By Cecile Blilious, Impact First Investments
Israel wears its crown proudly as a “startup nation.”
It is only logical the country would aim its know-how and its technology to tackle global social and environmental problems. Using technology allows the possibility of scaling up, which in turn allows a more significant impact on society and the environment to be made, over a shorter period of time.
Israel’s technological force and entrepreneurial zeal makes the positive vision of impact investing an increasingly good fit. The Israeli venture capital market has over 7,000 startup companies and dozens of active venture capital firms. This year has seen Israel’s biggest exit ever in high tech. This year’s $15 billion acquisition of Mobileye by Intel was Israel’s biggest-ever exit in high tech. (Overall, exits in 2016 totaled more than $10 billion, up 12 percent form 2015).
We at Impact First Investments are part of a growing ecosystem of accelerators and impact organizations. For now, Impact First is the only fund focusing on social impact with technology; however, interest in such investments is growing, either by angel investors that focus on social tech, or by accelerators and small investors.
Among the social-impact financial organizations in Israel is the Elah Fund. The Elah Fund is a growth capital fund that specializes private equity deals and focuses on high potential, medium-sized, revenue-generating, and export-oriented companies. They invest exclusively in the Negev and Galilee regions of Israel.
2B-Community is an impact investing platform aiming to achieve financial profit and social impact. 2B-Community makes investments in businesses or business projects that are interested in investment for growth, but also to allocate a significant share of the business’ profits to promote a social goal.
Dualis, a nonprofit organization, in businesses to provide personal skills, vocational training, employment, and job creation for “people on the margins” of society.
Additionally, there is Israel Venture Network (IVN) , which is a venture philanthropy network that is made up of high-tech entrepreneurs, business executives, venture capitalists, corporations, and philanthropists in Israel and the U.S. Much of IVN’s activities are centered around employment and career advancement of disadvantaged populations (which include youth-at-risk, people with special needs, and Orthodox, Arab, and Ethiopian populations).
And there is Social Finance Israel, a financial intermediary that endeavors to provide both social and financial returns to investors. They issue social-financial products (for example: social impact bonds) to raise new capital for the most effective nonprofit organizations in Israel. Social Finance Israel addresses Israel’s most pressing social and economic issues, while achieving monetary returns to investors. Social Finance Israel is the Israeli sister of Social Finance U.K. and Social Finance U.S.
And then there’s us, Impact First Investments , a venture capital fund that is incubated by Pitango, Israel’s largest VC firm. Impact First specializes in investments in Israeli technology across healthcare, ag-tech, clean-tech and energy, education, aging and accessibility for underserved populations. Impact First’s first two investments reflect the investment strategy: Intendu www.intendu.com and AngelSense www.angelsense.com.
We are spending time and energy to educate the market. Each company is expected to provide market-rate financial returns, while simultaneously achieving high and measurable social impact. Companies must be B-Corp rated, as well as conduct an SROI analysis of their impact for their stakeholders. In addition, a significant part of each company should be in Israel and/or the company is founded by Israeli entrepreneurs in the U.S. or elsewhere.
I believe this industry in Israel has huge potential to bring social innovation to the world and make compelling returns for our investors.