Horizon Ventures has made its first investments in four seed-stage cleantech ventures. The new investment firm recently picked four programs that, over the next two years, will test the feasibility and economic viability of cleantech ventures aimed at bringing about substantial energy savings using alternative sources.
Horizon Ventures is jointly owned by French giant Alstom SA (LSE: ALS; Euronext: ANO) (50%), Gefen Biomed Investements Ltd. (TASE: GEFEN) (30%), and Rotem Industries Ltd. (20%), the commercialization arm of the Israel Atomic Energy Commission. They founded the company a year ago with the vision of becoming a dominant player in Israel's renewable energy industry, by focusing investment in early-stage clean energy ventures, which are considered high risk.
Most of the risk in early-stage ventures is due to the need to demonstrate the technological feasibility and economic worthwhileness of the product, after the investment is made. Before deciding on the investments, Horizon Ventures spent months examining more than 100 renewable energy ventures and technologies proposed by entrepreneurs. Horizon Ventures executives estimate that it possible that it will decide within a few months on whether to invest in four further development programs, all them in renewable energy.
Revolutionary system
Horizon Ventures will initially invest NIS 8-10 million in the four start-ups. One of them, LNCon Ltd. is planning to lead the development of an innovative system, which Horizon calls "revolutionary", for the management of central air conditioning systems in office buildings, malls, factories, and campuses. The system uses special software to save more than half of the power consumption of large air conditioning systems.
The second venture, AFC Technologies Ltd., aims to reduce fuel consumption and greenhouse gas emissions of trucks through a system designed to improve the aerodynamic performance of trucks that will reduce their fuel consumption by about 10%. The third venture in which the Horizon Ventures intends to invest aims to boost electricity production of current and future solar energy fields by 15% through the use of special reflectors next to panels to direct sunlight to dead zones which generate little or no electricity. The fourth technology that Horizon Ventures intends to examine the feasibility of, by EVR Motors Ltd., aims to boost electricity production of wind turbines substantially.
Horizon Ventures CEO Meni Maor, who also manages Rotem's Renewable Energy Technological Center, told "Globes" that the firm intends to invest in 15 cleantech ventures over the next two years. "We prefer to focus on technologies that currently appear revolutionary. If out of fifteen technologies that we mark, we can bring five to a good working product, they will be the next thing in cleantech. This is also where the risk is. The fairly low investment at this stage reflects the risk of each investment. Nonetheless, we are determined, and our central goal is to bring these technologies from the concept stage to establishment of a start-up, the creation of a laboratory prototype, and the start of tests."
Impatient investors
"The fact that we linked up with a giant like Alstom allows us to reduce the risk and offer each venture five to ten experts who can thoroughly test the feasibility of the ventures," adds Maor. "This reduces the risk."
Maor says that some of the field tests of the technologies that Horizon Ventures will invest in over the next two years will be conducted at Rotem Industries' testing grounds in the Negev. He adds that the firm's investment is just the beginning. Over the next 4-5 years, the firm intends to be a dominant and leading player in cleantech, despite the many built-in difficulties that prevent the sector from providing breakthrough technologies as in other industries.
"We take into account the fact that R&D in cleantech is substantially different from R&D in high tech and communications, because we're talking about very intensive processes that require long-term investment. I understand that investors lack the patience to wait for a technology to mature over years and to see a return on their money only after 7-10 years. On the other hand, state agencies also do not realize how extensive financial aid for fostering and accelerating ventures in this industry can help important technologies come into use," says Maor.
"I believe that the state, through government ministries, does have an answer for such a challenging and difficult sector, such as support for ventures that need capital to get started. The field is full of impressive ideas in the initial stages, and a way should be found to support and develop them," concludes Maor.
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012