Israel has witnessed a 13% surge in climate-focused startups in past year

Fourteen cents of every dollar invested in Israeli hi-tech are directed towards climate-related ventures, according to an extensive report published on Wednesday by the Israel Innovation Authority and PLANETech, a joint initiative of the Israeli Innovation Institute and the Consensus Business Group led by Vincent Cheng.

The report, drawing insights from 784 climate-related companies established in Israel since 2003, underscores the nation's pivotal role in developing technologies aimed at mitigating and adapting to climate challenges. Among the leading sectors propelling this movement are climate-adapted agriculture, clean energy systems, sustainable and smart transportation, alternative proteins, and climate-adapted water infrastructure.

Robust Growth in Investments and Startups

Private investments in Israeli climate companies soared to an impressive $2.3 billion in 2022, showcasing the robust investor confidence in the sector. A noteworthy statistic reveals that one in six startups established in the same year falls under the climate tech category. The report highlights a substantial 13% increase in the number of companies developing climate solutions in 2023 compared to the previous year, totaling an impressive 784 climate tech companies.

Sectors on the Rise and Rankings Shift

Within the last five years, risk management and carbon capture and removal have experienced the most significant annual growth among climate tech companies. However, the report notes a shift in rankings as climate-adapted water infrastructure and clean construction dropped from fifth to eighth place in the overall standings.

Demographics of the Climate Tech Landscape

Approximately 66% of climate companies established since 2003 employ fewer than 10 people, showcasing the agility and adaptability inherent in smaller, innovative enterprises. The report also underscores the sector's resilience, with the climate tech industry proving to be 400% more resilient than other existing technologies in Israel during 2022.

Foreign Investments and Innovation Authority Support

Foreign investments played a pivotal role in driving the growth of Israel's climate tech sector, constituting 48% of all investments in 2022. The Israel Innovation Authority actively contributed to this momentum by allocating $71.4 million, equivalent to 16% of its 2022 budget, to climate tech projects. Throughout the year, the Authority supported 273 technological initiatives, reflecting a concerted effort to foster innovation in the climate tech space.

Global Reach and Markets

More than 20% of Israeli climate tech companies are operating in at least 10 other countries, indicating the global impact of their solutions. The primary markets for Israeli climate technologies include the United States and Canada in North America, along with Germany, Spain, and Italy in Europe.

Dror Bin, CEO of the Israel Innovation Authority, emphasized the sector's crucial role in addressing the global climate crisis and positioning Israel as a global leader.

"Now, more than ever, it is crucial to focus on the development of future technologies that will lay the foundation for our future," stated Bin. "Israel has immense potential in the climate tech sector, and it is our duty to continue supporting relevant players to ensure they have the necessary tools for continued growth and prosperity. Climate technological innovation is not only a significant contributor to combating the climate crisis but also a substantial opportunity for the growth of the Israeli technology industry, with the potential for tremendous success on the global stage.”  

Despite the ongoing war with Hamas, Bin remains optimistic about the sector's role in a sustainable recovery. “The current war draws attention away from immediate challenges and difficulties. However, the development of additional growth engines will provide a solid foundation for the sustainable recovery of affected regions, in a green and sustainable manner. Hand in hand with addressing climate challenges, this will advance the economic and social resilience of the State of Israel,” he said

Shani Zanescu, Climatech Investor and Chairperson at PLANETech, echoed optimism, noting the sector's 400% greater resilience compared to other high-tech sectors in 2022.

“As we begin to collect the pieces and work towards the recovery of society and the economy in Israel, it is essential to recognize that Israel has significant potential to lead the global climate tech field,” she said,  urging stakeholders to invest in Israel's climate tech industry, which “has the ability to lead a technological revolution that will save the Earth and all of humanity.”

“As we begin to collect the pieces and work towards the recovery of society and the economy in Israel, it is essential to recognize that Israel has significant potential to lead the global climate tech field,” she said, urging stakeholders to invest in Israel's climate tech industry, which “has the ability to lead a technological revolution that will save the Earth and all of humanity.”