In the hip Ramallah coffee shop ZAMN, Yousef Ghandour laments the slow Wi-Fi as he launches the beta version of one of his many start-ups, a social networking site that allows users to travel through time to find connections.

Mr. Ghandour, who never wastes a moment, shares the e-books he is currently reading on his iPhone (among them, "Good to Great: Why Some Companies Make the Leap ... and Others Don't"), shows off his blog, and lingers for a moment on his latest vision for a social networking site for Muslims called AnaBasili, or "I'm praying."

"People are really passionate about entrepreneurship and putting Palestine on the map using technology," says Ghandour, a software engineer who is helping to create – and brand – an emerging community of technology entrepreneurs in the Palestinian territories. They call themselves Palestinian geeks, or peeks.

Until now, the primary Palestinian contribution to technology has been outsourcing programmers and engineers to firms in the United States and Israel, including Google and Cisco Systems.

But these new entrepreneurs want to do more. They want to create companies based on their own ideas and hire people to implement them. Already their ventures range from smart phone apps to Web design.

Crucially, the community is now beginning to attract investors. The Sadara Fund, the first venture capital fund focused on the Palestinian territories, launched last year with an initial $28 million to invest in Palestinian start-ups. At the time, Sadara estimated that more than 300 tech companies were operating in the West Bank and the Gaza Strip, employing about 3,200 people.

"We're starting to see some green spots here and there, but not by any stretch of the imagination do we have a mature ecosystem," says Saed Nashef, a Palestinian-American software entrepreneur who lives in East Jerusalem and is a managing partner of Sadara. "But the entrepreneurs have started to think they can go out there and do something of value. If you get one or two of these guys going, you get things going."

From Microsoft to Ramallah

In booming Ramallah, the administrative seat of the Palestinian Authority, cranes and new high-rise office buildings jut from the rolling hills, with new names like Asal Technologies and PalTel emblazoned on the buildings. Many were started with seed money from local nongovernmental organizations.

The potential here prompted Mr. Nashef to return home from the US, where he went to college and worked as a software engineer for Microsoft. Now he has teamed up with Yadin Kauffman, a New York lawyer who was a partner in the first venture capital fund in Israel in the 1980s.

"It was one simple reason that motivates most of what I do here. I can come here and have an impact," Nashef says. "There's no reason not to try to make a difference."

For all of the growth and exuberance of the entrepreneurs, plenty of challenges remain, including outdated 1964 business laws. Nashef says he tried for a year to figure out how to register Sadara in the Palestinian territories before giving up and incorporating the fund in Delaware.

"The industry has some good beginnings, but it's suffered from a lack of risk capital [and] access to international markets," says Mr. Kauffman, Nashef's partner.

Virtual freedom from Israeli control

Palestinian schools produce between 2,500 to 3,000 graduates a year in computer-related fields.

Among them this year are Rasha Rasem Hussein, a computer systems engineering student in her last year at Birzeit University in Ramallah.

Ms. Hussein has already helped launch a start-up called Bazinga, a communal space for local entrepreneurs with mentors, gadgets, and networking events. It stayed open for nine months before it ultimately closed its doors because of funding and management issues.

But Hussein, who in many ways embodies the spirit of the young tech community in Ramallah, is undaunted. "I just love being part of the tech community," says Hussein, a Google student ambassador and one of the few female tech entrepreneurs here. "It feels like everything is possible. You just need to let your imagination work a bit, plus use your network to learn about how people think, then develop some great ideas."

She says her work gives her a sense of freedom despite the Israeli occupation. "It doesn't matter where you are and what you do, you can go anywhere on the Internet – the opposite of what's here in Palestine, with checkpoints and [the] political situation and everything."

Though entrepreneurs are mostly able to work within a virtual community, they do run into life-size roadblocks visiting clients or traveling outside the Palestinian territories to attend conferences.

Saed Shela, who runs SteadyPoint, a software business, was unable to get the necessary permit from the Israeli military to travel from Ramallah to Jerusalem – only about eight miles – to apply for a visa after being invited to attend a conference at Microsoft's headquarters in the US. He says he has tried for years to get a permit to travel in Israel but is always denied. "We have rules here much more than any other place," he says.

Unlike Mr. Shela, Faris Zaher – cofounder and chief executive officer of the discount travel site Yamsafer.me – has an Israeli passport, which enables him to travel between Jerusalem and the Palestinian territories. But it also bars him from traveling to many Arab countries, making it difficult to meet with potential partners and investors.

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His bigger issue, however, is competing for skilled workers in a market-place inflated by the high number of foreign aid workers, he says, noting that NGOs typically pay $1,000 to $1,500 a month, compared with private sector salaries of $400 to $700.

"We believe the private sector is really going to save the Palestinian economy, not the public sector, not the NGOs," says Mr. Zaher, who currently has five employees. "The young people all have the same vision. I think the Internet is very attractive to people in the West Bank because of the ability to export across the border. You can nurture a company only if it's an Internet company because all other sectors are blocked."