Impact investment fund Bridges Israel has invested a “few million dollars” in Israeli drip irrigation firm N-Drip, which has developed a way to enable large agricultural areas to use drip irrigation, which saves water and boosts yields at lower costs.
The move marks the second investment of Bridges Israel in an Israeli firm, since having its first closing with $50 million from investors in March.
The investment was part of a series A funding round raised by the Moshav Bnei Atarot-based startup, which also operates a manufacturing facility in Beit She’an.
N-Drip, founded in 2015 by Prof. Uri Shani, a former director of Israel’s Water Authority, with Ariel Halperin and Ran Ben-Or, has developed what they say is a system that will allow areas that use water flooding for irrigation to use the more precise drip irrigation instead.
Flood irrigation, perhaps the most ancient way of watering crops, is still one of the most commonly used forms of irrigation in the world today. Some 85 percent of agricultural fields globally use this system, in which water is delivered to the field by a pipe or a ditch, and the water simply flows over the ground through the crop. The system is wasteful of both water — it is believed that some 50% is actually lost to evaporation or infiltration of uncultivated areas — and fertilizer, nor foes it produce optimal yields.
N-Drip’s principal target market is those 85% of irrigated agricultural areas in the world, including the majority of agricultural areas in the US, Australia and other countries, where existing drip-irrigation systems are too expensive to use, explained Ran Grodecki, a managing partner at Bridges Israel.
Current drip irrigation systems require a source of energy to pump the water into the fields and a filtering system to keep the pipes from clogging. These requirements increase costs for farmers, and make the systems harder to deploy. For this reason, just 3% of arable land today is watered with drip irrigation systems, he said.
N-Drip’s system is cheaper, said Grodecki, because it uses gravitational force only, and thus does not need a source of energy. The system is also designed to work without filters and enables drip irrigation even when the water source is not clean. This enables farmers to move from inefficient flood irrigation to high-quality drip irrigation at significantly less cost, and with lower operational requirements, he said.
“Drip irrigation saves 50% of the water and also boosts crop yields by some 20%-30%, because the watering is targeted,” he said on a phone interview with The Times of Israel. “With N-Drip, all you need is a source of water at the beginning of a field with a slope,” so that the gravity can do the work. He added that all fields that use flood irrigation generally already have the required slope.
“This is a revolutionary new irrigation system that can target the global market and lead to significant savings in water,” he said. “N-Drip can expand precision irrigation to new and large crops and markets. It has the potential to generate significant global impact, socially and environmentally, helping to solve two major global challenges – the growing water shortage and the increase in food insecurity.”
The funding round will allow N-Drip “to increase its production capacity, to accelerate installations of the system in major markets, to continuously improve the quality of the system and to provide solutions for growing demand,” said N-Drip’s CEO, Eran Polak.
Bridges Israel was founded by Gal Hayut, Sandrine Montsma and Ran Grodecki, its three managing partners, who want to increase the amount of impact investment in Israel.
In impact investing, a growing trend worldwide, investors inject money into companies, organizations, and funds to create a social and environmental impact as well as financial returns. The concept flies in the face of the view that social and environmental issues need to be solved through philanthropic donations. Social impact investors believe they can advance good causes while also making money.
Last year, banks, pension funds, insurance companies and financial institutions around the world committed about $35 billion into over 11,000 deals, and indicated plans to increase capital invested by 8% in 2018, according to data compiled by the Global Impact Investing Network (GIIN). Some 229 of the world’s leading impact investors manage some $228 billion in impact investing assets in a wide variety of sectors, including financial services, microfinance, energy, and food and agriculture. Impact investors “overwhelmingly” said that performance was “in line” with both financial and impact expectations. A majority of respondents said their investments have “met or exceeded their expectations for impact” performance, some 97%, and for financial performance, some 91%.
There are some impact investment funds already operating in Israel, like the Israel Venture Network (IVN), set up by Eric Benhamou, a California-based Jewish entrepreneur and Herzliya-based Impact First.
Bridges Israel hopes to raise up to a total of $75 million for its first fund. The anchor investors of the fund are Israel Discount Bank, through its Discount Capital unit, and institutional investor Psagot Investment House Ltd. Other investors include private investors from Israel, UK, US and Australia.
“There is a whole world of impact investment where impact can be made without compromising financial returns,” said Montsma, a managing partner of Bridges. “If we want institutional investors and other sophisticated investors to invest large amounts in this field, we must be able to deliver competitive financial returns.”
Closing social gaps
The aim of the fund is to close social gaps in Israel by promoting projects in the country’s economic and geographic periphery and financing initiatives that have the potential to boost weaker populations. In addition to investing in Israel’s periphery, investing in Israeli tech firms that can have a global social impact is one of the ways to make a difference, Hayut, a managing partner of Bridges Israel, said.
Bridges Israel’s first investment was in Israeli company Venn, which aims to drive positive impact in underserved neighborhoods. The Venn platform offers homes, shared spaces, and community programs, connecting physical spaces with digital tools to encourage interactions. Venn started in Shapira (south Tel Aviv) and is currently launching its platform in Berlin and Brooklyn.
Bridges Israel is an independent affiliate of Bridges Fund Management (BFM), a global sustainable and impact investor. Founded in 2002 by Michele Giddens, Philip Newborough and Sir Ronald Cohen, BFM has since raised more than $1 billion. Today, it has offices in London and New York, and through its investments globally has helped provide healthcare services to almost 40,000 people; helped over 2,600 children achieve better educational outcomes and averted more than 30,000 tons of carbon emissions, according to its website.