European Investment Fund makes its first investment in Israel

Venture arm of European Investment Bank is injecting up to $20 million into a fund set up by Israel Cleantech Ventures; more investments on way

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Pier Luigi Gilbert, the chief executive of the European Investment Fund, center, together with Meir Ukeles, to his right, a partner at Israel Cleantech Ventures at a press conference in Tel Aviv on Sept. 13, 2018 (Shoshanna Solomon/Times of Israel)
Pier Luigi Gilbert, the chief executive of the European Investment Fund, center, together with Meir Ukeles, to his right, a partner at Israel Cleantech Ventures at a press conference in Tel Aviv on Sept. 13, 2018 (Shoshanna Solomon/Times of Israel)

The European Investment Fund (EIF), the venture arm of the European Investment Bank, has made its first equity investment in Israel, injecting up to $20 million into a fund being set up by Israel Cleantech Ventures.

“This is the first ever equity investment of the EIF in Israel,” chief executive Pier Luigi Gilbert said on the sidelines of a press conference held in Tel Aviv, announcing the investment. The fund is looking to invest similar amounts in two additional Israeli funds shortly, he said.

“As Start-Up Nation, Israel is at the forefront of innovation,” Gilbert said. The EIF investment marks a sort of a “quality brand” on the funds it invests in, allowing them to raise additional money from other investors.

Israel Cleantech Ventures (ICV), founded in 2006 by Jack Levy, Meir Ukeles and Glen Schwaber, is focused on investing in mainly Israeli, early stage innovation that addresses large global markets and finds tech solutions to increase the efficiency and sustainability of heavy industry, infrastructure and agriculture enterprises.

ICV is in the process of raising $75 million for this, its third fund, and has raised already “significantly more than half” of the amount, Ukeles said. “We have raised enough to start making investments out of this fund and we are working on our first investments.”

“The EIF is a financial institution that invests in venture and private equity funds in Europe and also outside of Europe and it is I think the largest and most professional investor of that kind,” said Ukeles, also on the sidelines of the press conference. So the fact that this is the first time it’s investing in Israel “is a pretty big landmark.”

“They can help us build relationships in Europe with other managers, introduce us to other potential partners for our portfolio companies,” Ukeles added.

The investment process, including detailed due diligence, took over a year, he said, “but it is worth the effort for us, because once they are with us as a partner, their goal and our goal is for them to be a partner for ICV 3 and for the funds” in the future.

In its first two funds ICV raised a total of some $155 million and has made 26 investments in startups, including cybersecurity firm Claroty, Vayyar, Freightos and Prospera.

“The EIF has basically announced that they are open to investing and actively investing in Israel equity funds,” Sagi Dagan, a VP at the Israel Innovation Authority, said. “It is a stamp of approval to the influence of Israeli high tech in Europe and Europe on Israeli tech. It furthers the connections and opportunities for creating an economy of tech growth.”

The EIF’s main mission is to support Europe’s micro, small and medium-sized businesses by helping them to access finance through venture funding, guarantees and microfinance tools. The fund has a portfolio of 600 funds and private equity firms it has invested in, in Europe and around the world, totaling some 12-13 billion euros.

The investment in Israel is part of a financial backing program, InnovFin, set out by Horizon 2020, the Framework Programme for Research and Innovation (2014-2020) of the European Union.

The investment in ICV marks the second operation of the EIF in Israel. In 2016 it signed an agreement with Bank Leumi Le-Israel’s tech banking arm to provide loan guarantees to startups in Israel. The deal allowed Leumi to provide financing of up to $100 million to startups in Israel with the support of a guarantee provided by the EIF and backed under Horizen 2020.

The EIF’s Gilbert said on Thursday that the institution is in the process of signing another guarantee agreement with “an important local Israeli bank.”

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