The Israeli government announced new programs to support the development of fuel alternatives, totalling over $100 Million in government funding by 2020. This initiative is big news for international investors who may be considering investment in Israel’s alternative fuel companies. The Chief Scientist’s Office in the Ministry of Industry, Trade and Labor is launching this new funding program, in which the government will invest a dollar for every 2 dollars by an investor, either local or international.
This news was announced by Gil Shaki, manager of the cleantech arena in the Ministry of Industry, Trade and Labor, at a panel “Challenges in developing the alternative fuels industry in Israel,” which took place within the framework of the Cleantech 2012 event in the beginning of July in Tel Aviv.
According to Shaki, the funding program stipulates that the investor, rather then the Company, will be the one to reimburse the funds loaned by the government, in return for stocks within 6 years. If the investor does not choose to exercise his option within 6 years, the Company will begin paying royalties from its revenues until the loan is returned. If the Company is not able to generate revenue, it will be exempt from having to return the loan. This is a risk-less route for both entrepreneurs and investors.
“This mechanism will enable companies to raise funds more easily for their technology-related activities, for research and demonstrations,” said Shaki. In other words, the mechanism is meant to help companies at the beta and pilot stages, which are considered “Death Valley” for cleantech technologies, a stage which is difficult to overcome on the way to market.
All this is on top of the existing assistance provided by the Chief Scientist, which includes funding for R&D, technology greenhouses, momentum programs, the “Magnet” program, and international activities like the European Commission’s 7th Framework Program (FP7), roadshows in target markets like the U.S. and China and more. Since the beginning of 2012, 10 grants have been approved for industrial R&D funding in the alternative fuels arena totaling over $2.5 Million. These grants leveraged a total funding of over $5 million in the given projects.
The panel also included Ms. Adi Yefet-Beeri, department head at Israel NewTech, Dr. Bracha Halaf, head of the alternative fuels department at the Ministry of Water and Energy Resources, Amir Zalzberg, of the Air Quality department in the Ministry of Environmental Protection and Sagi Dagan, Deputy Director the Alternative Fuels Office in the Office of the Prime Minister, who also led the panel.
Adi Yefet-Beeri also brought news to cleantech investors and entrepreneurs, saying that the government has decided to form a support network for alternative fuel companies, which will be publicly launched in the coming weeks. The objective is to ease regulations for technological experiments, in order to help companies successfully cross “Death Valley” in the regulatory sphere as well.
The mechanism will assist companies vis a vis different regulatory groups, and also help find specific solutions, for example if a company is interested in diluting more ethanol during a research process then is usually allowed.
According to Yefet-Beeri, the alternative fuels activity is promoted by the Israel NewTech program and by the network of economic attaches of the Ministry of Industry, Trade and Labor around the world, through holding business delegations, attending professional conferences, investment conferences, with the objective being “to find the solutions in order to win in the global market,” accorrding to Yefet-Beeri.
Dagan emphasized that at the Alternative Fuels Office in the Office of the Prime Minister, they are aware that one of the factors which hinder companies in crossing “Death Valley” are bureaucratic and regulatory obstacles, and noted that they are trying to find ways to make interaction between entrepreneurs and regulators smoother in order to promote experiments and projects in this arena.
Dr. Halaf noted that the Ministry of Energy and Infrastructure is checking constantly what are the unmet needs in the global alternative fuels arena, through joint research grants together with the U.S. and Europe, and through international scientific forums, in order to focus solutions on areas where the market need is proven.
More food for thought for investors and entrepreneurs was raised by Zalzberg, who said that the Environmental Protection Ministry holds foremost the issue of turning waste into an energy resource, and that they support research in this arena.
Altogether, these programs emphasize the commitment of the Israeli government to supporting the Israeli alternative fuels industry, a commitment which makes investment in Israeli companies easier and more attractive for investors from around the world.