Startup companies and innovators in the Arab World have suffered from underinvestment and lack of technology infrastructure in recent years. Even the wealthy Arab sovereign wealth funds have a very limited allocation to local ventures -- a direct result of the Arab Spring, political and security tensions, and modest returns in historical terms.
But this is changing. While the Israeli-Palestinian peace process is frozen and many countries in the region are facing civil wars and political violence, several Israeli investors are busy investing in Arab or Israeli-Arab startups and incubators.
Al Bawader, for example, is an Israeli-government-supported fund that invests in Israeli-Arab startups. Although in the past the Israeli startup community was almost exclusively Jewish and relied on innovation coming out of the Israeli Defense Forces, nowadays many university centers and commercial incubators are open to Arab entrepreneurs and investors.
Another leading example is Amelia Investments, a new Israeli private equity fund led by Chemi Peres, the former president's son and an Israeli venture capitalist dedicated to investments in companies operating in the Middle East or with close ties to the region. It has been reported that the fund has already invested in Tawkin Labs, a startup accelerator for Israeli-Arab entrepreneurs.
The long-term impact could be significant. Providing liquidity for innovation could foster jobs creation and prosperity, increase ties and reduce animosity on both sides. It should also be understood in the broader context of international participation in joint economic projects in the region. Noble Energy and Delek, for example, negotiate the sale of Israeli natural gas to several of Israel's Arab neighbors, and leading US tech giant Cisco has, for the past couple of years, been promoting cross-border initiatives in the high-tech sector in the region. The Middle East Commercial Center, an initiative of the US Chamber of Commerce, also provides unique platforms for economic dialogue, such as the MECC Tech Forum in Istanbul this past November.
Originally appeared on Global Finance Magazine