Key Takeaways
- • The European Bank for Reconstruction and Development (EBRD) commits US$3 million in equity to Ibtikar Fund II, marking its first venture capital fund investment in the West Bank and Gaza.
- • Ibtikar Fund II closed at US$25 million in total commitments, exceeding its initial US$15 million target and doubling the size of its predecessor fund, with capital designated for up to 25 early-stage Palestinian technology companies.
- • The investment targets a market where micro and small businesses represent over 98% of local enterprises and generate more than 60% of GDP, yet face significant capital constraints and economic headwinds.
- • EBRD's commitment aims to catalyze digitalization, job creation, and economic linkages between the West Bank, Gaza, and neighboring countries while supporting women entrepreneurs and youth employment.
- • This deployment represents part of EBRD's broader West Bank and Gaza strategy, which since 2017 has approved 36 projects totaling €185.5 million in commitments.
Summary
The European Bank for Reconstruction and Development has made its inaugural equity investment in a venture capital fund focused on the West Bank and Gaza, committing US$3 million to Ibtikar Fund II. The investment underscores EBRD's strategic pivot toward supporting early-stage technology ecosystems in the region, a market segment historically starved of institutional capital. Ibtikar, the region's established institutional-quality fund manager, will deploy the committed capital across up to 25 early-stage Palestinian technology companies, with flexibility to invest in selected firms in neighboring countries that maintain operational or ownership connections to the West Bank and Gaza.
Ibtikar Fund II's final capitalization of US$25 million represents a significant oversubscription relative to its initial US$15 million fundraising target, effectively doubling the fund size compared to its maiden vehicle. This momentum reflects growing institutional appetite for Palestinian technology investment and validates the operational model of the fund manager. The capital will be deployed to support local technology startups in scaling operations, accessing new markets, and driving sustainable growth—objectives critical to a Palestinian economy where micro and small businesses account for over 98% of all enterprises yet generate more than 60% of gross domestic product.
The EBRD's rationale for this investment centers on addressing the region's acute capital shortage and economic vulnerabilities. By backing Ibtikar Fund II, the multilateral development bank aims to advance digitalization, foster job creation among young entrepreneurs, and accelerate women's economic participation. The fund structure also targets enhanced economic integration between the West Bank and Gaza through portfolio company operations and cross-border relationships. Anne Fossemalle, EBRD Director for Private Equity Funds Investment, characterized the commitment as supporting "the further establishment of the early-stage innovation ecosystem in the West Bank in partnership with Ibtikar."
This deployment aligns with EBRD's longer-term engagement in the West Bank and Gaza, which commenced in 2017. To date, the bank has approved 36 projects worth €185.5 million in the region, with 2024 marking an accelerated pace of capital deployment. The Ibtikar commitment signals EBRD's confidence in venture-backed technology as a vehicle for sustainable economic development in a region facing structural economic constraints and limited institutional investment infrastructure.
Ibtikar Fund II's final capitalization of US$25 million represents a significant oversubscription relative to its initial US$15 million fundraising target, effectively doubling the fund size compared to its maiden vehicle. This momentum reflects growing institutional appetite for Palestinian technology investment and validates the operational model of the fund manager. The capital will be deployed to support local technology startups in scaling operations, accessing new markets, and driving sustainable growth—objectives critical to a Palestinian economy where micro and small businesses account for over 98% of all enterprises yet generate more than 60% of gross domestic product.
The EBRD's rationale for this investment centers on addressing the region's acute capital shortage and economic vulnerabilities. By backing Ibtikar Fund II, the multilateral development bank aims to advance digitalization, foster job creation among young entrepreneurs, and accelerate women's economic participation. The fund structure also targets enhanced economic integration between the West Bank and Gaza through portfolio company operations and cross-border relationships. Anne Fossemalle, EBRD Director for Private Equity Funds Investment, characterized the commitment as supporting "the further establishment of the early-stage innovation ecosystem in the West Bank in partnership with Ibtikar."
This deployment aligns with EBRD's longer-term engagement in the West Bank and Gaza, which commenced in 2017. To date, the bank has approved 36 projects worth €185.5 million in the region, with 2024 marking an accelerated pace of capital deployment. The Ibtikar commitment signals EBRD's confidence in venture-backed technology as a vehicle for sustainable economic development in a region facing structural economic constraints and limited institutional investment infrastructure.
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