A startup colony is emerging on the far side of Israeli military checkpoints
By M.M. | TEL AVIV
OUTSIDE of Silicon Valley, one of the most vibrant places for technological innovation is Israel. And while it is early days and tiny by comparison, another entrepreneurial ecosystem is emerging on the far side of Israeli military checkpoints: the West Bank now boasts about 300 firms operating in the information-technology (IT) industry.
Most of the Palestinian tech firms cluster around the city of Ramallah. This may be just a half-hour or so drive away from Jerusalem, but the gulf is immeasurably wider. With no airport of their own and travel heavily restricted, Palestinians can find it difficult to even attend business meetings. And borders and checkpoints make shipping physical goods very difficult. “That’s why we like to work with software,” says Mashour Abudaka, a former Palestinian IT minister.
It is not just software’s unique ability to flow through wires, untroubled by borders, that is helping the cluster flourish. IT workers in the West Bank earn only half as much as their Israeli counterparts. The Israeli subsidiary of Cisco, a Silicon Valley networking giant, in 2008 was one of the first firms to outsource work to less expensive Palestinian firms, such as Asal Technologies and Exalt Technologies, which now have 120 and 80 employees respectively.
Cisco has since been followed by the Israeli subsidiaries of Microsoft, HP and Intel. Today IT outsourcing accounts for around 10% of the West Bank’s GDP and the business is up 64% over the past four years, reckons the Palestine Information Technology Association of Companies, known as PITA. Some estimate that IT outsourcing now employs around 3,000 Palestinians.
As the IT work for international firms has grown, local tech startups began popping up—helped by collaborations between Israelis and Palestinians. In 2004 two Palestinians and three Israelis set up Middle East Education through Technology (MEET) to encourage Palestinian and Israeli high school students to work together. Ten years on, the project has evolved into a three-year curriculum led by teachers from Massachusetts Institute of Technology. Alumni of the course now number 163, and MEET has recently opened an “ideas lab” on the West Bank where budding entrepreneurs can incubate their startup ideas. Other groups, such as Startup Weekend (pictured), have organised coding events in the West Bank.
Another joint venue is MobileMonday Nazareth, a networking event modelled on similar monthly gatherings that now take place in more than 140 cities around the world. MobileMonday not only brings together tech experts, investors and entrepreneurs, but Israelis and Palestinians. The event’s main sponsor, Mercy Corps, sorts out the paperwork to allow between 15 and 20 Palestine tech professionals to attend each month.
“As a result, we now have VC firms such as AlBawader and Jerusalem Venture Partners all looking to invest in Palestinian initiatives,” says Hans Shakur, the organiser of MobileMonday Nazareth, who is an Arab living in Israel. Yet should these Israeli funds decide to invest, they may not publicly announce the deals. Openly working with Israeli companies or raising capital from Israeli sources would get Palestinian startups excluded from most markets in the Middle East.
Such contortions serve as a warning that much will have to happen for the Palestinian IT cluster to truly thrive. “Export-oriented tech startups with high-growth potential are a recent phenomenon in Palestine,” says Saed Nashef, the founding partner of Sadara Ventures, a VC firm in Ramallah, which has invested in firms such as yamsafer.me, a travel portal, and Souktel, an SMS platform. “Today, there is just a total of five venture-backed startups in Palestine,” explains Mr Nashef. “It takes decades to build mature tech ecosystems, so it's important that we don’t artificially inflate things.”
Others are more optimistic. The West Bank has a long way to go to emulate the regional success story across the border in Tel Aviv, but as Alan Weinkrantz, an adviser to PITA, says: "In many ways Palestine’s story is the same as Israel’s because you always do more with less. It has a long way to go to rival Israel, but it’s evolving at a rapid rate.”
