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'Cleantech' is the catch-all term for environmental science businesses
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High-tech clean-up of water sources such as the Yarkon River is a new industry in the making
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'Cleantech' - the next big thing?
Environmental technology market in Israel is less than USD 1 billion, but entrepreneurs and VC's are coming aboard

TEL AVIV - Israeli entrepreneurs and venture capitalists, who traditionally have focused on software, electronics and medical devices, now see a growing opportunity to make money from technology to clean up the environment.

 

The first so-called "cleantech" venture capital fund is being formed, while environmental start-ups are sprouting up, and established companies are supporting initiatives to improve the environment, especially in the water treatment field.

 

Nir Belzer, managing partner of the Millennium VC management firm, said he is setting up what will be Israel's first fund to support the cleantech industry.

 

Though he would not provide details of the fund, he said the amount raised would be large and that it would be established by year-end.

 

"We have been in cleantech before with our other funds. We have seen it with batteries, for example," he said.

 

Environmentally friendly batteries

 

The Millennium fund has invested in Power Paper, which makes environment-friendly batteries that can be adapted to fit the size and thickness of almost any product.

 

Israel's national water utility, Mekorot, has started a program called WaTech to support the expansion of water improvement technology.

 

It offers early-stage entrepreneurs access to testing facilities, technology analysis, access to global markets and assistance with strategic partners and capital. It offers later-stage water technology vendors the opportunity to enter into commercial arrangements and joint projects with Mekorot.

 

"We have 85 projects under examination, 12 in beta sites (testing), and two are going to international marketing," Mekorot Chairman Baruch Oren said at recent conference of the VC industry.

 

According to Doron Lavie of Pareto Engineering, the environmental technology market in Israel is less than $1 billion.

  

Nevertheless, Israel is a leader in areas such as wastewater recycling.

 

"In five years it will be the only country to use all of its wastewater, mainly for agriculture," he said.

 

According to Assaf Barnea, commercial manager at Mekorot WaTech, Israel already is the world leader, using 70 to 80 percent of its wastewater. Spain, at number two, uses only 12 percent.

 

Global disinfectant market - USD 5 billion

 

One start-up with a pilot test at Mekorot is Atlantium, which makes a hydro-optic water disinfectant system.

 

Founded in 2003, the company has raised nearly USD 10 million, mainly from Israeli billionaire Morris Kahan, whose Aurec Group founded Amdocs, a maker of customer billing software for telecoms companies. Kahan was the largest private shareholder in Amdocs when it went public in 1998.

 

The global disinfectant market is worth USD 5 billion, but most disinfecting is done through chlorination, said Oded Rose, Atlantium vice president of marketing and business development.

 

Atlantium's system, which can disinfect 5 to 200 cubic meters per hour, "doesn't use any chemicals, there are no byproducts, and it's low energy," Rose said.

 

He noted that chlorine also is not very effective against certain pathogens such as the parasite Giardia.

 

Three Atlantium units have been installed at Tnuva, Israel's biggest food company, and it is in various stages of testing at Nestle, Danone and Coca Cola.

 

Rose expects sales of USD 1 million in 2005, USD 7 million in 2006 and USD 20 million in 2007, when it expects to become profitable.

 

Atlantium is in the process of raising USD 12 million from VC's and strategic investors. To this end, Rose said, the company is in discussions with three of the top five major players in the water treatment sector for financing.

 

One of the top players is Siemens, which last year bought USFilter for USD 993 million. USFilter became part of Siemens's USD 4 billion Industrial Solutions and Services group as a "water technologies" division.

 

"Water is definitely a very interesting segment," said Oren Ahronson, the head of Siemens in Israel. "I don't think we've made our last move," he said.

 

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