Yoni Cohen of Forbes magazine wrote a great piece about the cleantech revolution proceeding in Israel, with an interview of my two friends and colleagues, Jack Levy, Me’ir Ukeles and Glen Schwaber:

Cleantech Investing In Israel, The Startup Nation

 

 Israel is the “Start-Up Nation.”  The tiny country has more scientists, engineers, and start-ups, per capita, than any other nation in the world.  Numerous Israeli firms have been acquired by leading multinationals including Google, IBM, and HP.  Other Israeli start-ups have gone public; more than 50 Israeli firms are listed on the NASDAQ alone.

Israel is also a hotbed of cleantech entrepreneurship. According to a new report from the Cleantech Group and WWF, Israel is the second most innovative country worldwide for cleantech.  (Denmark ranked first).  “Coming Clean: The Cleantech Global Innovation Index 2012” finds that Israel leads the world in creating cleantech companies and has produced a disproportionate number of high-quality firms.

Israel Cleantech Ventures (ICV) is the leading cleantech venture capital firm in Israel.  To learn about Israeli cleantech innovation and ICV’s strategy and investments, I spoke with the firm’s three founding partners: Jack Levy, Meir Ukeles, and Glen Schwaber.

Q: Israel is often described as the “Start-Up Nation.”  Why?

A, Jack Levy: Per capita, we have by far the most start-ups, particularly in cleantech. Although Israel is 60-plus years old, the country’s private sector is really young.  Its roots are in the 1980s and 1990s.  A lot of the dynamism in the economy really comes from that.  Another driver is the military experiences that young people go through, which gives them great responsibilities, great opportunities, and a can do attitude.  But the driver that is most important and hardest to replicate is cultural, the perspective that failure can be one step along the way.  America shares that perspective, but there are plenty of other cultures where a fear of failure keeps very talented people from taking risks or leaving larger organizations to start enterprises.  Israel has a risk-taking culture.  A lot of it comes from the fact that the downside is not as strong.  If you fail, you’ll try to learn from that failure and keep going.  People won’t hold your failure as a strike against you.

Q: In what areas is Israel strongest in cleantech innovation?

A, Meir Ukeles: At Israel Cleantech Ventures, we focus on areas that make sense in Israel for venture investing.  Generally these are areas where Israel has very strong roots, in traditional energy and water industries.  Israel is a dry country with a lot of sunlight and, up until recently, no domestic fossil fuel resources.  Not surprisingly, technologies for solar, water efficiency, water treatment, water reuse and, in the last 10-15 years, desalination, have pretty deep roots.  Call that one bucket.

The second bucket are startups that draw on technology innovation and intellectual capital out of what would be called traditional technology industries: semiconductors, power electronics, communications, and wireless in particular.  There has also been some innovation in energy storage, a lot of which over the years was funded by or benefited from research and development done in the military and in the defense establishment and then, in the last 20 years, has been a hotbed of more traditional venture-backed, for-profit activity.  There is a lot of innovation that comes from those roots and finds its way to the biggest problems of our era: resource efficiency, resource imbalances, and the environmental footprint of consumption.

The third bucket is from pockets in which Israel’s traditional industrial base has a lot to contribute.  Chemicals are one area where there is a lot of competence, some of which flows to the water industry.  Other aspects go to agritech and green fertilizers, herbicides, and pesticides.