Photo courtesy of Zvi Roger at Creative Commons

Takwin Labs (a play on the Arabic word for “genesis” or “beginning”), a new incubator in the mixed Israeli Jewish-Arab city of Haifa for startups targeting the Arab market, just announced that it has raised its first $4.5M of an expected $20M in funding for the new venture. This year it plans to select four to six early stage startups to participate in the incubator investing hundreds of thousands of dollars in each company.

The fund believes in the potential for entrepreneurship in the Arabic sector, particularly in internet and mobile markets, and they have good reason to believe so: Smartphone penetration rates are exploding in the Middle East, the MENA region has more than 350M mobile phone and 120M internet users, and Israel specifically has some fantastic Arab startups.

Three big-name Israeli high tech investors collaborated to create Tawkin Labs: Erel Margalit, a Knesset Member and founder of one of Israel’s largest venture capital funds, JVP; Chemi Peres, co-founder and managing general partner of Pitango Venture Capital and chairman of the Al Bawader private investment fund, the first government-backed fund to target Arabs in Israel; and Imad Telhami, founder and CEO of Babcom Centers, a leading service provider in northern Israel that helps Arab men and women integrate into the job market.

In addition to early stage investment, office space and administrative support, the incubator will also provide its startups with ongoing support and mentorship from some of Israel’s most successful high tech leaders.

The incubator hopes to address obstacles Arab-Israelis face in Israel’s high tech scene

All of the founders believed creating a fund specifically for Arab entrepreneurs in Israel was important. Chemi Peres estimated that Israel’s GDP could grow as much as NIS 30B a year if it fully utilized Arab-Israelis’ potential to disrupt the Arabic-speaking market, the fourth most spoken language after English, Mandarin, and Spanish.

Imad Telhami hoped that the fund would address barriers Arab-Israelis face in succeeding in high-tech, in part so that the next generation of Arab entrepreneurs in Israel won’t have to confront the same battles he faced as an Arab-Israeli aspiring professional: “As an entrepreneur, I experienced firsthand the difficulties that every person who aspires to carry out his dreams experiences, and also the unique difficulties facing Arab entrepreneurs within Israeli society. We have invested a lot of thought in identifying barriers that prevent the growth of Arab high tech and built a model aimed to support and deal with these obstacles. I believe that the fund we have established will allow more and more entrepreneurs to succeed in Arab society, realize their vision, and become significant players in the global Israeli high tech map,” he said in a statement.

Erel Margalit, one of the unique leaders in Israel that has succeeded both in the private and public sectors, talked about the great potential that is unlocked through investing in Arab-Israeli entrepreneurs, particularly youth. “As a public figure, I encounter tens of thousands of young Arabs that are capable and eager to participate in the new, high tech economy in Israel. The time has come for the business and public sectors to join forces to give Arab-Israelis a real chance to thrive.”

The incubator’s CEO and managing partner will be Itzik Frid, former CEO of Playscape (MoMinis), managing partner of Argoquest Holdings, senior adviser to Israeli finance minister Yaakov Neeman, and vice president of business affairs at AOL. He will also be a member of Takwin Lab’s investment committee, alongside Imad Telhami and Uri Adoni, a partner at JVP. Chemi Peres will serve as the committee’s chair.

A number of Arab-specific accelerators and incubators have emerged in Israel in the last few years, such as the NazTech accelerator in Nazareth and Al Bawader. While tensions between Arab- and Jewish-Israelis have remained high since the 50-day Israel-Gaza war this summer, the business sector seems to be one of the few places where coexistence is still meaningfully taking place – and we applaud Takwin Labs’ contribution to this effort.