Building the Palestinian Venture Ecosystem

Ambar Amleh co-founded Ibtikar Fund to address a critical gap in the Palestinian startup ecosystem: the lack of early-stage capital. In this Industry Voices feature, Ambar shares the insights learned from operating two funds out of Palestine, the challenges of raising capital during unprecedented circumstances, and her perspective on sustainable growth in an AI-driven world.

From Ecosystem Development to Venture Capital

Ambar's path into venture capital was unconventional. With a background in marketing and an MBA, she found herself drawn to the softer side of business rather than finance. After moving to Palestine, she founded Palestine for a New Beginning (PNB), an organization focused on youth employment in the post-Arab Spring era.

The board of PNB included major Palestinian employers, Bank of Palestine, PALTEL, and other established companies, all facing the same constraint: their growth was severely limited by the occupation and market size.This limitation made job creation difficult. The solution became clear: create more companies.

Through PNB, Ambar organized hackathons, training programs, and entrepreneurship events. But a pattern emerged. "Companies were going from competition to competition, to win, you know, $20,000, $30,000," Ambar recalls. "But it wasn't enough money to grow."

Previous funds in Palestine had struggled. A previous fund had invested large checks in an ecosystem that wasn't ready for such investments. Another fund had proved too cumbersome and complex for early-stage startups to navigate, particularly given its demanding funding requirements. What the ecosystem needed was something smaller, with tranched investments that could support companies through their earliest stages.

That's where Ibtikar came from.

Fund 1: Proving the Concept

Along with her partner, Habib Hazzan, Ambar launched Ibtikar Fund 1 in 2016 with a $10 million fund. The strategy was straightforward: partner with accelerators, pay for their services, provide cash to companies, and continue investing in those showing initial traction. Fund 1 made 27 investments (excluding follow-ons), often backing just an idea and a couple of founders.

"Fund 1 was so early, we often just invested in an idea on a PowerPoint," Ambar explains. "With the hope that they built an MVP and got early traction." The result was predictable for such an early-stage approach; many of the small investments were written off within months.

But Fund 1 wasn't about immediate returns. It was about validation. "We needed to prove that you could make investments out of Palestine, that you could make early-stage investments, grow them, etc.," Ambar says. The fund demonstrated to investors, the local ecosystem and the broader regional ecosystem that Palestinian startups were viable, with companies like Mashvisor and Coretava emerging from Fund 1 and continuing to grow today. 

The fund is now in exit mode, with Ambar and her team exploring creative approaches to returning capital to investors.

Fund 2: Evolution and Expansion

Fund 2 represented a significant evolution. Closing at almost $25 million, the fund was raised under extraordinarily difficult circumstances, starting during COVID and ending during the war. 

What made the difference was investor conviction. Most Fund 1 investors followed into Fund 2, with major DFIs like the IFC and Dutch Good Growth Fund doubling their commitments at the first close in December 2021. Smaller investors and institutions joined in the second close, followed by the European Bank for Reconstruction and Development in the third close in 2024. 

Fund 2 brought two major changes. First, it allows up to 30% investment in diaspora Palestinians, opening opportunities with companies like Podeo in Lebanon, Mental in Abu Dhabi. Second, the larger fund size enabled bigger investments, with average checks of $500,000 into companies that had demonstrated traction and were ready to scale beyond Palestine—compared to Fund I’s $150,000 post-accelerator checks.

Fund 2 has made 17 investments to date, still often serving as the first institutional check for Palestinian companies.

Pattern Recognition

The transition from Fund 1 to Fund 2 was about applying hard-won lessons. "Fund 2 became more about pattern recognition," Ambar says. "We’ve seen what works and what doesn't work."

One critical lesson: solo founders. "We have made investments into solo founders with Fund 2, but we've put a lot of guardrails around it," Ambar explains, requiring them to bring on co-founders or senior-level support. 

Another key shift was market size discipline. In Fund 1, many companies were building solutions that worked in Palestine but struggled to scale elsewhere. "We're no longer making those investments," Ambar says. "We're really being quite strict about making sure that the market is large enough." The team learned to be more selective about conviction and understanding what regional investors seek to invest in companies positioned to attract follow-on funding and scale beyond Palestine.

The Exit Challenge and Creative Solutions

The most pressing challenge facing Ibtikar—and the broader Palestinian ecosystem—is the lack of exits. "Nothing is realized until you exit," Ambar says candidly. 

She's clear about the stakes: "You raised Fund 1 on a promise. You raise Fund 2 on the early traction that you have with Fund 1, but Fund 3 without exits is nearly impossible."

Without visible exits, the ecosystem struggles to attract regional investors who still don’t see a clear, proven path for Palestinian founders. Exits create that proof point, signaling that outcomes are real, capital can be returned, and success stories can repeat. “As an ecosystem, we really need that,” Ambar adds. “That’s when you’ll start to see more regional investors come in.”

Ibtikar is pursuing creative exit strategies. Some Fund 1 companies have evolved into strong SMEs—profitable but no longer typical VC companies. For these, the team is exploring management buyouts and dividend structures. For VC-track companies, exit pathways are already taking shape. The team is exploring secondary transactions in future funding rounds, while some portfolio companies are actively engaging with potential acquirers.

The team has also introduced "structured exits" in Fund 2 investments to ensure a pathway for liquidity. For companies unable to reach venture scale, they are including provisions: if a company doesn't raise a Series A within a specified timeframe but remains profitable, it starts buying back Ibtikar's shares. 

Operating Through Crisis

2023 - 2025 brought unprecedented challenges. The war affected everything. Palestinian founders dealt with increasing movement restrictions, travel difficulties, and intense scrutiny. Bank accounts were shut down. Partners who had previously worked with Palestinian companies withdrew. "We've had to really just go to plans B's and C's and D's, at times," Ambar notes.

Yet, for the majority of their founders, work offered the perfect distraction. “Since more of our startups have markets outside of Palestine, their customers continued demanding services, which meant that neither them, or we, stopped.” The team focused on demonstrating that Palestinian companies could operate globally, reminding investors that COVID had proven remote work was viable.

Despite everything, there are clear positives. The challenges have forged a generation of founders with exceptional resilience and grit. “You just keep your head down and keep working,” Ambar tells her team. That persistence, she believes, is the ecosystem’s greatest asset.

The State of the Palestinian Startup Ecosystem

After a slowdown in 2023-2025, companies are beginning to show regional traction again. "We have enough of a pipeline that we're excited about," Ambar says.

What makes Palestinian founders distinctive is their backgrounds. "We don't yet have the tech bros founder culture here," Ambar explains. "You often have founders that are really out of the box, and you wouldn't think of these people as startup founders. But because they've been in those industries, they realize a tremendous pain that no one else is seeing." 

This pattern of industry insiders identifying overlooked problems represents a unique advantage. Palestinian founders are building strong B2B SaaS companies for regional SMEs, disrupting traditional industries hesitant to adopt technology but recognizing they must change to survive.

Ibtikar has also been actively exposing founders to tools that dramatically lower the barrier to building and testing products, compressing time-to-market and speeding up feature development across its portfolio. While Ambar is optimistic about the opportunity, particularly as these tools enable founders to build faster and more independently, she’s also clear-eyed about the risks. 

Countries like Palestine have long served as a technical backbone for the region, supplying strong engineering talent at competitive costs. As AI reduces demand for entry-level and outsourced technical roles, the challenge becomes existential: how to move from being a source of labor to a source of products.

The hope, Ambar says, is that these same tools can help founders make that leap, shifting talent from service work into building their own companies, and positioning the ecosystem not just to survive the disruption, but to emerge stronger because of it.

AI, Defensibility, and Sustainable Growth

Ambar sees AI fundamentally changing how venture capital evaluates companies. "Now it's less about the tech, and it's more about how you go to market, how you capture market share, and how you build those moats around you," she explains.

The focus has shifted to stickiness and retention. It's not about 100 signups in a month, it's about how many return, how often they use the product, and whether the company has become indispensable. "I'd rather see a company that's maybe growing a bit slower, but is being used consistently, than something that grew super fast but if you disappeared, you'd be easily replaced," Ambar says.

She believes this shift toward sustainable growth is positive. "For so long it was growth at all costs," she notes. Now the focus is on companies deeply integrated into customer workflows or so tailored to user needs that switching becomes difficult.

In many ways, this shift plays to the historical strengths of Palestinian startups. Capital has never been abundant, forcing founders to grow steadily, operate efficiently, and build deep relationships with their customers. Growth may not have followed a classic hockey-stick curve, but it has often been consistent and resilient, underpinned by a strong understanding of user needs.

The Future of Venture Capital

Ambar believes AI will reshape how venture capital operates, pushing funds toward leaner, more top-heavy teams as analyst work like research and data collection becomes automated. That shift raises questions about how future managing partners are developed. “Is it really about analyst skills,” she asks, “or about understanding people and knowing how to support startups?”

For Ambar, the enduring value of VC lies beyond capital: pattern recognition, helping founders make decisions based on others' experience, and offering calm support during uncertainty and chaos.

She also questions whether the traditional VC model still fits today’s innovation landscape. Ten-year funds with 20% carry aren’t obsolete, she argues, but they’re too rigid. The industry needs more flexible structures. "Not every company that can make us money fits that model," she explains. The industry needs more flexibility. "Can we think beyond that structure to be able to support innovation where it is? To meet it where it is?"

2026 Outlook

2024 and 2025 were Ibtikar's biggest years for investments, even amid the challenges. The team made strong investments and continued supporting portfolio companies through daily obstacles. Every challenge presents an opportunity to demonstrate the resilience that defines Palestinian founders.

Looking to 2026, the focus remains clear: execute the first exits, continue deploying Fund 2, and prove that the path from hackathon to global success is viable for Palestinian startups. As Ambar puts it, “Success breeds optimism: more funds like Ibtikar, and more young people choosing to build within the ecosystem.”