Zemach Regional Industries and Mishkey Emek Ha-Yarden (Jordan Valley Farms) have announced their intention to begin a venture capital fund with tens of millions of dollars to invest in innovation, mainly in water and agriculture. The amount raised by the fund will be used to support startups founded in the Kinneret Agro-Tech Innovation Center now under construction, and may also be extended to other companies active in the Jordan Valley.
The initiative for founding the fund and building the Kinneret Center is part of the renewal process taking place in the Zemach industrial zone. The new center will include an industrial park for agriculture companies. The industrial park, scheduled to open in May, will have a laboratory belonging to Kinneret College that will be available to the Center, a compound for startups, and a school for innovation and entrepreneurship.
The center is being built with an investment by Zemach Regional Industries and Jordan Valley Farms under the management of Zemach Regional Industries CEO Menashe Shalom and Jordan Valley Farms chairperson Tal Yeshua. Social and business entrepreneur Elad Shamir, who founded and managed a program for integrating youth at risk in national service and managed national service for Arab society, is CEO of Kinneret Center. Zemach Kinneret Investments and Development chairperson Kalman Kaufman will chair the fund. Kaufman is a cofounder of KLA and a former VP at Applied Materials USA. One member of the Center's founding team is Kinneret College president Prof. Shimon Gepstein.
"Support already at the pre-seed stage"
"Our goal is to remake the Jordan Valley and Lake Kinneret region," Yeshua says. "A few years ago, we analyzed the companies' financial statements and discovered that if the price of water goes up by just NIS 0.50, the region will be in deep distress. We want to create a high-tech environment with an emphasis on agriculture and water technology, which are our specialties. We plan to create 50 good jobs within five years, because 1,500 engineers currently living around Lake Kinneret and in the Jordan Valley commute daily to Yokneam, Haifa, or Tel Aviv."
"Globes": Who are the investors in the fund?
Shamir: "We raised initial capital from philanthropists. We're on the verge of closing an investment from a strategic investor, and the rest of the money will be raised from financial investors, with participation from the Jordan Valley communities and Zemach Regional Industries, which will jointly invest up to $10 million."
"In which sectors and at which stages will the fund invest?
"Agricultural companies in our region already need support at the pre-seed stage. Residents of the Center can raise money from friends and family, but the entrepreneurs here often come from kibbutzim and moshavim, where their parents and friend don't have money that they can afford to risk. Instead of moving to the center, we want them to found their businesses here.
"The fund we raise will invest at the seed stage, and mainly in the A round, which is the most challenging for agro-tech companies, because this is the stage of the big investment in plants and marketing. In this sector, processes are lengthy. It takes time before you find out whether the investment is successful."
What types of companies are supposed to join the initiative?
"One of the companies is an image processing company that developed software making it possible to create an "ID card" out of a photograph of an orchard showing the state of each tree in order to improve its yield. Another company is developing cloned fish tissue from tuna cells. There are also land analysis and water purification companies. There's also a cyber security company that regards farmers' customers as its potential customers."
Yeshua: "As far as I'm concerned, the main thing is the effect on the region. The contribution to our activity is in keeping personnel in the region and creating a knowledge center."
Shamir: "Today, it no longer matters to a startup whether it's in Tel Aviv or two hours away from it. Most of its financial activity is in any case with the global market. The companies being founded here will have access to pilots with a broad range of types of soil, water, and plants."
16 ventures at various development stages have been spotted, and are in various stages of negotiations. They will be supported by the innovation center, the philanthropic pre-seed fund, and the venture capital fund, in addition to established companies founding a headquarters or branch in the agro-park being constructed. The launch event for the park will take place this Thursday.
Published by Globes, Israel business news - en.globes.co.il - on February 28, 2019
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