Tel Aviv skyline 370.
(photo credit: Thinkstock/Imagebank)
Ronen Botzer, CEO of the young clean-tech firm Phoebus Energy, wanted more than
just capital when it came time to grow his business. The award-winning company
had already installed its smart pumps – which cleverly coordinate heating and
cooling systems to wring out inefficiencies, save money and limit environmental
impact in one stoke – in major facilities in its home country.
one week at the Tel Aviv University sports club, the largest in Israel,
Phoebus’s system cut 1,300 kilograms of carbon dioxide emissions, and saved NIS
9,000 in LPG costs. But because Israel is a small country, and the potential
international market for their product was huge, when it came time to raise
funds, it turned to another Israeli start-up: Asquith Israel Merchant
“It’s not really a bank; it’s a fund with some bolts and whistles
on it,” says Asquith executive director Michael Freedman, who launched the
company just over a year ago with CEO Eial Diskin.
A year after opening
its first fund, it has paid out its first investment – into Phoebus.
fund’s raison d’etre is to fill a funding gap for small and medium-sized
enterprises (SMEs) with the hopes that they will stay rooted in
Whereas so many of the leading investors are “firm believers that
what Israel is good at is starting up and selling out” to companies abroad, says
Freedman, the Asquith team thinks there is more potential for profit and local
economic benefit for firms that stick around.
“How is this helping to
grow the SME sector in Israel? Because in the end, SMEs are surely where the
jobs are,” says Freedman.
An investor, he adds, “will pay even more money
if you show that you can grow the company out on the five-year scale, rather
than on the six-months scale.”
As a result, Asquith’s process involves
more than just putting money in and getting money out, but providing advice,
building relationships and getting its investors actively involved in the
Both its immigrant connections and its particular legal status
make Asquith a lifeline to international funding; to avoid Israel’s costly
regulatory process, Asquith is domiciled in Jersey, which also precludes it from
raising funds within Israel itself.
But that’s one of the things that
attracted Phoebus to it.
“Part of our strategy for the world market was
to look for investors that could develop us in regions of interest,” says
Phoebus’s Botzer. “That’s what Asquith has.”
“What they do is very
unusual, rather unique,” he continues. “Sometimes you have an investor and they
put in money and that’s it.”
The relationship-focused Asquith, he says,
has a staff that understands business in general and his company’s goals in
particular, which will need more global investors as it continues to
Freedman points out another unusual aspect of the fund.
think we’re the only fund in the world to have a negative management fee. We pay
It keeps us honest. It has the effect of demonstrating to
your investors that you’re serious.”
Indeed, Asquith is very selective
about which companies it invests in. It limits itself to buying equity and debt
in firms that fall in what it calls the investment “sweet spot” – growth
businesses that are already established, have some investment and are bringing
Among the other companies it has found that fit that
description are CartaSense, which produces sensors that help regulate shipping
conditions to reduce waste; Gamasec, a cloud-based Internet security company;
and Aqua Era Farms, which developed fish farming technology that helps raise
Though Asquith’s process of vetting the company was
laborious, Botzer says, in the end it was worth it, though not just for the
“We also met good people and we had good chemistry with them,
which I think is important for every business,” he concludes.