Where we were hurt the hardest is where we should invest the hardest

Three years after 7 October, the Gaza envelope has more residents than it did before the war. About 66,000 people live in the communities around the Gaza Strip, in the western Negev, today, some 5,000 more than on the eve of the attack. That is a rise of about 10%, two and a half times the national growth rate. The state has put close to NIS 17 billion into a multi-year plan to rebuild the region.¹

Fronterra Investments is a private equity fund taking control positions in profitable industrial and agri-industrial businesses in Israel's southern periphery, and every investment it makes there is a business decision. Fronterra made its first investment in the Otef in 2022. After 7 October, it stayed and rebuilt the businesses there.

Daniel Zelkind, Fronterra's Founding Partner, states the thesis plainly:

"Post-conflict situations are a breeding ground for renewal, rebirth, growth and rehabilitation. What history has taught us is that where we were hurt the hardest is where we should invest the hardest."

What history shows

The record supports him, with one condition. After the Second World War, the Japanese cities that lost the most people to bombing grew the fastest afterwards, and most were back to their pre-war relative size within about 15 years, Hiroshima and Nagasaki included.² In Germany, bombed cities in the West recovered, while bombed cities in the East did not. The researchers trace the difference to the post-war economic system.³

Damage alone does not bring recovery. Backing does. In the Otef, that backing shows in the residents who have come back and in the state's multi-year plan.

People first

Before Fronterra looks at a single number, Zelkind looks at who is across the table.

"I check the people I'm dealing with: honesty, good virtues and values. This is the first go/no-go."

No adventures

The business then has to clear a conservative bar.

"I'm not looking for adventures. The business needs to have solid unit economics, healthy revenue distribution, and close to zero debt or leverage. The preferred situation is a good business with no succession."

That last line describes a specific opportunity: a profitable business whose owner has no one to hand it to. The company works. What it needs is its next owner.

What the Otef has taught

Investing in the region since 2022 has produced two lessons, one about the business and one about people.

"The business lesson is 'no sudden movements': changes are to be made slowly, and if possible, avoid making big changes in the first year."

"The personal lesson is that 100% of the shareholders need to be vetted, no matter how small. And if vetting is not possible, or it has not passed, make sure a wall and a fence are built around the risk."

The business case

Fronterra holds a factory in the south to the same tests as any other investment: the right people, sound unit economics, little or no debt, and no sudden moves after the deal. That is what makes it a business case.

Sources

1. Tekuma Administration figures, reported by i24NEWS, 24 September 2026.
2. Davis and Weinstein, "Bones, Bombs, and Break Points", American Economic Review, 2002.
3. Brakman, Garretsen and Schramm, "The strategic bombing of German cities during World War II and its impact on city growth".