Government Should Give Incentives to Climate Tech Companies to Stay in Israel
The first climate tech conference of Israel was conducted on Wednesday where it was heard that the government needs to give incentives to climate tech companies.
These should be given to benefit them enough that they stay in Israel for some time, before they decide to look for bigger overseas markets.
Companies moving abroad
Recent months have seen a number of homegrown companies make announcements about shifting abroad.
These include biotechnology firm Future Meat, which is based in Jerusalem and creates lamb, chicken and beef products that are made from animal cells.
They plan on setting up a production facility in the US. There is also the developer of cultured milk and dairy called Remilk, which intends on shifting to Denmark to set up the world’s biggest production facility of cow-free milk.
One of the biggest VC funds in Israel is called Pitango and its Head of Impact and Sustainability, Cecile Bililious spoke at a session on climate tech investments in Israel.
She said that Israel offers a small market, while companies want to conquer the world and are global by design.
She added that if the companies don’t have any good reason to stay, they would just move to the US, or any other big market.
But, she also said that Israel has the potential of offering more opportunities for climate tech as opposed to other fields.
She said that climate tech solutions have a big market in Israel, from gas and oil companies, to utility firms to large corporations.
She went on to say that with their experience in Israel, the companies would be able to scale up, but they need to be facilitated.
This is where the government should come in because they have to provide the ecosystem with incentives that would allow these startups to first introduce their solutions in Israel and then expand to other countries.
OurCrowd’s investment partner, Liat Sverdlov said that even manufacturing could offer local opportunities to climate tech companies.
He said that startups that were not generating enough revenue yet were facing difficulties in securing state financial incentives.
The NIS three billion plan had been approved by the government back in June for boosting climate tech.
This is an umbrella term referring to technologies for food manufacturing, water treatment, clean energy, waste reduction, transportation and supply chain improvements.
According to an inter-ministerial report, investors believe that climate initiatives are high risk and offer profits in the long-term, so they hesitate in making investments.
Product development related to climate is a complex process, can take years and depends on hardware that can be expensive to develop. Plus, it also has a high risk.
It requires high investment for the long-term and the companies involved have to absorb significant losses before they get to a point where they can expand and start making profits.
Investors need to be shown that a big problem can be resolved for them to be willing to take a big risk.