Israel Tech: Itzik Frid on why the ‘Startup Nation’ needs more Arabs

Itzik Frid is a longtime
Israeli tech entrepreneur and the CEO of Takwin Labs, a startup
incubator focused on Arab-led startups.

Harrison
Jacobs/Business Insider

• Israel is
  often called the “Startup Nation” due to the sheer number of
  entrepreneurs and tech companies in the country of 9 million
  people.
• Itzik Frid, a longtime Israeli tech entrepreneur and the
  CEO of a startup incubator focused on Arab-led startups,
  believes that the country will lose its edge if it can’t better
  integrate its Arab minority into the tech industry.
• While Arabs make up 21% of Israel’s population, they
  currently only make up about 3% of the tech workforce.
• Frid believes that bringing more Arabs into the tech
  workforce could alleviate the massive wage gap the population
  faces and improve the Israeli economy. 
• This post is part of Business Insider’s ongoing series on
  Better
  Capitalism.

Israel produces an impressive number of highly successful
tech companies for a country with just 9 million people, from
social navigation app Waze, which
sold to Google in 2013 for $1.15 billion, to autonomous
driving company Mobileye, which sold to Intel last year for a whopping
$15.3 billion.

Israelis have long lovingly referred to the Middle Eastern
country as the “Startup Nation,” thanks to the sheer number
of entrepreneurs building businesses there, particularly in
cities like Tel Aviv.

But some, like Itzik Frid, a longtime Israeli tech entrepreneur
and venture capitalist, think the country will lose its edge if
it can’t better integrate its minorities into the tech
scene. Frid is the CEO of Takwin Labs, a venture
capital firm and startup incubator focusing on Arab-led startups.

“Honestly I love Israel … but I’m so fed up with us being so
self-content with us as ‘the Startup Nation,’” Frid told Business
Insider in a recent interview. “As much as we like to think
ourselves as a ‘startup nation,’ everything in the startup scene
is happening in the center of Israel.”

Frid isn’t the only one who thinks so. The Organization for
Economic Cooperation and Development said in its 2018 report that
Israel
needs to better integrate its Arab-Israelis or risk economic
stagnation and declining living standards for all of Israel.

While Arabs make up 21% of Israel’s population, they currently
make up only 3% of the workforce in the tech industry. And there
is a huge wage gap between Jews and Arabs in Israel, with the

average Arab making 58.6% of the average Jew in 2015.

Frid is the CEO of Takwin
Labs, a venture capital firm and startup incubator focusing on
Arab-led startups.

Harrison
Jacobs/Business Insider

Much could be done to close that gap and improve the Israeli
economy, Frid said, by getting tech companies to hire and
cultivate Arab talent.

“Put aside the fact that they are a minority and we need to
encourage them, Israel’s economy would benefit by around $60
billion a year. If we need an incentive to do this, that’s one,”
he said.

The government has taken steps to remedy the issue. As part
of a law called Resolution 922, a $4.3 billion five-year plan for
the Arab sector passed in 2015, funding
was increased for Arab business centers and accelerators and
the government plans to invest $25.6 million in small and
medium-sized Arab businesses.

The government has also pledged to fund 30 months of salaries for
Arab employees if a company hires five or more people from that
population. The Innovation Authority, the office charged with
developing the science and tech industries, said it was
expanding grant and support programs for Arab entrepreneurs.

Nearly all of the tech companies in Takwin’s portfolio have
received grants or seed funds from the Innovation Authority. The
larger problem, as it is for most startups, according to Frid, is
the funding companies need a year or two down the line.

Fixing that issue, and the larger issue of bringing more Arabs
into the tech workforce in general, will likely come down to the
industry as a whole doing more to hire and cultivate Arab talent
and to provide more funding to Arab-led startups.