When we think of green technologies, fancy solar panels and cars that go vroom on space-age hydrogen batteries may come to mind. Or how about a machine that sucks up greenhouse gases so the whole global warming problem will be solved overnight?
But before the next big thing that might never actually be invented, making existing earth-bound practices like farming more efficient is among the core solutions that our energy-intensive planet needs. This is the focus of a new Israeli-founded clean-tech fund called AquAgro II.
The recently announced fund is seeking early-stage investors - those people and companies who see their future fortunes tied with the success of green technologies, and those in particular with the vision and practical nature of Israeli clean-tech entrepreneurs.
AquAgro II aims for a portfolio of about 10 to 12 companies. It will be based on the model of the first fund, AquAgro, which invested $50 million in Israeli clean technologies starting three and a half years ago in Tel Aviv.
Launched after success of first fund
Hillel Milo, the managing partner of both funds, says AquAgro II is a natural extension of the first. Out of AquAgro's portfolio of nine Israeli companies, the fund has already seen a partial exit of the plant genetics company Evogene, now listed on the Tel Aviv Stock Exchange.
Other companies in the portfolio include the water technologies incubator Kinrot; Desalitech, which offers a new reverse osmosis technology; and Transbiodiesel, which has developed new enzymes to create biofuel.
AquAgro was formed by the Israeli conglomerate Gaon Agro Industries, AquAgroGbR Germany and Ainsbury Properties, along with fund managers Hillel Milo and Nir Belzer. The AquAgro II funders hope to bring the same kind of down-to-earth opportunities to investors.
Milo says: "The strategy of our fund is determined by us. We see the fundamental needs in the world, which are really water, energy and food. If there is a strategic niche between one of our investors, it is a mutual benefit, but not a factor in why we decided to invest in food and smart agriculture. We decided to do so because there is a fundamental need."
The team is actively scanning new opportunities for investment purposes, and this time, like the last, there is a mandate that one-third of the companies can be outside of Israel. This wasn't exercised in the first fund simply because there was no need to search for opportunities elsewhere, says Milo, a pioneer in the venture capital industry in Israel.
Thinking ahead of the green curve
Israel is being lauded on the world stage as a clean-tech performer for investors. A new report from a Washington-based group looked at 27 green economies and, contrary to perceived investment potential, Israel was one of the top four along with Germany, Sweden and Denmark. The report summarized that smaller countries are showing better investment performance. Meanwhile, in large countries like the United States, the solar energy industry has gone bust and Israel's clean-tech industry could go in breakaway mode.
So investing in blue and white technologies simply makes sense, agrees Milo. "We invested in Israel because we had such a high quality deal flow," he says. "There was no need to go outside. And the second reason is that we are very involved in our companies. We actually participated actively in growing the companies from acquisition. [We would] require the same from an investment outside Israel, but it is something we could practice through partners."
Milo is very knowledgeable about the green social and green environmental aspects of life in Israel, expressing support for the advocacy work of Adam Teva V'din - Israel Union for Environmental Defense, a non-profit group that lobbies for environmental laws to be made and enforced in Israel. However, he adds: "I think that people who can affect the environment don't belong in one sector. It's the people who actually comply with those [laws who make] new standards for the environment, and eventually these are the people who produce the product systems."
The veteran venture capitalist says he chose clean-tech over high-tech because he wants to be ahead of the curve. And what is his curve? Aside from an economical impact, "ones that have a very serious impact on the environment and profound social impact. I cannot live in ideologies. I have to do something about them," he says.