capital standards, but Kaufmann said it’s almost identical to the amount of money that Israel’s first venture capital fund, Athena, began with in the late 1980s.
Many Palestinian high-tech entrepreneurs have been learning from their Israeli counterparts. Some Israeli-based tech companies have broken the political and cultural barrier and begun doing business with Palestinian engineers.
The Israeli branches of Cisco, Microsoft and Intel corporations have all begun to outsource work to Palestinians, according to Mercy Corps, an aid group working to forge Israeli-Palestinian high-tech ventures.
Nashef, who spent nearly 20 years working at Microsoft and other software companies in the U.S., said the startups they choose to fund will benefit from their proximity to Israeli companies.
“When you have something available to you next door in Israel — partnership deals, exit opportunities — why go halfway around the world to do it?” Nashef asked. He said the Palestinian territories are proving themselves a breeding ground for technology entrepreneurs. According to the Sadara Fund, there are about 300 new high-tech companies and more than 2,000 engineering and technology students graduates each year.
It’s also a good investment opportunity, he said. Salaries in the West Bank are low compared with Israel and the West, but workers are talented, and the high-tech market in the Middle East is booming.