As the Israeli-Palestinian peace talks stall, a venture capitalist and a businessman are teaming up to bridge the economic divide between the two sides. Yadin Kaufmann, co-founder of Israeli venture capital firm Veritas Venture Partners, and Abdul Malik al-Jaber, the CEO of Palestine Telecommunications Co., the largest phone company in the Palestinian territories, last month announced the creation of a new venture capital fund that will invest in technology-based, export-oriented Palestinian businesses. The fund will focus on the West Bank, controlled by the Western-leaning Palestinian Authority, rather than on the Gaza Strip, ruled by militant Islamic group Hamas. Israeli venture capital funds last year accounted for 40 percent of the $1.8 billion raised by Israeli technology firms. The West Bank has some 270 technology companies and about 4,000 engineers and programmers graduating every year from Palestinian universities. Kaufmann will co-manage the fund with a Palestinian manager yet to be announced. The fund aims to raise $50 million — half of it by year-end — from institutional and individual investors, and to build up a portfolio of about 15 companies. But, adds Barry, it faces real challenges: “Investors may be hesitant about the experience and potential of [Palestinian] companies, and there may be worries about the political situation and the ability to get their returns,” says Orna Berry, head of the Israel Venture Association. But that can also be a plus: “There is access to knowledge that has no funding resources. Because the fund is the only one of its kind and the market is hungry for it, investors could choose good companies at an attractive price.”
