Food-tech and ag-tech are Israel’s largest climate tech sectors

Energy transition is one of the more popular climate tech fields in Israel, with nearly 200 start-ups dedicated to the matter.

 Founders of the Climate Solutions Festival which took place in October 2022, from left to right: Doron Markel, Jeff Hart, Galit Levi, Avi Hasson. (photo credit:  Eliran Avital)
Founders of the Climate Solutions Festival which took place in October 2022, from left to right: Doron Markel, Jeff Hart, Galit Levi, Avi Hasson.
(photo credit: Eliran Avital)

Israel is well on its way to becoming a global climate tech hub, according to new data presented by Start-Up Nation (SNC) Finder. Over the last two years, over 850 companies within the climate tech sector have received venture funding or grants, having raised over $1.5 billion just last year.

“2022 was the second-best year in terms of investments for Israeli climate tech since 2019, after the all-time tech investments record of 2021. In 2022, climate tech companies raised almost $1.6 billion in private capital across 164 rounds,” said Yael Weisz Zilberman, climate tech sector lead at SNC.

“There is a rapid acceleration of the number of Israeli start-ups with solutions addressing climate change, a positive trend which is different from the ongoing decline in the number of new start-ups established in Israel in general since 2017,” she said. “In 2022, climate tech start-ups represented 19% of all the new start-ups established in Israel, jumping from 11% in 2021.”

A report from SNC highlighted six key fields within climate-tech that encompass a majority of the companies within the space, as well as how many active companies operate within those fields: food and land use (259), cleaner industry tech (234), energy transition (194), water solutions (82), transportation and logistics (66) and carbon tech (39).

Climate tech and food tech go hand-in-hand

The most populous climate tech sector – making up 29% of the start-ups mapped by SNC – is food and land use, which encompasses a vast majority of the food-tech industry. Innovations in sustainable proteins have acted as a driving engine behind food-tech’s resilience against recent market regression, and Israel’s contributions to the technology has positioned it as second in the world in terms of sustainable protein investments.

 Yael Weisz Zilberman (credit: Miri Davidovitz) Yael Weisz Zilberman (credit: Miri Davidovitz)

“Israel continues to lead as a global hub for start-ups in alternative proteins with over $1 billion in VC funding in the last two years and an increased share of climate tech investments,” said Aviv Oren, Good Food Institute Israel director of business engagement and innovation.

A recent report from the institute noted that while market slowdown has resulted in a 42% decrease in Israeli tech investments between 2021 and 2022, investments in food-tech companies (including the alternative protein sector) were somewhat insulated against the negative impact, reflected in a mere 18% decline.

“For renewable energy to become not only the leader in new energy, but also the leader in energy in general, you'll need to solve the storage issue.”

Dr. Astorre Modena, managing partner at Terra Venture Partners

Sustainable farming is also a critical issue being tackled by companies within this climate tech category. Irrigation, new generation fertilizers, precision agriculture, crop preservation, regenerative agriculture, eco-efficient farming equipment and indoor farming are among the many developments being made by start-ups within the sector.

Climate tech is wide and getting tall

ENERGY TRANSITION is one of the more popular climate tech fields, with nearly 200 start-ups addressing issues related to energy generation, energy transmission and distribution, energy usage and storage. The optimized utilization of common elements such as stone and water have enabled significant leaps in the energy storage field, as have more complicated technologies such as the flywheel-driven energy storage technology implemented by EV charging tech developer ZOOZ.

“We’re big believers in energy storage and electrification. It’s the number one challenge for the entire renewable energy field to really become the number one energy source,” said Dr. Astorre Modena, managing partner at Terra Venture Partners. “For renewable energy to become not only the leader in new energy, but also the leader in energy in general, you’ll need to solve the storage issue.”

Another growing sector within climate tech is mobility, which is becoming increasingly relevant as automotive tech advances toward electric vehicles and public transportation and mobility services continue to innovate new ways to move people around. Mobility optimization such as micro-mobility, ride-sharing and accessible public transport as well as fuel efficiency and fleet management are all critical issues in the space.

“There is a rapid acceleration of the number of Israeli startups with solutions addressing climate change, a positive trend which is different from the ongoing decline in the number of new startups established in Israel in general since 2017."

Yael Weisz Zilberman, Climate Tech Sector Lead at Start-Up Nation Central

The cleaner industry tech and water usage categories see a lot of overlap in the problems they seek to solve, like waste management and recycling, eco-efficient manufacturing and green construction.

Lastly, while it is gaining traction in discussion among experts, the field of carbon tech, which relates to issues such as carbon capture, storage and sequestration, still represents only about 4% of the total start-ups within the climate tech sector.

Recent developments have opened a window of opportunity for carbon tech, however, such as Israel’s first Climate Bill, which was approved last year.

In October, Airovation Technologies signed a Memorandum of Understanding with Israel’s only glass manufacturer, Phoenicia, that will enable the latter to reduce the carbon output of Israel’s glass production.

“By partnering with Israel’s only glass manufacturer, we have taken crucial steps to not only put our technology into action but also toward revolutionizing the glass industry in our home country,” according to Airovation’s co-founder & COO Gil Tomer. “We are seeing a real priority from the country and its business industry to adopt encouraging global carbon standards.”