Nazareth high-tech incubator provides platform for Arab startups

New Generation Technology receives some of its funding from the Israeli Chief Scientist and utilizes the vast knowledge that the Israeli-Arab community has amassed in life sciences.

By Yehuda Tzion

When it was first established back in 2002, there were many doubters who said that an Israeli high-tech incubator founded by Jewish and Arab entrepreneurs to develop ideas by Arab-Israeli scientists would never work.

Almost 10 years later, the New Generation Technology (www.ngtnazareth.com) (NGT) incubator in Nazareth is not only still on its feet, but is thriving, with 20 startup companies in various stages of development.

“We’ve succeeded in providing Arab entrepreneurs with a platform to turn their ideas into businesses and it’s become known throughout the Israeli-Arab sector that such an opportunitity exists. I think that’s been our biggest accomplishment,” says Nizar Mishael, the chief financial officer of NGT since 2006.

Originally founded by five leading Israeli-Arab business people and Israeli-American investor Davidi Gilo, NGT under its longtime CEO Nasri Said continues to operate on a combination of private and government funding, receiving an annual budget from the Chief Scientist’s Office of the Industry, Trade & Labor Ministry. The only incubator of its kind in Israel in that it’s a joint Arab-Jewish venture, NGT is housed in a building on the edge of Nazareth’s industrial zone, a predominantly Arab city about an hour’s drive from Tel Aviv. Next door to NGT are two companies with like-minded agendas -- MIT Soft, a high-tech manpower company set up to get around the obstacles facing Israeli Arabs, and Tsofen (http://www.tsofen.org/?page_id=2&lang=en), a non-profit organization that prepares Arab science graduates for the job market.

“The founders realized that in the 1990s, there was great potential for the Arab sector in the way of entrepreneurship,” says Mishael. “But the problem was, until NGT, only one or two high-tech companies had been established by Arabs. They understood that there was a need for a company to nurture the Arab entrepreneur -- and to also provide opportunities for Arab doctors, PhDs and lab workers.”

NGT CEO Nasri Said at the Biomed Conference in Tel Aviv earlier this year

Download link: http://www.megaupload.com/?d=PZ0XQV0F

A pure true partnership

[The following quotes were taken from a previous interview.]

Davidi Gilo, a successful Israeli businessman who has initiated many projects aimed at coexistence between Jews and Arabs in Israel, says the idea behind NGT was one of full Jewish-Arab partnership.

"There are many Israeli initiatives that open factories and do different things with Arabs -- but basically the Jews are the employers and the Arabs the employees,” says Gilo. “NGT is the only project in Israel that is a pure true partnership between Jewish and Arab businessmen in Israel. We're all board members, and we've all invested the same amount of money."

NGT”s location in the Galilee, where more than half the population is Arab, enables NGT to utilize the vast knowledge that the community has amassed in life sciences – a talent pool that includes approximately 700 PhDs, 3,000 MDs and about 700 Israeli Arabs working in the pharmacology and pharmaceutical fields.

“Most of our companies are based on medical devices and biomed products,” says Mishael. “And that’s not by coincidence. The Arab sector in Israel is known to have a huge potential in the fields of medicine and biomed. And even more, the companies that we’re founding are developing products and devices that are going to help that same population by stimulating the economy and creating jobs.”

After nearly 10 years in existence, NGT can boast some impressive numbers. Twenty-one companies have been established, with 10 of them graduating the incubator period to stand on their own, and five companies raising more than $8 million. Even more impressive is that eight of the companies have been established in the last 15 months, indicating that NGT is on the upswing. Amid a flurry of activity, Mishael still sees many challenges facing the incubator as it readies to enter its second decade.

“There are two ways to measure our success – one is if we’re bringing in money to the company and the second is if we’re succeeding in establishing Arab entrepreneurs and raising awareness of careers in the Arab sector,” he says.

“In the first goal, we haven’t succeeded yet but we’re optimistic. Most biomed and pharma sector companies take on the average of eight to 10 years to establish themselves. And because we didn’t often have the funds to support these companies, they had to raise the funds themselves, which caused further delays. Regarding the second vision, we’ve been a great success -- establishing companies, developing entrepreneurs including women. Some of our companies have succeeded in raising money and in this way, we’ve become the leaders in the Arab high-tech sector.”

According to Mishael, NGT’s success has prompted many young Arabs to enter the scientific fields, and the company regularly takes part in the Young Entrepreneurs program, an Israeli version of Junior Achievement.

“We’re helping to create the new generation of Arab entrepreneurs,” he says.

No less important, though, is NGT’s role in developing a model for coexistence and cooperation between Jews and Arabs in Israel.

“I don’t want to say that we’re singlehandedly making peace, but at all of our companies, there are Arabs working next to Jews and it’s a very good atmosphere,” says Mishael. “I think that probably many of the Jews had never worked with Arabs before, but they all give 100 percent to each other and we’re managing to bridge the gap between Arabs and Jews in Israel.”

So what do the next 10 years look like? Mishael is intent on raising more funds, establishing more companies and building NGT to the level whereby it can support a wide portfolio of companies and give them the stepping stones to success.

“And ultimately, we’d like to give the Arab entrepreneur in Israel a chance to see some money from his idea – and be able to reinvest it into the community. That’s our basic goal and hope for the future.”

Based on its track record so far, NGT is on the right path to achieve that vision.

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SIDEBAR 1
 
Fluorinex Active (http://www.fluorinex.co.il/)
One of NGT’s big success stories brings a smile to everyone’s mouths. That’s because the product developed by Fluorinex and its founder Kamal Khwald whitens teeth. Khwald, from a small village near Nazareth, holds an MSc in applied chemistry from Hebrew University of Jerusalem, and is a specialist in electrochemical reaction and metal electroplating. Previous to founding Fluorinex Active, he was owner and CEO of a metal finishing company. He established Fluorinex Active at NGT in 2004. Following its two-year incubator phase, the company signed a long-term strategic alliance with Syneron, that enabled it conduct clinical trials, file patents and sign worldwide distribution deals for a number of products based on the tooth-whitening patents.

SIDEBAR 2
Metallo Therapy (www.metallo-therapy.com)
Metallo Therapy is a relatively recent addition to NGT’s portfolio, but one of its prime movers. It was founded in 2009 by Dr. Amal Ayoub, a physicist from Ben-Gurion University of the Negev who is believed to be the first female life sciences Arab entrepreneur in Israel. Ayoub developed the company's DNA irradiation cancer therapy, which irradiates cancer tumors with atomic particles as a prelude to radiation therapy. According to Ayoub, the particles absorb the radiation and release it at more focused strengths in the area of the tumor. Until now, there was a problem injecting these metals into the cells, because they were unstable and were liable to be toxic when interacting with the body. Metallo Therapy’s process attaches a coating to these particles that prevents them from interacting with the body, rendering the particles non-toxic.

The company recently received a $4 million investment from Arkin Holdings and its president Mori Arkin, a sign of confidence in Ayoub’s therapy. “We decided to invest in Metallo Therapy because we believe it has innovative technology for treating cancer, excellent basic science, and management with the necessary skills. We also believe that the Arab community has much talent in the life sciences, and that investments of this kind will help promote Jewish-Arab cooperation in various fields," Arkin Holdings pharma division director Pini Orbach told Globes in May upon the announcement of the investment.

Currently, small animal trials are being conducted, with a long road ahead before the innovation developed by Ayoub is eventually employed on human patients.

SIDEBAR 3

Nutrinia (www.nutrinia.com)
 
One of first companies founded by NGT is still one of its most promising. Nutrinia, established in 2003 by Prof. Naim Shehadeh , a leading researcher in the field of juvenile diabetes and head of the Pediatric Diabetes Clinic at the Rambam Medical Center in Haifa, is developing bioactive food supplements for infant formulas and animal feed based on a novel micro-encapsulation of insulin.
 
Its goal is to make infant formula closer to mother's milk, and the company is currently focused on supplementing pre-term
and term infant formulas with insulin, which is present in human milk but absent from infant formulas originated made from powdered cow’s milk and soy.

"We have found that insulin has a very positive effect on the entire system, and leads to rapid maturation of the intestinal enzymes. When a premature bottle-fed baby is given insulin-enhanced formula, its GI tract interacts with insulin and matures faster," Shehadeh explains, adding that the effect is local, meaning the insulin does not go into the blood and interfere with the natural sugar/insulin balance.

"We looked on the market and we did not find any baby formula with insulin," says Shehadeh. "The reason insulin is not in formula is because it is very sensitive to heat and mechanical stress, and usually destroyed in formulas. We developed a new technology to keep the insulin bioactive. We also have a usage patent."

Nutrinia has completed phase I clinical studies of InsuMeal, its trademarked first range of products consisting of pre-mixes that combine microencapsulated insulin with food-grade compounds to supplement infant formulas and bring infant formula closer to mother's milk.

Contacts

Nizar Mishael

04 656 4118