The Bizmax workspace in Jerusalem hosts an emerging haredi (ultra-Orthodox Jewish) startup scene. Bizmax last week launched Bizlabs Technology, a five-month program in which seven haredi startups will be given access to international corporations, take part in sales workshops, and be connected to investors and mentors. The program's organizers say that their goal is "to address the plight of haredi startups that do not survive the initial stage." It is no secret that most startups never get off the ground, and the success rate of haredi startups is lower than the general startup success rate.
Bizmax, the first workspace designed for haredim, was founded two years ago by the Kemach (Haredi Professional Development) Foundation, the Jerusalem Development Authority, and the Achim Global Loan Fund in order to help haredi entrepreneurs and business owners work in a haredi work environment, grow and develop professionally, and turn their business into a successful company. Bizmax's founders provide full funding for Bizlabs.
Nearly 100 companies in various sectors currently work at Bizmax. The entrepreneurs participate in professional workshops and courses and receive counseling on raising capital, managing a budget, and how to grow fast.
A number of professional business communities that provide assistance in forming cooperative ventures and creating business connections operate on the Bizmax site. Communities in ecommerce, high-tech, and media and design are among those operating there.
The new program is a scalerator that supports existing companies that already have a concrete product and employees, one of whom is a full-time chief technology officer (CTO). The average amount already raised by the companies participating in the program is $350,000. This format differs from an accelerator, which is designed for beginning companies in earlier stages.
A very small proportion
The partners in Bizlabs include Amazon, Google, the Hebrew University of Jerusalem, General Motors, Jerusalem Venture Partners (JVP), the Yigal Arnon law firm, accounting firm KPMG, services platform Fiverr, and the Israel Advanced Technology Industries (IATI) umbrella organization.
"When I ask how many haredi startups there are, people guess several hundred. They don't know that there are only a few dozen," Bizmax managing director Yitzik Crombie told "Globes." Crombie founded the haredi high-tech forum and promotes the high-tech industry in the haredi sector. "Keep in mind that the trend is positive. The growth percentages are large, but the absolute numbers amount to almost nothing.
"We've been in this sector for almost seven years. The bottom line is that with all of the efforts and investment by us and others, there aren't really any haredi startups now. Haredi startups are a negligible proportion of both the high-tech industry in general and the startup scene, and certainly where mature startups are concerned. We're making progress, but there's a long, tough road ahead, and we're only at the beginning."
Commenting on the rationale behind the program, which costs NIS 500,000 for each class of startups, Crombie says that most startups encounter a crisis after raising initial capital and developing a product. He explains that there is "inadequate counseling and assistance" for these young companies. "They don't have the right envelope to help them get ahead, because they lack connections and understanding of the market, and don't have the right connnection to the ecosystem." Furthermore, Crombie says, the high-tech industry, the pipeline that can provide talents for the startup scene, "unfortunately employs only a few thousand haredim."
"We founded Bizmax to enable haredi men to operate in a shared space, like WeWork, in which everything that happens is appropriate for a haredi who wants to maintain his way of life as much as possible. This is the concept underlying the projects for promoting haredim. One of the main reasons that haredim work less and are less active in business is the conflict between the desire to advance and the desire to maintain the haredi way of life. They want to stay within their society. We enable people to both preserve their characteristics and customs, and to do it at the highest possible professional and technological level. That's our motivation."
A big gap
Bizlabs managing director Gil Shourka is a former startup entrepreneur himself who managed the global entrepreneurship network of US fund Kaufman, and worked in innovation at Elbit Systems' (Nasdaq: ESLT; TASE: ESLT) incubator. "The participants in the venture," Shourka says, "commit themselves to at least two or three full workdays a week, from the morning until the afternoon… The goal is to improve the success rate of early-stage startups founded by haredi entrepreneurs and overcome what is called 'death valley' - the second year after raising the initial capital, which most of them don't survive." He adds, "The companies accepted are just as good as in the general sector."
The haredi scene is lively; Bizmax will hold a hackathon next week on emergency medicine in cooperation with United Hatzalah in order to overcome the technological constraints of the haredi sector in an emergency. "There are very special technological challenges for an organization that relies on volunteers providing emergency services," Crombie explains. "What happens when the mobile phone network crashes in an emergency? The army has walkie-talkies, but how does a network based on smartphones keep going?
"How do you find the scene of the event today? In order for the emergency center to know the location of the person making the report, the person reporting the event clicks on a link received in an SMS, which makes it possible to trace the location. In Israel, however, there are nearly a million people who can't send or receive SMSs, among other things because they use kosher phones. So we initiated activity in which haredi programmers will try to solve such challenges.
"The key to the advancement of the haredi sector in high tech is professional training, boot camps, and courses, but mainly scholarships for academic studies, where the gap is very wide. We can do a few accelerator programs, but if there aren't enough programmers, it won't get anywhere; we'll stay in one place."
"Someone who studies Talmud in depth has an advantage in artificial intelligence"
Startup company Healables, which joined the Bizlabs program, is the second venture of Moshe Lebowitz, 44, who is married with five children and lives in the Ramot neighborhood of Jerusalem. The first startup founded by Lebowitz, who immigrated to Israel from the US 21 years ago, tried to develop a system for building websites according to the "what you see is what you get" (WYSIWYG) method. "Actually, what we wanted to build what the website building platform of Israel company Wix now offers," Lebowitz tells "Globes," "but we didn't succeed. One of the reasons was that a decade ago, we had no help, encouragement, or knowledge of how to cope with all the gaps between us and the general business world. I got entangled with accountants, grants, and lawyers."
Lebowitz now heads a digital health company developing a solution for chronic pain. "Without Bizlabs, we probably wouldn't have succeeded this time, either, because there are many things that an entrepreneur has to know on both the business side - grants and money raising - and the technological side, not to mention the special needs of the haredi sector. This startup is a small company with big problems. In order to overcome them, we need advice from experts, for example on questions about international business that an ordinary lawyer can't answer. Had Bizlabs' program been at our disposal a decade ago, I might have succeeded, because we already began developing the product, but we didn't manage to market it enough."
Lebowitz describes the characteristics of the place that are particularly suitable for haredim: "The food here is glatt kosher and everyone is dressed modestly. It is also reflected in small things, such as in lectures, for example, which give example from advertisements or movies that are modest. The hours and timetables are adapted to prayers and the Jewish calendar. For example, they take the Jewish holidays and the first day of the Jewish month into account, so that our business activity doesn't come at the expense of the ability to maintain a haredi way of life, even for entrepreneurs with eight children."
In addition to the gaps filled by the program, Lebowitz emphasizes the intellectual assets that haredim bring with them to the world of technology. He says, "Someone who studies Talmud in depth has an advantage in artificial intelligence. A Talmud student learns how to interpret something simultaneously from several angles, all of which are valid, justified, and have both advantages and disadvantages. It's a kind of analysis that resembles what happens in machine learning and neuron networks. The ability to think creatively that you learn from the Talmud is a very positive trait for an entrepreneur."
"On the other hand," he says, "he lacks technology, a little grammar, and mathematics, and, as I said, business concepts. This is what Bizmax does - it takes smart guys who know how to think in depth and how to work together with a study partner, and devises a plan to fill in the other gaps."
Published by Globes, Israel business news - en.globes.co.il - on March 4, 2019
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