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Israel’s State of Climate Tech 2021

(Courtesy of Israel Innovation Authority) According to the Climate Tech report, the most significant challenge facing climate companies is securing funding, along with difficulties in Scale-Up, finding Beta Sites, and regulatory barriers

Dror Bin, CEO, Israel Innovation Authority: “The climate crisis is the most significant global threat facing humanity. While a number of activities are taking place at an international level, the eyes of the entire world are looking to the technology sector to produce innovative and ground-breaking solutions to reduce greenhouse gas emissions and deal with the consequences of the crisis. Climate innovation is not just an important stage in the war against the climate crisis, but also a significant business opportunity for the growth of an innovative, diverse and sustainable technological industry.”

Uriel Klar, Director of PLANETech: “The report we compiled positions Israel as a global leader in climate tech and throws a spotlight on the areas that have unique potential in Israel. Israeli entrepreneurs that will develop climate solutions and technologies will build a new generation of unicorns in Israel and will help in coping with the biggest challenge for humanity. The vision of PLANETech and its partners is to transform Israel into a global center for climate technologies that helps reduce greenhouse gas emissions in Israel and around the world.”

The Israel Innovation Authority, in collaboration with the PLANETech community—a joint venture of the Israel Innovation Institute led by Dr. Jonathan Menuhin and Consensus Business Group led by Vincent Tchenguiz, published on Monday, October 18, for the first time, a report on “Israel’s State of Climate Tech 2021” dealing with the status of the Israeli innovation industry and its current and potential future contribution to helping with the global challenges created by the climate crisis. As such, the report identifies the innovative technological companies that are finding solutions to one or more of the climate challenges facing the world.

The Main Findings:

According to the report’s findings, beginning in 2014 there was a leap in the number of new startups dealing with climate issues in Israel, with their number reaching a peak in 2016. The proportion of these new climate companies out of the total number of new high-tech companies increased considerably, reaching nine percent of the total companies established in 2020.

There are 637 startups and growth companies developing climate technologies, and the five challenge areas are: Climate Smart Agriculture, Clean Energy Systems, Sustainable Mobility & Transport, Eco-Efficient Water Infrastructure and Alternative Proteins. Most of these innovative companies are young, up to seven years old, with up to 10 employees.

Until today, more than 560 private investment entities have invested in Israeli climate companies, mostly venture capital funds, out of which two-thirds are foreign investment entities.

– These same entities invested a total of 2.97 billion dollars between 2018 and 2020. The total investments in the first half of 2021 amounted to 40 percent of the total investments in the three previous years.

– However, out of the 20 leading investment entities in Israeli climate technology, there is no single entity dedicated to climate technologies. Moreover, in Israel, to date, there is no dedicated climate tech investment group. In addition, the Israeli government invests significantly in climate companies.

– From 2018-2020, led by the Israel Innovation Authority, the state invested a total of $280 million in promoting climate tech research & development.

– A special survey that was commissioned for this report, in which close to 200 Israeli climate companies participated, found that the most significant challenge for Israeli climate companies is securing funding. 72 percent of the surveyed companies noted that today, access to capital is the main challenge to their growth.

Israel in comparison with the world – Israeli technologies are found at the top of the list of countries (G20) operating in the following fields: cultivated meat, irrigation systems, precision agriculture and water desalination. However, Israel is far from fulfilling its potential as reflected in its relatively low rate of participation and success in the Horizon Program.

The report identified four challenge areas with significant potential for Israeli climate innovation:

– Clean Energy Systems: 235 companies, of which 119 startups have raised $2 billion. Energy Storage was identified as a field with especially high potential, with 34 startups that raised $265 million.

– Climate Smart Agriculture: 212 companies, of which 130 startups have raised $950 million. Precision Agriculture was identified as a field with especially high potential, with 69 startups that raised $489 million.

– Sustainable Mobility & Transport: 127 companies, of which 75 startups have raised $1.8 billion. New Mobility was identified as a field with especially high potential, with 69 startups that raised $1.19 billion.

– Alternative Proteins: 45 companies, of which 42 startups have raised $364 million. Cultivated meat was identified as a field with especially high potential, with five startups that raised $185 million.

An examination of each area in accordance with its rate of young companies (companies that were established within the last three years), and the volume of investments, reveals three main groups of technological areas: established fields (a low rate of young companies with a high volume of cumulative investments), which includes the areas of Clean Energy Systems and Sustainable Mobility & Transport; early emergence (a high rate of young companies and a low volume of cumulative investments), which includes Novel Materials, Circularity, Food Loss & Waste; and rapid growth areas, which include the areas of Alternative Proteins and Green Construction.

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