Israel Cleantech Ventures held a $20 million first close toward its purposed $60 million fund, making it the first Israeli VC firm to raise money for the emerging cleantech industry, co-founder Glen Schwaber told PE Week.
Schwaber, Jack Levy and Meir Ukeles, each of whom is under the age of 40, co-founded the Ra’anana, Israel-based firm last September, as PE Week first reported. The firm has since then bulked up its staff, adding Venture Partners Arnon Goldfarb, Israel Kroizer, Eytan Levy and Yigal Stav.
Schwaber says that his decision to leave JVP and launch Israel Cleantech Ventures was more about the opportunities he saw in cleantech deals rather than any particular interest from institutional investors.
Cleantech looked like an untapped opportunity to Schwaber, especially in Israel. He points out that there are 250 startups that fall into the cleantech category while the country has worked to create desalinization and geothermal power projects. Up to now, most of the innovation has come from large corporations. “There’s an opportunity to be a first mover here,” says Schwaber.
Although Israel Cleantech Ventures may be the first pure-play cleantech fund to get off the ground in Israel, it isn’t the only one there. General Partners Astorre Modena and Harold Wiener, along with Venture Partner Zwi Vromen launched Terra Venture Partners last year. The Jerusalem-based firm has targeted $50 million for its first fund, but has yet to hold a close.
Both firms are focusing on energy and water technologies. Israel has been a leader in desalinization and water treatment technologies for years, an expertise both groups hope to leverage. Neither firm has announced an investment to date.
VCs funded six cleantech startups in Israel with $50.6 million during 2006, according to data from the Cleantech Venture Network. Three of the startups that raised money operate in the fields of water purification and reclamation, the data shows.
Schwaber sat on the boards of optical broadband companies CyOptics, Inplane and Kodeos Communications while at JVP. He opted to leave the firm just as it expects to raise a fifth IT fund this year, because he says the venture market in Israel has matured.
“The larger all-purpose funds are going to have trouble generating good returns,” he says.