An Israeli venture capital fund is taking a pragmatic, business-centered approach to climate change, believing innovation and technology are key to resolving the challenges it poses.
Capital Nature CEO Ofir Gomeh predicts the entire global economy will undergo a dramatic transformation in the coming years, shifting towards decarbonization and decarbonized industries, with business opportunities as a driving motivator.
“It’s a huge technological opportunity, a huge economic opportunity,” he tells NoCamels. “It’s the only way to save the world, so in that sense, climate [tech] will be everywhere, and therefore we will.”
Originally created as an incubator for very young startups in the climate ecosystem, in recent years Capital Nature has evolved into an investment fund, with a focus on decarbonization.
This means reducing the use of fossil fuels like coal and oil that release carbon dioxide into the atmosphere, where it traps heat from the sun and causes the planet to heat up, and also reducing the amount of carbon already in the atmosphere.
Technologies advancing decarbonization tend to center on carbon-free and renewable sources of energy such as wind, hydro and solar, and reducing gas-powered vehicles in favor of electric models.
Capital Nature was founded in 2012, when Investment Manager Orelle Khalili says climate technology “was not cool.”
“We are actually Israel’s first climate-focused fund,” she tells NoCamels.
And, Khalili adds, the fund sees many aspects of modern technology as having the potential to help deal with climate change.
“Today, we’re not necessarily just focusing on mobility and energy, but really on anything and everything that could be considered climate [related],” she explains.
“We believe that that is what it is evolving into,” she says. “It’s shaping the technology that we use in our daily life in every sense of the word.”
According to Khalili, because of the small size of the country and the limited number of companies actually actively working on climate change solutions, investors in Israel must look beyond the scope of the climate ecosystem in Israel.
She gives the example of Copprint, one of the startups in the fund’s portfolio, which had an environmental factor without even realizing. The Jerusalem-based startup uses copper ink to print electronics instead of the industry standard of silver, whose mining causes considerable environmental damage.
“They weren’t even aware that by producing these inks, they are significantly reducing a lot of toxic waste, a lot of silver mining,” says Khalili.
“[It’s] not necessarily within the scope of the usual climate suspects that VCs here are looking for, but [they’re] actually having a significant impact.”
The portfolio currently includes 15 startups at various stages of development and covering a gamut of the environmental ecosystem, from innovative battery designs to reducing food waste.
But, says Gomeh, the fund does tend to “shy away” from the agriculture and food sectors, not because they are any less crucial to mitigating the impact of climate change, but rather because they require specialized knowledge.
“We find the other things we do are [varied] enough for us to focus on,” he says.
Trucknet, another of the startups in the Capital Nature portfolio, is an example of coupling profitability with environmental responsibility.
The company has developed a way for transportation providers to ensure that their vehicles do not make any journeys without a full complement of cargo, by selling spaces in the trucks and vans to different companies.
This not only reduces transportation costs for all involved as they share the expense, but also cuts the number of vehicles on the road, thereby causing less carbon emissions.
“They built the marketplace,” Gomeh says of the Eilat-based Trucknet, which also has offices in France, Romania and Spain.
“They’re the owners of the marketplace, and then cargo owners and truckers come in and do whatever they need to do in order for trucks to go,” he says.
Perhaps surprisingly, the fund’s shareholders include Israeli defense technology behemoths Elbit Systems and Rafael Advanced Defense Systems, but Gomeh points out that these companies are also interested in developing greentech such as sustainable aviation fuel for fighter jets.
“Why would the army care if an F-16 flies on regular aviation fuel or sustainable fuel?” he says. “Well, it does matter and they do care.”
Furthermore, technology developed for the military often finds its way into the civilian world, such as unmanned aerial vehicles like drones, which Amazon intends to bring into widespread use for deliveries.
And, he explains, the smaller batteries and other lightweight components developed for the military drones will also find their way into private electric vehicles.
Ultimately, Gomeh says it is possible to draw a straight line between the massive investments being made in defense technology and tomorrow’s climate ecosystem.
“We’re trying to be there and situate ourselves at this intersection,” he says, “so we are able to deploy defense technology into climate, and help it grow as much as we can.”
3rd July 2024