It was actually the coronavirus pandemic that persuaded Shahar Botzer to take the plunge, to risk his money, and form a venture capital fund. He was already an impact investor with a local reputation, but until then he had done it with other people's money. The pandemic left him stuck at home for eleven months, since he was in an at-risk group. "That whole period when I worked from home was like a noise elimination workshop. It convinced me without a doubt that this was the right thing. Without that, I'm not sure that I would have had the courage to do it - for all that people call me brave and inspiring," he says.
Many of the people who encounter Botzer and his story really do think that. Even his partner in founding the fund, Ido Fishler, admits: "Every day that I come to work and look at Shahar , it spurs me to think that nothing's impossible." But Botzer himself doesn't much like that description. "I've always had difficulty with that perception. Only in recent years have I accepted it as my role in the world."
And before that?
"Often, when people meet someone in a wheelchair, their instinct is pity. That makes me very tense. Until a few years ago I had the feeling that I had to conquer every room I entered, to make people switch from pity to esteem."
His fund, Good Company, which specializes in impact investment, and which counts among its investors Eytan Stibbe (the future astronaut), was founded in June 2021, when it made the first closing of its fund raising round, on the way to $30 million. But the jump into the deep end happened nearly eighteen months previously, when Botzer and Fishler started to invest their own money, on the assumption that the investors would turn up later. "People looked at us as though we weren’t quite normal," says Botzer. "We went against all the odds, without a fund. Our first investment was in March 2020, just when the coronavirus pandemic broke out in Israel."
The first company they invested in, BeeHero, offers a solution to the global decline in the bee population, which is shrinking at 40% annually. Later, they added four companies in healthcare, the future labor market, and the circular economy.
"As far as problems like the climate are concerned, we are already in injury time, and huge changes are taking place in public opinion, influenced by people from Greta Thunberg to Joe Biden. This is changing regulation and obliging giant enterprises to change, and these changes are fertile ground for startups."
In effect, then, you're saying there's hype, let's jump on this impact bandwagon.
"It has become fashionable among activists," says Fishler, "but among investors - if only it were so fashionable. There's a 2019 study by Social Finance Israel that shows that only 3% of venture capital in Israel goes to impact companies, whereas the proportion is 18% in Europe and 12% in the US. This is another opportunity for a fund like ours, because we haven't even begun to realize the potential."
"In the long run, impact funds make returns that are no less good, and they can be even better," says Botzer. "They're based on genuine problems such as the world shortage of food in another two decades, and today's technology makes it possible to solve these problems. Amidst the coronavirus pandemic, companies like those in our portfolio saw increased sales."
High Court of Justice at age 13
Botzer's need to fix the environment started much, much earlier, at age 13, when his family moved from Jerusalem to Maccabim-Re'ut. Botzer had always got around in a wheelchair, because he was born with muscular dystrophy, and "my parents realized that making Jerusalem accessible for me was not a realistic proposition." Maccabim-Re'ut was at that time under construction, and there was a better chance of doing it there. Before they moved, Botzer's parents corresponded with the Ministry of Education and with the entities involved in building there. But it was in vain, and Botzer found himself in a school where he was unable to move around. This led his parents and him to embark on a legal battle, giving rise to the precedent-setting Botzer ruling in the High Court of Justice, obliging educational institutions throughout Israel to be accessible.
"I wanted a normal life. I didn’t want a helper and a stair lift. I wanted to play as a defender on the football field with a wheelchair. I didn’t want to have to have a private lesson in computing, but to be able to reach the lab on the upper floor.
"I found myself being interviewed in the press and media. I would come with points prepared. These are things that a thirteen-year-old doesn’t generally do. It certainly did plant activism in me."
In the army, in which Botzer served as a volunteer, he managed the Home Front computing network. After that, he enrolled to study accounting and economics at Tel Aviv University, and became involved in the Student Union, which just at that time was campaigning against the Shochat Committee that was examining tuition fees. He later became chairperson of the union. "It bewitched me. I saw the power of it, and I thought that it would be possible to direct this power to more important campaigns than tuition fees."
At the same time, Botzer discovered the business side, as the Student Union had several subsidiary companies, such as travel agency Issta and employment agency Jobtov, and by virtue of his position he served as director or chairperson of some of them. "At the time I felt as though I was in the best job of my life. In the morning, I read that Ethiopian children weren't being allowed to enter a school in Petah Tikva, so I organized a minibus and we went there to teach, and in the evening I had a meeting of the board of directors of Issta, to discuss building the Cramim Hotel."
When the post of chairperson of Issta became vacant, in the light of his familiarity with the company and the board, that job was offered to him too. He served as chairperson for two terms.
His first stop in investment, however, was in 2B Group, when founder and owner Yoel Cheshin wanted to form an impact fund, that is, a fund that would invest in companies offering social or environmental benefit, and tapped him as the right person. Thus Botzer became managing partner at 2B Community. "We raised money, announced that we were an impact fund, and got underway," says Botzer, "but that was a mistake. It took a very long time until we made investments."
Who did turn up to ask for investment?
"People with no business background, not second-time entrepreneurs."
One of them was Israel Air Force pilot Ofir Paldi, eventually one of the entrepreneurs behind teamwork coaching company Shamaym. "When I met him there was no product yet, but the potential was clear."
The fund invested $500,000 in Shamaym, and a month ago the company was floated at a valuation of NIS 75 million. "We made more than fifteen times the investment," Botzer says, "but at Good Company we wouldn't invest in a company like Shamaym."
"Because at Shamaym the impact isn’t obvious. To my mind it is an impact company because they closely measure not just the effect of debriefing on the efficiency of the enterprise, but also on the people themselves."
What else would you not invest in today?
"In any company that comes along with one slide for the social goal and a separate side for the business. Everywhere that that has happened, the business didn’t work."
Apart from Shamaym, Botzer made eleven more investment is at 2B, and after six years decided to move on. That's also when he met Fishler.
"Impact is just perspective"
Ido Fishler was born in Misgav, "a bit of a farmboy" as he puts it. At age 16, he set up his first company, Ido to Door, going around houses in the settlements in the vicinity, repairing computers. At university he studied computer sciences, and started to work at SAP, where he reached a management position.
His next move was to join F2 Venture Capital, which was formed by people who left Genesis Partners, and which focuses on early-stage investments. "But I found myself becoming less and less excited about sitting with entrepreneurs telling me about how they were going to improve the sales process at giant enterprises, and more and more interested in startups trying to solve big problems in agriculture, health, and energy."
Fishler set out to learn about investment with social-environmental value, and met bankers, investors, and social entrepreneurs. "They all told me, you have to talk to Shahar. He's one of the key players in early-stage impact investment. When I met him, one of the first things he said to me was 'Forget the word impact'."
Shahar, what did you mean?
"Impact is just your perspective, the spectacles through which you examine whether the investment will also have value in solving the world's big problems."
The two made the search for investors right in the eye of the coronavirus storm. "For someone who had for many years been on the side where the money was," says Botzer, "it was a very humbling experience to receive a lot of refusals."
They invested in five companies as they went along, and built a unique model. In a typical venture capital situation, the fund's managers meet entrepreneurs who tell them about a market failure they have found, and how their product solves the problem. At Good Company, they work the other way around: they define the problem together with companies with which they are in contact, and then hold a "challenge" each quarter, with a call for proposals inviting startups that can respond to it.
Fishler and Botzer say that more experienced entrepreneurs are turning to impact projects than in the past, but that the volume is still far from enough. "There's potential," says Botzer. "There's exceptional brainpower in Israel. We have opportunities to meet entrepreneurs, for example at competitions that we're invited to judge, and I sometimes say to them: 'You're talented, you have an excellent team, so why have you chosen a field like how to focus advertising better on web surfers?' It's a waste. Solving the world's burning social and environmental problems is also where the big business opportunity is, and that's where the unicorns and the big flotations will come from in the future."
Published by Globes, Israel business news - en.globes.co.il - on July 20, 2021
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