Palestinian-Israeli Venture Firm Encourages Diversity in Israeli Startups

If investing in hope could be trademarked, two Israeli entrepreneurs—Forsan Hussein and Ami Dror—would hold the patent.

The two cofounders and managing partners of Zaitoun Ventures—an investment firm that focuses on companies with diverse human capital—say their strategy is proving to be a winning formula.

“We wanted to create a business that inspires hope but also fulfills its mission to make money. It’s an investment company with values, with a soul,” Hussein told ISRAEL21c. “People like us have a responsibility to do something big.”

Dror and Hussein, who knew each other for years, formally joined forces in 2014. They have raised $5 million and invested some $17 million in Israeli startups so far.

The name of the company comes from the Arabic for “olive tree.” “The olive tree is a symbol,” Hussein said. “It’s a story of peace. We Arabs and Jews have a Mediterranean connectedness. There’s something that bonds us. Maybe this is the symbol for the future.”

Zaitoun requires all portfolio companies to implement its “30in3” rule: Within three years of investment, the companies must strive to reach 30 percent diversification in human capital.

“Corporate studies show that diversity is beneficial to a company,” said Hussein. “We believe innovation comes from diversity. The more diverse your company is, the more powerful it is,” added Dror.

Dror and Hussein say their outline to include everyone is already rubbing off on others in the high-tech arena. They excitedly discussed how a CEO of a big Israeli company was so impressed with their idea that he actively set out to hire Arab engineers. “It’s common wisdom these days that creative thinking comes from diverse populations,” says Hussein.

Dror previously cofounded XPAND 3D, a multibillion-dollar company specializing in state-of-the-art 3D technology. Hussein has been involved since the age of 10 in organizations that promote Mideast peace, social entrepreneurship and social finance. He holds degrees from Brandeis University, the Johns Hopkins School of Advanced International Studies, and Harvard Business School. He was recently selected as a Young Global Leader for the World Economic Forum in Davos.

Portfolio companies include Comedy Break, a Tel Aviv-Ramallah startup using facial detection to personalize comedy for users; Myndlift, an Arab-Israeli startup with an app that can improve attention deficits; Ninispeech, an app to help people who stutter; Sidis Labs, which creates wearable technology for alleviating motion sickness; and Teramount, a Muslim-Jewish startup company providing optical connectivity for computer chips.

Eighty percent of their investments come from China, including Alibaba and Tencent Holdings. “The Chinese investors found working with a values-oriented company as something fresh and new, and they love it,” said Dror. He is moving with his wife and three kids from Tel Aviv to Shenzhen in the next few months. “We’re planning on doing something big, to be behind massive success,” he says of Zaitoun’s future.

Hope is also a key aspect in their success, they say. “If you don’t have hope, you cannot start your business,” states Dror. “If you do not have hope you cannot start your country. So we have the business of hope.”

In order to become part of the Zaitoun family, would-be investors need to come to Israel for a week of touring, hosted by Hussein and Dror. The investors visit Jerusalem, the Negev, Bethlehem, and Sha’ab, the Arab town in northern Israel where Hussein grew up.

“We want them to understand the region and the real situation. It’s not only about the innovation. Yes, we have amazing innovation but you need to understand the complete story of Israel—the good and the bad,” said Dror. “Those people that get into it and learn, they become our friends, our investors, our partners.”

“We’re not going to partner with anybody who doesn’t see eye to eye what we’re doing and try to get to know the people,” said Hussein. “We’re creating a circle of trust which that in itself will be the mechanism in sustainable success of the future.”

“That’s the secret: the people and trust,” says Dror. “And we know how to obtain trust.”

(via Israel21c)

[Photo: Courtesy ]