Ariel Beery
Ariel Beery
Dedicated to solving problems facing humanity with sustainable and scalable solutions

Israel needs Aligned Investment in the fight against climate change 

Photo by Josh Calabrese on Unsplash
Photo by Josh Calabrese on Unsplash

Innovation to reduce carbon output requires aligning investment incentives to achieve climate focused objectives and key results

Prime Minister Naftali Bennett’s announcement at the COP26 that Israel will set up a special fund to encourage local entrepreneurs to invest in green technology is welcomed. Israel should absolutely harness its innovative spirit to save itself and humanity from the coming climate collapse.

Attracting Venture Capital (VC) to Israel through building the incubator system worked well for building our software industry. However, if our purpose is to address the challenges of imminent climate collapse, we need to recognize that VC is simply the wrong tool for climate technologies. To realize Israel’s potential as an electric light unto the nations we will need to redesign our startup financing to be climate-aligned.

Attracting Venture Capital (VC) by building the incubator system worked well for building our software industry. However, if our purpose is to address climate collapse, we need to recognize that VC is simply the wrong tool

VC incentives, which emphasize financial return on investment, are quite simply misaligned with the complex task of building and integrating technological solutions into our infrastructure at a rate we require to avoid catastrophe. There is no doubt that our business-as-usual way of encouraging innovation was good for business. We became Startup Nation by building an incubation ecosystem that attracted foreign investment into Israel, by, as Bennett described it, committing to VC that “we share the risk while they enjoy the profits.”

However, climate-aligned technologies (energy, water, agriculture, transportation, etc) present a triple challenge VC has failed at repeatedly: these technologies take a long time to develop, require multiple objective validations, and need institutional customers to be willing to be venture clients.

Instead, building a climate-aligned strategy for investment requires first for the government to agree to a set of objectives and key results (OKRs) for all of the innovative solutions we seek to support. All of the programs our governments fund, and the incentives we provide, should be specifically geared to drive inventors, innovators, and entrepreneurs to contribute to achieving those OKRs.

Taking the UN’s latest warning to heart, we have “eight years to almost halve greenhouse gas emissions: eight years to make the plans, put in place the policies, implement them and ultimately deliver the cuts.” If we accept this challenge, every single venture the public helps finance should be singularly focused on the key result of reducing carbon and methane emissions, to avoid the threats the INSS projected Israel will face from climate collapse.

Clearly defining our OKRs is also important because they help us know what we are not focused on: we should not optimize for financial return. Our objective is so save our market, not necessarily grow it. All of our public investment should be optimized to help us survive the collapse.

The analogy for this is the defense industry: while some may profit by developing successful solutions, Israel invests in defending our citizens without regards to return on investment. We expect some of the new technologies may have phenomenal profit potential and attract venture capital, but we do not want inventors, innovators, and entrepreneurs to be limited to business plans that create VC-level returns.

Fortunately, we have a great model for such a mission-driven innovation ecosystem: public mobilization during COVID19.

Fortunately, we have a great model for such a mission-driven innovation ecosystem: public mobilization during COVID19.

Those of us working in healthcare have been astounded by how quickly things developed since SARS-CoV-2 was acknowledged at the end of 2019. At warp speed, governments enabled the scientific community to focus almost entirely on COVID19, creating a phase-sensitive series of interlinked grants, manufacturing support loans, and purchase agreements that facilitated rapid development, validation, and commercialization of solutions we needed to live in the time of SARS-CoV-2.

It wasn’t only governments that rose to the occasion: academic institutions made a plethora of grants available for research, and academics were given permission to change course and to focus their expertise on the pandemic. Scientific journals opened up, and data commons were created to share the results of experiments whether they succeeded or failed. Granting organizations such as BARDA in the US supported the rapid prototyping and validation of technologies. Public health associations pooled resources to quickly test and validate technologies. Commercial actors accelerated these validated technologies by investing in marketing and distribution. Local governments and health systems signed on as venture clients, pursuing a policy of advanced purchase with massive purchase orders to enable these projects to sustainably grow.

The results have been revolutionary. The field of molecular diagnostics has advanced more in two years than in two decades; vaccines were developed in record time; our understanding of virology and human health have jumped forward a generation.

These tremendous gains are the fruit of collective action aligned towards clear OKRs by inventors, innovators, and entrepreneurs who were not “in it for the exit,” but rather inspired by their ability to contribute to averting a clear and present danger.

Because the climate emergency is not as present in our daily lives as COVID19, we need the State to build incentives to enable new climate solutions regardless if they fit the mold created for VC-backed companies.

Because the climate emergency is not as noticeably present in our daily lives as COVID19, we need the State to build incentives to enable new climate solutions to mature without encumbering them with the requirement of fitting into the mold created for VC-backed companies.

Practically, this means putting our public funds into the similar sorts of mechanisms that worked for COVID19: grants to experiment with inventions housed within our universities and research labs that may address our climate OKRs; grant and loan mechanisms to enable the most promising solutions to be rapidly prototyped; a network of objective validators who have the resources to test and confirm the utility of the solution; a competitive marketplace of firms able to pick up on these products and put them through the commercialization process; and, of course, government institutions that ensure our infrastructure has clear on-ramps for integrating these innovations into everyday offerings.

If Israel is to realize the vision Bennett presented at the COP26, we need to catalyze a mass mobilization of the scientific, engineering, commercial, and institutional community. We must harness the same innovative spirit that made us Startup Nation, and reignite the same shared sense of purpose of a global pandemic, to innovate how we start up climate-aligned ventures that will have outsized impact to help humanity avert the worst of climate collapse. We can only do this with climate-aligned venture investment.

About the Author
Dedicated to solving problems facing humanity with sustainable and scalable solutions, Ariel Beery co-founded and led 3 Israel-based social ventures over the past two decades: CoVelocity, MobileODT, and the PresenTense Group. His geopolitical writings - with deeper dives into the topics addressed in singular columns - can be found on his substack, A Lighthouse.
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