The European Bank for Reconstruction and Development (EBRD) announced on September 25 its first equity investment in a venture capital fund in the West Bank, committing $3mn to Ibtikar Fund II, it said in a statement.

Palestinian businesses face significant economic challenges and capital shortages as well as continued aggression by Israeli forces in both Gaza and the West Bank following the Hamas incursion into Israel on October 7. Labour conditions in both Gaza and the West Bank since the Hamas incursion in Israel have significantly worsened, according to recent data. 

Ibtikar (innovation in Arabic), a prominent institutional-quality fund manager in the region, will invest in up to 25 early-stage Palestinian technology companies. The fund closed with $25mn in total commitments, surpassing its initial $15mn target and doubling the size of its maiden fund.

Since its launch, Ibtikar Fund II has attracted strong interest from institutional and private investors, including Bank of Palestine, Dutch Good Growth Fund DGGF and IFC. The fund has already made significant investments in companies such as DataQueue, Mental and Vatrin, which are expanding beyond their home markets to make a regional impact.

Anne Fossemalle, EBRD director for private equity funds investment, stated: “We are excited to support the further establishment of the early-stage innovation ecosystem in the West Bank in partnership with Ibtikar.”

She added: “This is our first investment in a venture-capital fund in the West Bank and we look forward to taking part in supporting local startups, particularly in these unprecedented times."

The investment aims to promote digitalisation and job creation in the West Bank and Gaza, where micro and small businesses account for over 98% of local enterprises and generate more than 60% of gross domestic product.

Habib Hazzan, managing partner of Ibtikar, commented: “We are excited to welcome the EBRD to Ibtikar Fund II, as we share a common vision for empowering Palestinian entrepreneurs.”

The fund will provide local technology startups with resources to scale up operations, access new markets, and drive sustainable development.

The fund also aims to support young entrepreneurs and women's employment, while enhancing economic links between the West Bank and Gaza and neighbouring countries.

Since beginning operations in the West Bank and Gaza in May 2017, the EBRD has approved 27 transactions worth a total of $142mn.