Last week, I visited Israel last week as part of a Harvard Business School trip on the subject of innovation.  One of the groups we met was a new venture capital fund called Sadara Ventures (which is a name that connotes “pioneering” in Arabic).  Sadara focuses on Palestinian investments—mainly in the city of Ramallah in the West Bank.    

The fund is run by a duo—an American-Israeli and a Palestinian-Arab—who have raised almost $30 million from US high tech companies like Google.  They are looking to provide start-up money for ventures in mobile tech, software, and other similar industries. There are already a few large tech companies in the West Bank such as Cisco, and the West Bank has considerable expertise in areas like software engineering.  But until now there has been a brain drain from the Palestinian territories.

The general partners of the fund have a double bottom line—turning a profit and building up the tech industry in Palestine.  They believe that such a build-up will be a significant factor in moving toward peaceful co-existence with Israel.

At present, venture capital is vibrant in Israel with its start-up culture, but venture capital is at most in its infancy in Palestine.  There is cautious optimism about the success of this new venture fund—both as a generator of profits and as a catalyst to economic development in Palestine.