Elite Army Unit Alumni Give Arab Israeli Entrepreneurs Boost in High-Tech

Hybrid Accelerator’s connections-and-skills program spawns myriad startups

In the near future, you could be trying on jewelry virtually before buying it online thanks to Basila Kattouf, an Arab Israeli entrepreneur trained by former members of an army cyber unit.

Gemsight Chief Executive Officer Kattouf, the company’s co-founder, was part of a group of Arab Israelis who recently finished the six-month Hybrid Accelerator program run by alumni of the Israeli Defense Forces (IDF) cybersecurity division, Unit 8200. The training seminars, which started in 2016, are in partnership with other bodies such as the Economy Ministry and Bank Hapoalim.

Arab Israelis generally choose not to serve in the IDF, so they often do not forge the connections there that can prove invaluable in future careers. Nor do they receive the high-tech training that certain military units provide. They are, in any case, not allowed to serve in Unit 8200, for security reasons. The Hybrid Accelerator helps compensate for that by giving a boost to Arab Israelis who have the talent and the drive to succeed in high-tech.

Firas Matar, whose Shield34 testing automation platform helps software-development companies test products more efficiently, said that without the Hybrid Accelerator program he did two years ago, he would be in a different place.

“We used to email venture capitalists we wanted to meet, and some of them would get back to us six or even eight months later,” he told The Media Line. “But once we got an introduction from the Hybrid people, we’d get an instant reply.”

“More than 50% of the investors we met, either private individuals or those who were part of a venture capital firm, were through introductions from Hybrid. That’s one of the most valuable things we got from the program,” added Matar, the chief executive officer and co-founder of Shield34, which entered the market last year.

Many of the important people in Israel’s highly competitive high-tech startup ecosystem are graduates of Unit 8200. Former Unit 8200 personnel are responsible for companies like Check Point Software Technologies Ltd., which was valued at $20 billion in 2019, and Waze, which Google purchased for $966 million in 2016.

Because Israeli Arabs cannot serve in Unit 8200, some of its alumni created the Hybrid Accelerator to provide them with support, skills and connections.

“Hybrid opened endless doors to investors. … We also gained an investor’s eye view through Hybrid, so when I’m talking to an investor and the investor asks me a question, I can anticipate … thanks to the Hybrid workshops, why the investor is asking that question,” Matar said. “This directs me to give the best answer possible because I know where it comes from and why they’re asking this question.”

The Arab community doesn’t participate in [Unit 8200], which makes it much harder to get into a network and be part of the Israeli ecosystem

The Hybrid Accelerator’s founders said this was a way for them to help the community and level the playing field.

“The Arab community doesn’t participate in [Unit 8200], which makes it much harder to get into a network and be part of the Israeli ecosystem,” Hybrid Accelerator Managing Director Noa Gastfreund told The Media Line

“What we’re trying to do is use the 8200 network and connections to the Hybrid ecosystem for those Arab communities that take part in this [program],” Gastfreund said.

“Some people can’t find the natural connection between these two communities and organizations,” she said. “We’re trying to find a way to leverage the 8200 graduates’ skills to support those who don’t have the same skills, or connections, or ability to participate in the competitive system here in Israel.”

Arab Israeli entrepreneurs are expected to come to the Hybrid Accelerator with an idea and leave with a company that can work, Gastfreund said. The difference between Hybrid and other accelerators is its focus on cultural differences.

“We know that sometimes they have problems with the language, and we need to work more on the pitches. Sometimes the norms in their community are different from other communities: Their parents expected them to learn specific skills, not to be a high-tech worker.”

“It’s very hard for them sometimes to jump into the water and take risks, and we are … teaching them entrepreneurship and what it takes, so they will be able to start from the same point as everybody else within the Israeli eco-system,” Gastfreund said.

Basil Hawari, recent Hybrid grad and co-founder of Petwork, an app to connect pet owners in a mutual-assistance network, says he acquired marketing skills.

“We learned how to market … to actual venture capitalists. At the end of the day, that’s what matters in terms of startups,” he told The Media Line. “It’s not just about having the idea or having the right data, it’s also about presenting.”

Being able to deliver an effective presentation is crucial because Arab Israeli entrepreneurs often have a harder time getting capital than their Jewish counterparts.

It’s a bit harder to get the funding, mainly because we [the co-founders] are two Arabs, but it’s improving. In the coming years, I think it will improve even more. It’s not a racist thing; I think it’s merely because we don’t have the connections that others have

“The main problem for an Arab entrepreneur is funding,” said Dr. Adi Omari, who attended the Hybrid program and co-founded Contilt, an online platform that helps authors write by creating drafts in any language on a selected topic based on inputted details.

“It’s harder to get funding because you come from an Arab village no one has heard of, even though you have a Ph.D.,” he told The Media Line. Omari said he has four degrees in computer science and business from the Technion.

“It’s a bit harder to get the funding, mainly because we [the co-founders] are two Arabs, but it’s improving. In the coming years, I think it will improve even more,” he said “It’s not a racist thing; I think it’s merely because we don’t have the connections that others have.”

“I also think they have an idea about the Arab sector, that we don’t have the spirit of entrepreneurship,” Omari continued. “They are used to us being workers more than us being entrepreneurs.”

Gemsight’s Kattouf agreed that finding capital is difficult for Arab Israelis entrepreneurs.

“Raising money is a big challenge because it is not very common for Israeli venture capital to invest in an Arab entrepreneur,” he said, attributing this to what he said was the Arab sector’s lack of a success.”

“We have yet to have an Arab entrepreneur in Israel who has built a one-billion-dollar company,” Kattouf said.

Omari says that the funding problem is compounded by the fact that there are very few Arab investors. The Israeli government could help with its new official ties with the United Arab Emirates and Bahrain, he suggested.

“The government can give Arab investors from other countries some incentives to invest in Israeli Arab businesses,” he said.

It’s very difficult to be in a man’s world. … I don’t have anything against men and I have many friends who are amazing men … but when you go to strangers [who are] investors and business developers, it is harder for women than for men. You can’t really compare it

However, recent Hybrid graduate Zada Haj said the problems she faces are not exactly the same. Haj is a feminist, an engineer and the founder of Daifco, an online platform that connects news outlets to experts on different topics. The obstacles she encounters, including in funding, are based on gender issues.

“When I first started, I didn’t know a lot of people in high-tech, but I remember [that] when I applied to Google … I didn’t have someone from the inside to mentor me and tell me what to say in the interview, what to do, how to do it. There is no big sister inside high-tech,” she told The Media Line.

“It’s very difficult to be in a man’s world. … I don’t have anything against men and I have many friends who are amazing men … but when you go to strangers [who are] investors and business developers, it is harder for women than for men,” she said. “You can’t really compare it.”

“When you stand up in front of 20 men, and you are the strongest, they don’t like it … and I’ve always had men around me,” she added.

The fifth and most recent class to go through the accelerator is unlike any other because its participants are launching their companies in a world crippled by COVID-19.

Funding problems, Omari said, only get worse because of the pandemic.

“Finding funds these days is much harder because you cannot predict the market … [and] the investor can cancel their investment at the last minute,” he said.

Shield 34’s Matar agreed that with the pandemic, the new graduates face additional challenges.

“It’s a bit harder to get sales … to go through if you are targeting companies [to purchase your product] because most of them are still working from home,” he said. “A lot of people are still in the mindset that we’ll get to those things once we are back in the office.”

“The fact that you can’t get people to meet in a single room while you make a presentation and look at their expressions will be a challenge for them. Even though you can do that on Zoom, it’s still not the same … especially with sales pitches and sales meetings,” he added.

I truly believe that the reason it’s difficult for Arabs to become part of the tech market in Israel is because of racism and implicit bias and politics. … I’m afraid it’s going to get harder because of corona and [images the media are projecting that Arabs are flouting coronavirus health rules]

Dr. Galit Desheh, director of Power in Diversity, an initiative that helps tech companies become more inclusive and diverse while showing them the benefits in doing so, is concerned that COVID-19 will deepen the inequities that Arab Israelis face.

“I truly believe that the reason it’s difficult for Arabs to become part of the tech market in Israel is because of racism and implicit bias and politics. … I’m afraid it’s going to get harder because of corona and [images the media are projecting that Arabs are flouting coronavirus health rules],” she told The Media Line.

Nevertheless, Petwork’s Hawari, is optimistic about his company.

“I can say with confidence that at least now we are in a better place to start [as a result of the program], even though it is more challenging.”

Gemsite’s Kattouf is guardedly optimistic. While he knows that people buy less jewelry when the economy is weak, online shopping is an expanding field.

“This trend of moving to e-commerce and online purchases is going to continue with or without the pandemic,” he said.