Funding increase to support Palestinian startups

Ibtikar Fund

• Bridge financing and VC schemes
• Bank of Palestine commits $500,000
• International Finance Corporation support

Funding levels are being ramped up to support Palestinian startups in the war-torn territory and across the wider Middle East and North Africa.

Just $8.8 million has been invested in Palestinian startups – marked as Ramallah, West Bank or Gaza-based – in 18 deals on record from 2022 to the present day, according to Racha Ghamlouch, co-founder of Dubai-based Digital Digest.

That includes a $5 million bridge financing facility from Intersect, a Ramallah-based tech hub and incubator backed by the Bank of Palestine Group. Launched in August, the fund is aimed at helping Palestinian tech startups impacted by the ongoing conflict.

“For Palestinian startups, funding is of course generally low,” says Ghamlouch.

The Bank of Palestine has committed $500,000 to support the SAFE Palestine Bridge Finance Initiative. In addition to its own investment, the bank is covering all setup and management costs for investors.

The initiative has provided urgently needed liquidity to 29 high-growth Palestinian startups, safeguarding more than 300 existing jobs and creating new employment opportunities within the tech sector.

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Ibtikar, a Palestinian venture capital fund targeting early-stage Palestinian-founded startups, has just closed its second fund at $25 million, which included $3 million from the European Bank for Reconstruction and Development as a limited partner.

The funds will be used to invest in 25-tech startups founded by Palestinian entrepreneurs across the region.

“This final closing marks an important step in our mission to provide much-needed capital to Palestinian founders,” says Ambar Amleh, managing partner at the Ibtikar Fund with Habib Hazzan.

Ibtikar Fund

The Palestinian territory is the 80th most popular country globally to start a company or startup and ranks 10th in the Middle East, according to Flat6Labs, another prominent investor in Palestine’s entrepreneurial ecosystem at home and overseas.

“The Palestinian market is small,” says Feras Nasr, innovation manager of UK Palestinian Tech Hub, which is also helping to expand the footprint of Palestinian startups in the UK and further afield. 

“To be successful, it is very helpful for Palestinian startups to register their companies and establish a presence in one of their main target markets,” Nasr says.

“This not only allows them to market and sell more effectively by being closer to their customers and reducing political and legal risks, but it also allows them to raise more funding as they expand their businesses.”

Jamil Shinawi, an investor, founder and CEO of mobility tech company Ahoy, says he expected  the technology side of education, agriculture and health to be the prominent sectors for Palestinian entrepreneurs to explore.

“I should hope a new, sector-defining vertical does emerge from this portfolio. That is what real venture capital is about,” he says.

Bank of Palestine

In August, International Finance Corporation (IFC), a member of the World Bank Group, along with other partners, committed to provide a financing package of up to $100 million to the Bank of Palestine, to support small and medium sized enterprises (SMEs).

SMEs make up about 85 percent of total businesses in the West Bank and Gaza. Over the last few months, more than half a million jobs were lost because of the conflict in the Middle East, according to the latest World Bank Economic Monitoring Report. 

The economy, according to the report, is further projected to shrink between 6.5 and 9.4 percent this year, with a 22 percent decline in economic activity across the West Bank.