Getting Funded and Working with Innovation with the Israeli Utilities: Dos and Don’ts from Leaders of Innovation at WaTech™ and KARAT – CleanIsrael Network Meetup –  August 2^nd,2011, 9 am. (RSVP: http://www.meetup.com/cleanisrael/events/25000871/)

by Shelli Zargary

In the context of the relatively small Israeli domestic market, utility corporations such as IEC – the Israel Electric Corporation – and Mekorot the Israel National Water Company are giants that benefit from a large bank of employees, a dependable customer base and relatively high economic stability. But these giants don’t slumber in their comfort zones; on the contrary, like the stereotypical Israeli Sabra, they are technologically advanced, ingenious pioneers who embrace wholeheartedly their mission to manage the responsible consumption, development and protection of Israel’s scarce natural resources. To do so, both Mekorot Israel National Water Co. and Israel Electric Corporation (IEC) have accumulated great and diverse assets in terms of knowledge, technologies, human resources, sites and equipment that today they are more aware and interested in leveraging to drive commercially, technologically and ecologically valuable projects that will serve the interests of the utility companies themselves, the water and energy sectors, the State of Israel and sustainability worldwide.

To achieve these both lofty and profit-driving goals, each company has set up a kind of internal incubator to identify, invest in, collaborate with and otherwise promote research and venture projects in their areas of expertise.  Israeli cleantech entrepreneurs developing potential ventures in the water and energy sectors, especially ventures whose business models will require any kind of cooperation with the utilities companies, would be wise to consider approaching Mekorot’s WaTech™ and IEC’s KARAT.  CleanIsrael Network is hosting a discussion with Amikam Levanon, currently Special Advisor to KARAT, CEO & President at Alimo Holdings and former General Manager of Negev-based incubators Iris Ventures and Rotem Ventures; and with Yossi Yaacoby, Director of WaTech™ and former Marketing and Projects Manager at EMS Mekorot Projects.  The session will take a look at how the incubators operate and what entrepreneurs can and should do to maximize their chances of winning KARAT and WaTech™ investment and support.

Mekorot founded the WaTech™ Water Technologies Entrepreneurship Center in 2004 to leverage Mekorot’s values to promote water technology solutions in Israel and worldwide. Aptly titled “water technologies accelerator”, WaTech™ focuses on four primary areas. These include water technology-related business ventures and collaborations; applied research using Mekorot’s internal and third-party knowledge; intellectual property development and patenting, again as a service both for internal, joint and external IP; and water sector information management.  In all these activities the company invests significant resources to promote sustainability and environmentally friendly water technologies that capitalize on non‑perishable natural resources.

WaTech™ manages projects in the categories of water quality, desalination, wastewater treatment and effluent reuse, sustainability (environmental quality and green energies), water security, engineering services, water supply command and control systems and models for optimized water system operation and management. Readers can download a detailed description of Mekorot’s “wish list” as to the technologies they would be most interested in supporting using the following link: http://www.mekorot.co.il/Heb/WaterTechnologies/Documents/WaTech_Reshima-eng.pdf To date WaTech™ has participated in some 20 joint projects from among the some 560 proposals they have evaluated. The supported ventures have benefited from access to a wide variety of Mekorot facilities including alpha and beta testing procedures and sites, professional experts, engineering support, business counseling and a wide network of international contacts. Some of the companies that have collaborated with WaTech™ include Atlantium, Aqwise, Bacsoft, Kinrot Ventures, Lesico Cleantech, Rotec, Solaris Synergy and many others.

The IEC, the national Israeli utility that generates, transmits and supplies electricity set up Karat (Hebrew acronym for “Accelerating Technological Ideas”) as an internal venture management unit within the company to support and invest in innovative initiatives in energy-related fields that promote “green” (clean) electric energy, lower energy costs, and higher energy efficiency, all in concert with the aim to reduce national and global dependency on carbon fuels.  Early-stage ventures participating in the KARAT program receive access not only to funds (up to NIS 2m) and to fund-raising efforts, but also to the electrical grid that is so critical for testing and validating technologies, as well as to IEC’s scientists and engineers, strategic partners and other services that significantly facilitate the ventures’ business success.

Karat promotes energy-related initiatives, in particular in the areas of renewable energy (materials, devices, systems, control, etc.); environmental protection (reduction of greenhouse gases, electromagnetic fields and other emissions, recycling, waste treatment, etc.); use of electricity generation process by-products;   improved energy efficiency, storage and smart-grid systems.  Karat has clearly defined criteria and procedures for acceptance that seek out the most unique yet commercially viable technologies; it now plans to expand support for its portfolio companies by setting up a Global Partnership Program. Hundreds of ventures have been screened; the list of innovative companies approved and operating within KARAT includes promising startups such as InnoSave, Metrycom, Burning Solar Ltd., Even-Or Technologies, PVnanoCell and Powercom.

The thresholds are high and the application processes are not simple, but they can make the difference.  Ventures that go the route of applying to Karat and WaTech™ will already benefit from the evaluation process itself.  Needless to say, those ventures selected as participants will get a big basket of goodies, including funding, publicity, technical and business support and access to strategic local as well as global players that can be the deciding factor to bring rapid business success.

* shelli.zargary@gmail.com

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2. How to join the CleanIsrael Network
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Jason Eis, Senior Strategy Manager, The Carbon Trust

UK Industry experts shared insights on trends & strategies that can help innovative Israeli cleantech ventures meet with success in the global market

In the dynamic and uncertain waters of the rapidly developing cleantech sector, startups will improve their chances of success by navigating carefully and making smart decisions on their commercial focus and business model from the outset.  To help its members make the right decisions, CleanIsrael invited experts Jason Eis, heading up Innovation Strategy for the Carbon Trust, UK and Richard Youngman, MD Europe & Asia, the Cleantech Group to share their insights, experience and expertise on the topic.  Both speakers indicated that while today’s trends show that currently it is more difficult to obtain funds for new ventures, nevertheless the megatrend bringing cleantech to the mainstream continues. The UK and global markets are expanding and more and more varied sources are seeking innovative cleantech technologies in which to invest.

The event kicked off with opening remarks by Ariella Grinberg, an analyst at ICV, and Gabby  Czertok, CEO of HydroSpin and Managing Director of CleanIsrael, who co-hosted the event for the CleanIsrael Network. Next on the agenda was Richard Youngman, MD Europe & Asia for the Cleantech Group, the world’s premier intelligence service on global cleantech innovation, who previously spoke at CleanIsrael in 2008.  He gave a brief analysis on how VC funding for cleantech companies has evolved since his previous appearance in 2008. From a peak of US$8 billion in 2008, the bulk of which was invested in large-scale, capital-intensive renewable energy and infrastructure technology companies,  the volume of investment has decreased slightly but the number of transactions has grown. Until the market hears reports of success and positive returns on the big cleantech endeavors of the last few years, focus within the sector will remain on resource efficiency projects characterized by secure business models involving smaller investments, partnering and risk-sharing. See graph below.

In addition to cleantech-specific VCs, investments in cleantech are also being made by private, usually low-profile individual and family office investors, as well as by large corporations carrying out technology scouting to broaden their portfolios.  Signs of stronger interest from public equity investors are evident in the performance of the Cleantech Index. Youngman concluded that the cleantech theme has gone from niche to mainstream, from renewables to energy efficiency and from California to China in a short space of time: new startups must take these changes into account when strategizing their market entry.



Source: The Cleantech Group

The primary presentation on commercializing cleantech technologies was delivered by Jason Eis, responsible for setting strategic direction for RD&D programs and planning commercialization support for new ventures at the Carbon Trust, a not-for-dividend company aiming to accelerate the transition to a low carbon economy, through various programs including collaborative RD&D between technology developers and buyers, as well as integrated packages of grants, advice and networking for cleantech entrepreneurs.  A former McKinsey project manager and currently a policy advisor to the British government, Eis shared his insights on the complex and dynamic cleantech playing field, where the rules of engagement are still not clear. He recommends that in order to survive in these market conditions, cleantech ventures must analyze public policies and invest their attention as much in understanding how such policies drive the market demand for their technologies, as they would traditionally focus on the technology itself.  Eis gave several examples of cleantech market uncertainty in the form of technology alternatives that are dependent on differing infrastructure which the market will eventually have to choose between, such as electric versus fuel cell vehicles or CHP versus heat pumps. To date countries don’t yet know where they will invest and policies are often contradictory; effective cleantech companies’ business models recognize and negotiate these issues by supporting and influencing industry and government standards, and by partnering with corporate leaders that have technological staying power and can help them facilitate market access.

Eis described how the Carbon Trust offers a commercial deployment-oriented approach to R&D by bringing together “convened consortia” of large technology buyers in specific subsectors, such as offshore wind, to identify challenges and barriers  and define R&D projects oriented toward commercial opportunities, hence reducing the risk to innovators.. These programs are open to innovators across the world, and they are currently defining new program areas for the next 3 years. This experience and knowledge guides the Carbon Trust in the advice it offers to startups while also positioning them to offer more services and funds to new ventures.

The Carbon Trust also offers incubator services to fast track new entrepreneurs across the cleantech “Valley of Death”. Services include grants, broad networking opportunities and advice using a proprietary diagnostic tool. They have assessed 2000 and supported 300 ventures to date and have capacity to scale up by at least 2-3x this volume. For each million pounds Carbon Trust invested, the companies were able to raise 13 million in private funds, and 67% of the ventures they supported achieved commercial investment. Eis stressed the increasing role of corporates in cleantech that startups can engage as part of an effective business strategy.

Eis cited other UK agencies offering assistance and financing such as the Technology Strategy Board and the Energy Technologies Institute.  Moreover, public funds for cleantech in the UK will be available in the near future via the Green Deal and the Green Investment Bank, the latter is expected to offer £2-3 billion in public money to leverage up to £15 billion in private funds.  Overall the message was that Israeli cleantech ventures would do well to include the UK in their investment and development programs and the Carbon Trust is very interested in investigating Israeli cleantech ventures.

Both speakers indicated that they find Israeli cleantech ventures to be of interest. When asked how he characterizes Israeli cleantech, Richard remarked that Israeli ventures tend to be highly technical, and because the local market is small, most ventures’ route to market involves a challenging cross over a geographical divide at a relatively early stage. To succeed in these tough circumstances, Richard recommends that the entrepreneurs be very realistic in evaluating the time it will take them to get to market and to set business plans accordingly.

Jason’s observations largely concurred; he commented that in many areas of the cleantech sector the role of buildup and achieving maturity in your local market before extending out globally is very significant.  This factor creates a tough challenge for Israeli cleantech startups that face more difficulties breaking into foreign markets than those in other high-tech sectors; at the same time, he notes that Israeli ventures tend to be outward- oriented early on relative to ventures in other major markets.

The event drew a large audience with representatives from cleantech startups, venture capital funds, established firms and academia. The atmosphere was positive and the speakers answered many questions and met with several attendees one on one after the presentation.  The general presentation was preceded by a closed Round Table session focused on innovation in efficient energy & water management in buildings that enabled CEOs and managers of interested startups, such as TriDiNetworks, Emefcy and Panoramic Power among others to present their ventures to the guest speakers in advance and get some valuable individual feedback and have more detailed discussion. Thanks go to the Carbon Trust and to Israeli Cleantech Ventures for co-sponsoring the event.

By Shelli Zargary, shelli.zargary@gmail.com

Shelli Zargary, a veteran marketing and marcom professional with some fifteen years of experience in the Israeli high-tech sector, has joined CleanIsrael to assist with marketing activities.

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1. Getting Funded and Working with Innovation with the Israeli Utilities: Dos and Don’ts from Leaders of Innovation at WaTech™ and KARAT – CleanIsrael Network Meetup
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Aora Solar has a unique, modular technology capable of generating electrical power a reality for billions across the globe living off the grid,  in remote communities, requiring a reliable, clean power, around the clock.

Yuval Susskind, COO and Co-Founder

Company History

Aora Solar was founded in 2002 as EDIG Solar, a member of the EDIG group of companies. The company has developed an advanced solar-hybrid power generation unit based on breakthrough intellectual property licensed from the Weizmann Institute of Science. The company built and operates  Israel’s first and only grid-connected solar thermal power plant in the Arava Valley at Kibbutz Samar.

Innovation

Aora’s modular, small-scale solar thermal units, comprise of a field of 30 tracking mirrors (heliostats) focus the sun’s rays onto the top of  a tower, where a gas turbine converts the 1000C heat energy into electrical energy. Unlike larger solar thermal systems that require a liquid (usually super-heated water or oil, used to generate steam), Aora’s systems needs no liquids to operate. In addition to solar heat energy, the unit can operate on fuel and biofuel, ensuring operation even with solar irradiation. Each modular unit produces 100kW electric in addition to 170kW thermal power,  enough to power about 70 US households.

These hybrid power system operates either on solar energy or on conventional fuel, thereby offering remote communities, uninterrupted power- 24/7.

Market & Strategy

Aora is focused on providing modular energy units to emerging economies, particularly India and China, where explosive population and growth of the middle class are driving demand for power where Generation, Transmission and Distribution infrastructure do not exist.

Competition

Although there are several major solar thermal companies, including leading Israeli companies BrightSource Energy and Siemens CSP (formerly Solel), they are focused on multi-hundred megawatt installations, which are significantly more capital intensive and face massive regulatory and other hurdles. Aora also competes with traditional solar PV and solar concentrated photovoltaic companies, but believes its modular and low-cost solar hybrid offering is unique solution in the spectrum of Rural Solar- solutions for off-grid communities.

Financials

In early 2007, Aora closed it’s initial $5M Series A funding round. Until then, the company had been founded and supported by EDIG, the parent company in the group.

Presently, Aora is in the process of seeking a $5M Series B round of financing.

Contact

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