| Notes |
Status of the Market Report 1
Impact Investing in Israel:
Status of the Market
March 2019
In collaboration with Social Finance Israel
With special thanks to IVC Research Center and the Israel Innovation Authority
An OurCrowd Report
Status of the Market Report 3
Acknowledgments
With special thanks to the following: Richard Norman, Gila Norich, Jesse Medina, Leah Stern, Bridges Israel, New
Era Capital Partners, Hackaveret, TechForGood, Gandyr Foundation, Dalia Black, Vanessa Bartram, IVN, Impact
First Investments, Pears Program for Global Innovation, 8200 Social Program, TechForGood, PR360, Shir Kahanov,
Dalit Paradis, Samantha Winter, Sir Ronald Cohen, Edmond de Rothschild Foundation, Michal Saam, Shmulik
Shelach, IVC Research Center, Naomi Kreiger, The Israel Innovation Authority Societal Challenges Division
This report is the most up to date study of the rapidly growing impact investing landscape in Israel.1
OurCrowd,
a leading Israel-based VC, has partnered with Social Finance Israel, to put a spotlight on this asset class, for best
practices to be broadly adopted across the local investment ecosystem
1. Recently released updates on the Israeli impact ecosystem include:
Bartram, Vanessa. “Impact Investing in Israel. Yes, it’s a Thing.” Published 10 February 2017.
The Edmond de Rothschild Foundation. Impact Innovation in Israel: Ecosystem Overview. Updated 18 January 2019.
Table of Contents
Introduction 4
Executive Summary 6
Global Activity and Key Trends
In Impact Investing 8
Israeli Impact Investment Ecosystem 14
Market Data: Israeli “Impact-Related” Companies 22
“Impact-Related” Company Survey 24
Looking Ahead 27
Status of the Market Report 5
Sir Ronald Cohen, Chairman Social
Finance Israel, Global Steering Group
(GSG) for Impact Investing
We are pleased to release this report with OurCrowd, the largest
venture investment firm in Israel. It details Israel’s current
role and emerging prospects in the global impact investment
ecosystem, a rapidly expanding $300 billion market. Impact
investment brings market practices, private capital, ambition,
and creativity to bear on social and environmental challenges.
I can think of no better place to grow and scale the field than
Israel.
The country is already on the world stage as the Startup Nation,
but as the enclosed report demonstrates, is swiftly developing its position as the Impact Nation,
and is culturally positioned to tackle the world’s most pressing challenges. While Israel is leading
the way in technology, with high per capita spend on scientists and innovation, underneath
the surface grave social and economic inequalities threaten the cohesion of its society. Impact
investing, by turning social challenges into entrepreneurial investment opportunities, empowers
citizens who have been left behind by Israel’s rising prosperity to reach their full potential and
close social and economic gaps.
Social Finance Israel, the pioneer of social impact bonds and impact investing in Israel, is spreading
best practices locally by partnering with investors, public agencies, businesses and charitable
institutions, to structure innovative investment instruments, and develop impact measurement
tools. Our partnership with OurCrowd advances the ecosystem in two ways. First, it tackles the
task of impact measurement with credibility and expertise. Second, it stimulates leadership
within the Israeli investment community, whose participation is critical to the success of the field.
We applaud OurCrowd for leading by example in demonstrating that profit and purpose can go
hand in hand.
The enclosed study provides a glimpse of the enormous breadth and energy of the growing global
impact market. I encourage you to join us as we use business as a force to improve lives in Israel
and beyond.
Sir Ronald Cohen
Chairman, Social Finance Israel
Chairman, Global Steering Group (GSG) for Impact Investing
Jon Medved, Founder & CEO OurCrowd
The rapid growth of the impact investment market in Israel
should come as no surprise. As this report details, investments
in impact-related sectors in the Israeli market accounted for
29% of all deals last year. These sectors, spanning healthcare,
agtech, education and more have been pillars of Israeli
innovation – often out of necessity – since the State’s founding
over 70 years ago.
Impact has always been in OurCrowd’s DNA. Since inception
36% of our investments have been in impact-related sectors.
We have been ardent supporters of many of the country’s
greatest social entrepreneurs, firmly believing that technological
innovation coupled with a passion to create positive change can provide the ultimate “win-win” of
solving global problems while generating fantastic returns. It turns out that these concepts aren’t
at odds with each other, on the contrary we are realizing more and more how well aligned they
are.
Today we are formalizing our impact investment approach and proudly aligning ourselves with
the expanding local ecosystem laid out in this report. We have partnered with Social Finance
Israel, the leading local impact advisory firm, to launch an investment vehicle providing access
to a diversified portfolio of VC-backed businesses striving to create measurable positive change.
We believe that the combination of OurCrowd’s unmatched global network, together with Social
Finance Israel’s deep bench of industry expertise, makes us uniquely well positioned to support
these businesses in maximizing their impact potential.
Social Finance Israel has been a wonderful partner, educating us on how to assess impact potential
at the company level and guiding us on how OurCrowd can best leverage its many resources to
support the impact industry. The excellent research their team provided in support of this report
further highlights the professionalism and expertise they bring to the table.
This report and the launch of our fund are just the first steps. Now the real work begins!
Jon Medved
Founder & CEO OurCrowd
INTRODUCTION
Status of the Market Report 7
EXECUTIVE SUMMARY
In its formative years, Israel’s creativity and innovation earned it the title Startup Nation.
Today its entrepreneurs and capital providers are increasingly focused on using this innovation
to generate positive social and environmental outcomes, putting it on track to go from Startup
Nation to Impact Nation.
Startups currently
tracking impact KPIs
84% of startups indicated that their company generates a positive impact. 35% indicated that the company was
established with the intention to develop and scale a solution to an environmental and/or social challenge. Only
13% of companies actually track impact-related KPIs.
Addressing the gaps between startups that say they are generating impact, especially those who are doing so
out of a stated intention, and those who are tracking, would position these startups for impact investment and
dramatically increase potential deal flow for global impact investors.
Findings demonstrate a clear need to provide companies with the tools and resources to effectively track, measure
and report their impact, and to more readily communicate and scale their social impact.
35%
48%
75%
84%
13%
Startups
established with
the intention to
develop a solution
to a social or
environmental
problem
Startups that
indicate they offset
public sector costs
Startups with target markets that
include underserved populations
Startups that indicate they
generate a positive impact
Survey of Local
Startups:3
Size of Israeli impact investment market has
more than doubled in just two years
and is set to expand as OurCrowd announces impact fund targeting $30M
$130M
in 2016
over $260M
in 2018
Represent 23% of all
capital raised ($6.8B)
2,576 Startups in sectors
aligned to the UN Sustainable
Development Goals
234 deals; represents 29% of
total deals in the market (813)
raised by
impact-related2
startups in 2018
$1.6B
2. For the purposes of this report, “impact-related” refers to companies in sectors that align with the UN Sustainable Development
Goals and are positioned to generate social and environmental impact, though do not explicitly incorporate impact management
and measurement practices, the definitive characteristics of the field as described by the Global Impact Investment Network (GIIN).
3. The internet survey received 82 responses in total. Disclaimer: the survey does not constitute a representative sample of the market
and should be used instead only as an indication of startup company practices. The online survey was distributed by OurCrowd and
the IVC Research Center to impact-related companies.
Status of the Market Report 9
How much is being invested in impact worldwide?
Turns out an ever-widening tranche of global assets under management.
Notable asset owners shifting significant resources and attention to the field include AXA Investment
GLOBAL ACTIVITY AND KEY TRENDS IN IMPACT INVESTING
Notable asset owners who are shifting significant resources and attention to the market include AXA Investment
Managers, Credit Suisse, Deutsche Bank, J.P. Morgan, UBS, the Ford and Rockefeller Foundations, among others.
In the past two years, leading global private equity funds like Bain Capital, TPG, KKR and others have launched
dedicated impact funds, bringing impact investing into the mainstream. The concept is catching on among family
offices, foundations, and high net worth individuals well. Together they committed $2.8B to impact investing in
2018, an increase of close to 50%, compared to 2017.
A rapidly growing impact investment market is taking the world by storm and Israel, the Startup
Nation, is well placed to play a leading role because it’s all about changing the world for the
better through innovation.
Impact investing is about bringing innovative technologies to market that have the power to dramatically improve
social, environmental, and economic outcomes, foster social mobility and promote inclusion. These include:
Innovations in the way health, education, and welfare services are delivered.
Innovations in financing ventures and projects that meet the needs of underserved populations.
Innovations in social impact measurement.
As defined by the Global Impact Investment Network (GIIN), impact investing is the practice of investing into
companies with the intention to generate a measurable social and/or environmental impact alongside a financial
return. Impact investments embody four core characteristics:
• Intentionality: the investor and/or company are driven by a stated intention to affect positive social and/or
environmental change
• Measurement: investors and companies commit to tracking and reporting the social and environmental impact
generated, ensuring accountability while informing future practice in the field
• Returns: investments are made with return expectations
• Additionality: the notion that the impact would not have been generated if not for the specific investment in question
Pension funds, banks, development finance institutions
(DFIs) and fund managers are among the highest value
players in the market
$113B
in 2017
$228B
in 2018
$468B
by 2020
Status of the Market Report 11
As reported in the most recent GIIN Annual Impact Investor Survey (2018), most capital flows have been from
developed markets, most notably from the U.S. & Canada (47%) and Europe (30%). Interestingly, capital is allocated
almost evenly between emerging markets and developed markets.
Investment activity by organization type
Excludes two outliers and two respondents that did not report investment activity.
Number of deals Capital invested
(USD millions)
n
Median
2017
Total
2017
Total Planned
2018
Median
2017
Total
2017
Total Planned
2018
Fund manager for-profit 105 8 7,857 8,273 23 18,344 21,261
Fund manager not-for-profit 30 10 701 717 13 1,133 1,346
Pension fund / Insurance company 9 9 155 109 116 5,408 4,273
DFI 6 38 321 371 132 5,169 5,614
Bank / Diversified financial institution 13 6 842 964 150 3,461 4,307
Foundation
Family office
30 5 221 206 10 1,189 619
8 4 50 51 5 92 87
Permanent investment company 4 4 17 23 1 50 60
Other 20 12 972 998 9 681 899
Total 225 8 11,136 11,712 17 35,526 38,465
Note: ‘Other’ organizations include community development finance institutions; non-governmental organizations;
and advisors, incubators, and technical assistance providers that also make impact investments.
Sample breakdown by sub-group
Sub-group
DM-HQ Investors
EM-HQ Investors
EM-focused Investors
DM-focused Investors
Private Debt Investors
Private Equity Investors
Market-Rate Investors
Below-Market Investors
Impact-only Investors
Impact and Conventional Investors
Percent of respondents
82%
15%
45%
42%
26%
24%
64%
36%
67%
33%
Respondents headquartered in developed markets
Respondents headquartered in emerging markets
Respondents that allocate ≥ 75% of their current impact
investment AUM to emerging markets
Respondents that allocate ≥ 75% of their current impact investment
AUM to developed markets
Respondents that allocate ≥ 75% of their current impact investment assets under
management (AUM) to private debt
Respondents that allocate ≥ 75% of their current impact investment
AUM to private equity
Respondents that principally target risk-adjusted, market-rate returns
Respondents that principally target below-market-rate returns,
some closer to market rate and some closer to capital preservation
Respondents that invest only in impact investing strategies
Respondents that invest in impact investing strategies in addition
to conventional strategies
Description of the category
n = 229
Geographic allocations by AUM and percent of respondents
Left side, Percent of AUM: n = 226; total AUM = USD 228.1 billion.
Right side, Percent of respondents with any allocation to each geography: n = 229; respondents may allocate to multiple geographies.
Note: ‘Other’ includes investments with a global focus .
Source: GIIN
U.S. & Canada
LAC
SSA
WNS Europe
EECA
South Asia
SE Asia
East Asia
MENA
Oceania
Other
48%
40%
46%
31%
20%
35%
31%
16%
15%
8%
13%
20%
16%
12%
11%
10%
7%
6%
5%
5%
3%
5%
Percent of AUM Percent of respondents
source: GIIN 2018 Annual Impact Investor Survey
Globally, top sectors of impact investment include financial services, energy, microfinance, and housing, but
other sectors include healthcare, water, sanitation and hygiene (WASH), education, conservation, manufacturing,
transportation, and tourism, among others.
These figures illustrate the growing global ecosystem of supply, demand, intermediation, regulation, professional
services and academia that is developing increasingly sophisticated and standardized financing mechanisms, deal
structures, and impact measurement tools to ensure that private capital is deployed to the most effective and
needed solutions.
Status of the Market Report 13
What Accounts for this Activity?
Drivers for the pronounced growth of the ecosystem include:
Risks & Opportunities:
Social and environmental and risks abound. At the
same time, these risks constitute new opportunities
for growth. A report by the Business & Sustainable
Development Commission, a committee of leading
CEOs, reports that global challenges offer a
compelling growth strategy, opening $12T of market
opportunities.
Changing Regulation:
Governments are swiftly moving to realign capital
markets with sustainable outcomes. Recent examples
include the EU’s Action Plan for Financing Sustainable
Growth and Israel’s Capital Markets Authority
directive mandating impact reporting.
Millennial Generation Demands
According to Morgan Stanley, 90% of millennials want
impact investing as an option within their pension
funds. Millennials favor businesses that align with
their values; their preferences will be put into action
as $30T in wealth is transferred in the coming years.
Industry Leadership:
Pressure from industry leaders like Larry Fink, CEO
of Blackrock, the $6.3T asset management firm, who
famously wrote that a company must show how it
makes a positive contribution to society, and that in
5 years all companies will be using environmental
social and government metrics.
Impact Measurement
Impact investors are also increasingly
aligning - and even measuring – their
investments to the UN Sustainable
Development Goals (SDGs), a collection of
the 17 most pressing challenges societies
are facing related to poverty, inequality,
environmental degradation, prosperity
peace and justice. These standardized
goals and metrics further promote
impact-tracking, increasing companies’
credibility and performance.
Leading tools and measurement
approaches are also constantly evolving.
The TPG Rise Fund, a $2bn private equity
impact fund, pioneered a bespoke approach
which they call the “Impact Multiple of
Money” to quantify the economic and social
contributions made via their investments.
Harvard Business School, Social Finance
US, and the and the Global Steering Group
(GSG) for Impact Investment have launched
a measurement lab to develop impactweighted accounts. These examples reflect
the market’s growth and enhanced need
for sophisticated tools, which will in turn
perpetuate its continued growth.
Two of the guiding pillars of the field, intentionality and impact measurement, are defining approaches that
distinguish between the companies that are merely impact-related and those that are explicitly working to ensure
a targeted change occurs. Impact investors and companies use impact measurement as a management tool to
track progress toward stated goals; understand what approaches worked
and why; compare between investment opportunities; scale and duplicate
best practices; and promote policy change.
FINANCIAL INSTITUTIONS
GOVERNMENT
Charitable Foundations
ACADEMIA
ACCELERATORS
Private Funds
Israeli Impact Investment ECOSYSTEM
The formal impact investment market in Israel is still in its nascent stages, though showing rapid, early growth. In
just two years, Israel has seen the size of its impact ecosystem effectively double, from $130M to more than $260M
in assets under management. New sources of private capital are entering the market and government bodies are
just beginning to contribute to market development through various funding initiatives and other strategies.
Status of the Market Report 15
ADVISORY
Status of the Market Report 17
Local institutional investors are taking more active strides in impact investing. With the exception of two Israeli
banks, Leumi and Hapoalim, who invested in Social Finance Israel’s first and second social impact bonds, the last two
years have seen Israeli banks and pension funds begin to take an active role in the local impact investment market.
For example, Discount Bank, co-invested with Psagot Investment Housein Bridges Israel, a sister fund to UK-based
Bridges Fund Management, which officially launched in 2018. Discount was the anchor investor in the fund.
Additional engagement is expected by Israel’s leading firms, especially considering a 2017 directive by the Capital
Markets Insurance and Savings Authority, the government agency that regulates pension funds and insurance
companies, compelling institutional investors to report whether they employ responsible and/or impacting investing
strategies. 2019 will be the first year that the directive is enforced.
FINANCIAL INSTITUTIONS
In the last two years, five local charitable foundations - Keren Hayesod, Rashi Foundation, the Gandyr Group,
the Arc Impact Foundation, and the Edmond de Rothschild Foundation – have established dedicated impact
investment strategies or impact market building mandates.
Charitable Foundations and Jewish Federations abroad are also deploying increased amounts of capital to
support market building activities, reduce barriers, and create favorable conditions for impact entrepreneurs
and investors in Israel through various investment vehicles and approaches. Opportunities include a soon-tobe-deployed matching grant for ecosystem building initiatives among local organizations, loans and grants to
social enterprises and impact entrepreneurship accelerators, support for feasibility studies, pilot projects, and
outcomes funds for social impact bonds. The result is an influx of capital that will scale Israel’s growing pool
of impact companies and local ecosystem players who are piloting financial, measurement, and service-related
innovations addressing both local and global challenges.
The Israeli impact investment ecosystem experienced a tangible boost last year as over $120M in impact capital
was deployed by Israel’s newest impact funds - Bridges Israel, New Era, and 2BCommunity – in tech and non-tech
ventures. 2019 will see more new market activity with the launch of the OurCrowd Impact Fund, a partnership
with Social Finance Israel targeting a $30M capital raise. While specific practices and strategies differ, Israeli
impact funds engage in pre-investment impact analysis when considering companies for their portfolios and
continuously work with companies throughout their holding periods to measure and evaluate their social and
environmental impact on a periodic basis.
Charitable Foundations
Spotlight: The United Israel Jewish Appeal (UJIA)’s si3, recently launched its 3rd funding round for
Israeli enterprises that promote social and economic mobility for vulnerable communities, with a
focus on education, employment and community development.
Private Funds
Spotlight: Bridges Israel has raised $60m to invest in Israeli companies serving Israel’s socio-economic
periphery, where gaps in access to quality housing, employment, health, education and income are
significant. The fund will also invest in tech-based companies in the post-validation stage in the following
sectors: food-tech, water-tech, ag-tech, assistive technologies, and climate mitigation. The fund has
already made 3 investments.
This activity builds on the work of the pioneers and longer standing players in the field, such as Impact First
Investments, IVN, Dualis, the Elah Fund, Zora, Vital Capital, Takwin Labs, and Al Bawader, and the Israel Free Loan
Association (IFLA), which together have supported close to 100 social enterprises and impact ventures.
Status of the Market Report 19
Uria Lin, Manager: “We are beginning to
see more awareness about impact on the
part of entrepreneurs who are eager to see
where they fit on the impact spectrum. We
are also seeing more interest from private
investors who are often under the radar,
and even institutionals. It’s a constantly
flourishing ecosystem. I hope we see more
sources of capital, more impact funds in
2019 and beyond.”
HacKaveret (The Hive)
Mission
A joint initiative between JDC Israel and the National Insurance
Institute that supports early-stage business and organizations
working to improve the welfare of vulnerable populations
Cohort
• 2 cohorts
• 35 companies
Themes
At-risk youth, the elderly,
individuals with disabilities,
and low-income groups
Tamar Ish Cassit Founder & Designer of
Cassit Orthopedics, Pears Challenge Fellow:
“The most important pivot for me happened
in the Pears Challenge where I found out I
actually can design for people in developing
countries.”
Pears Program for
Global Innovation
Mission
A fellowship program involving ideation, acceleration,
validation, and support for Israeli entrepreneurs looking to
create innovative, financially sustainable and impact-oriented
technology ventures addressing the needs of developing
countries.
Cohort
• 4 cohorts
• 20 ventures validated
in the field
Themes
Water, health, sanitation
and hygiene (2019 Pears
Challenge theme; themes
rotate annually)
Promoting Economic Inclusion
Impact investment is applied to support companies with products or services that tackle a social or environmental
challenge, and it is also employed to strengthen the efforts of minority entrepreneurs who typically lack access
to mainstream sources of capital. Accelerator programs for Arab, Haredi (Jewish Ultra-Orthodox), and women
entrepreneurs are also expanding. At the ideation stage, PresenTense, the country’s first accelerator program for
social enterprises, has worked with Arab entrepreneurs around the country, while The Hybrid works with earlystage Arabentrepreneurs, including Druze and Bedouin entrepreneurs, preparing their companies for pre-seed
and seed stage investment. Recently-announced public funding will further compliment these efforts.
8200 Social Program
Mission
Accelerator for early stage ventures with a prototype and proof of
concept that aim to solve social programs through technological
means.
Cohort
• 5 cohorts
• 35 impact companies
Themes
Accelerator for early
stage ventures with a
prototype and proof of
concept that aim to solve
social programs through
technological means.
ACCELERATORS
Status of the Market Report 19
Mission
Through industry and government partnerships, TechForGood
Israel supports entrepreneurs who use technology to tackle
social and environmental issues.
Cohort
Yachin Impact (food and ag-tech
accelerator):
• 2 cohorts
Aeon Impacting (aging tech
accelerator)
• 2 cohorts
• 8 impact companies
Themes
Food and ag-tech
assistive technologies
TechForGood
While the exact number of impact entrepreneurs working to generate a measurable positive change to a defined
challenge is not known, local practitioners agree the number is in the hundreds, with online communities of the
programs illustrated below topping 7,000 members. In the last two years, four dedicated impact accelerator programs
have developed strategic partnerships with government and industry leaders and have provided mentorship and
impact measurement tools to early stage impact companies looking to develop and scale their businesses.
Neta-li Meiri, Managing Director: “I see
growing awareness among entrepreneurs
about the importance of business to
provide an added value to society. Whereas
in the past it used to only be about
eliminating its carbon footprint, the frame
of concern is much wider. It’s now, is this
company diverse, paying its workers fairly,
contributing positively to society? I think
this will continue to shape the practices of
Israeli entrepreneurs.”
Nir Shimony, Co-Founder and CEO: “We
view our role as essential to tackling the
issue of mission drift. We work to build
the ecosystem to ensure that companies
connect with investors at every new
stage of investment who share the
same vision for impact. The danger of
not meeting the right supply is that the
company could pivot towards applying its
technology to a much less impactful goal.
We work to avoid that.”
Status of the Market Report 21
GOVERNMENT
ADVISORY
ACADEMIA
Recognizing Israel's potential to emerge as the “Impact Nation,” the Israeli
Government is working to grow the local impact investment ecosystem
through a breadth of activity, including investing in companies and considering
cross-sector funding models. In 2017, the Israeli Innovation Authority (IIA), a
non-aligned, publicly-funded agency dedicated to supporting technological innovation in Israel set up a Societal
Challenges Division to support entrepreneurs, early stage ventures, growth companies and NGOs working
to improve the effectiveness of public-sector services and enhance social welfare and quality of life through
technological innovation. Its incentive programs provide non-dilutive R&D funding to entrepreneurs through
matched funding opportunities, effectively doubling and de-risking early-stage investments.
The Division has deployed annually
to approximately through three programs:
• Assistive Technology – tech for people with disabilities in partnership with the Israel National
Insurance Institute
• Gov-Tech - Public sector challenges in partnership with Digital Israel, an initiative of the Ministry
for Social Equality
• Grand Challenges Israel - Global health and development challenges in partnership with MASHAV,
Israel’s Agency for International Development Cooperation.
Outside the scope of this study, other divisions within Israel’s Innovation Authority provide funding to impactrelated ventures while dedicated innovation divisions within government ministries are also working to provide
entrepreneurs with the skills, resources and networks to pilot new technologies and scale their ventures locally
and abroad.
Alongside the flush of activity around tech-based social entrepreneurship, a small but determined corps of
small to mid-sized enterprises (SMEs) and property development projects are also taking shape, demonstrating
creative solutions that address the challenges of ethnic and gender inequality, quality employment and workforce
participation, the lack of long-term affordable rental solutions, and the challenge of regenerating Israel’s geographic
and social periphery. These solutions stand not only to promote greater social cohesion locally, they also have the
potential for duplication abroad among societies facing similar socio-economic challenges.
Behind the deal flow and growing pool of impact capital is a growing ecosystem of intermediation, professional
services and academia that is working together to build a competitive and thriving impact investment market.
Social Finance Israel, for example, develops innovative and specialized financing mechanisms, , impact investment deal structures
and tools for measurement and evaluation , advising investors and mobilizing private capital toward evidence-based solutions.
To date, Social Finance Israel has launched 3 social impact bonds, with more currently in development.
Together with the JDC, Social Finance Israel chairs the National Advisory Board (NAB) for
impact investing, a volunteer group of practitioners championing the development of the
local market. The Israeli NAB represents Israel abroad at the Global Steering Group for
Impact Investing (GSG), which works to catalyze and share best practices globally.
DB Consult and Beyond Family Office work with families and foundations
on their impact investment strategies.
Toniic, the global action community for impact investors, also operates a local
chapter for private investors looking to deepen their engagement in the field.
Training the next generation of impact investment
professionals and cultivating evidence-based standards and
practices is a key component of a thriving Israeli impact
investment ecosystem. Established with the joint support
of The Edmond de Rothschild Foundation and the Dualis
Foundation, the Academic Center for Social Investments and
Business at the College of Management Academic Studies
is the first local initiative created explicitly to provide the
academic infrastructure to further develop the impact investment ecosystem.
In 2018, Ben Gurion University of the Negev announced the launch of a $1M student-run venture capital fund,
Cactus Capital, with a dedicated social entrepreneurship track that will invest in student-run enterprises. In
addition, Bar Ilan University is offering a new course in ESG investing for students to gain practical
investment experience through a student-run ESG investment fund – the first of its kind in Israel.
Initiated and designed by Social Finance Israel, the course will draw upon case-studies from
leading global asset management firms. Students will have a chance to manage a live portfolio,
with funds contributed by a leading Israeli asset management firm.
Courses on social entrepreneurship and impact investing have also been offered at the Recanati Business School
at Tel Aviv University, the Milken Innovation Center at the Jerusalem Institute, and the Clinical Legal Education
Center (CLE) at the Hebrew University.
Status of the Market Report 23
Market data: Israeli “Impact-Related” Companies
According to research conducted by the IVC Research Center, there are 2,576 Israeli companies in “impactrelated” sectors.
For the purposes of this report, “impact-related” refers to companies in sectors positioned to generate social
and environmental impact, though do not explicitly incorporate impact management.
$1.6B raised by
impact-related
startups
23%
$6.8B raised in
the market
234 deals in impact
related startups 29%
813 total deals
in the market
In 2018 234 deals were made in “impactrelated” sectors, with most capital raised
from non-VC sources – angel investors, banks,
industry, etc. (52%). Most deals across all
“impact-related” sectors targeted start-ups at
the pre-revenue stage.
In 2018, “impact-related” startups raised
$1.6B, with the majority invested in health
($1.1B). The sectors that saw least investment
during the period were ag-tech ($30M) and
disability and elderly-tech ($6M).
4%
62%
34%
Pre-revenue companies
Initial revenue companies
Revenue growth companies
682
8%
43%
49%
Health
Cleantech
Agtech Edtech Smart Cities Wellness
210 169 158 91
Disability and Elderly - 18 companies | Civic/Gov Tech - 6 companies
1,242
Companies
Status of the Market Report 25
“Impact-Related” Company Survey
To further understand the gaps between “impact-related” companies and those with a defined impact mission and
impact practices, as well as to identify potential avenues for future growth of the impact investment ecosystem
and prospects for impact deal flow, OurCrowd teamed up with Social Finance Israel and the IVC Research
Center in January 2019 to survey local startup companies in impact-related sectors. The online survey received
82 responses, 69 of which were received from startups that state that they are generating a positive social or
environmental impact. That’s 84%.
Impact Intentionality and Measurement
Of the strong majority who indicated they were making a positive impact (69 responses), 41% indicate their
company was established with the intention to develop and scale a solution to an environmental and/or social
challenge. Intentionality is one of the main characteristics of an impact investment.
51 (93%) of respondents indicated that they are seeking impact investment capital. However, companies are
typically only eligible for impact investment if they can evidence the impact they are generating and align with
the impact management practices outlined at the start of this report. As demonstrated below, most do not.
Only 11 (15.9%) of respondents to this question (69) are currently tracking impact metrics.
On the other hand, a majority (58%) of these companies expressed interest in learning how to measure their
impact.
These findings reveal interesting insights. Addressing the gaps between startups that were founded with the
intention to generate impact, and the small percentage who actually measure their social and environmental
performance, a gap of 26.1%, has the potential to dramatically increase deal flow for global impact investors
seeking solutions to pressing challenges, while growing the local impact market.
Does your company generate a positive social and/or environmental impact?
15.7%
Yes
No
82 responses
84.3%
Do you currently track the impact of your company with social
and/or environmental impact KPIs?
15.7%
Yes
No
69 responses
84.3%
Which of the following aligns most closely to your company’s impact orientation?
7.1% The company was established with the intention
to develop and scale a solution to an environmental
and/or social challenge (i.e. generating positive impact
is the main focus of the business)
Positive social and/or environmental impact is one
of the many consequences of the product/service
Positive impact is an unintended consequence
of the product/service
69 responses
41.4% 51.4%
Status of the Market Report 27
While not a conclusive sample, the figures above give initial indications of the impact practices, demographic
reach, and desire of Israeli companies to engage and contribute to a growing impact market. Overall findings
demonstrate a clear need to provide companies with the resources and knowledge need to better track and
measure their impact in order to effectively communicate the social impact they are generating.
LOOKING AHEAD
The Israeli impact investment market is still at an early stage in terms of amount of capital deployed, adherence to
impact measurement principles, and breadth of public, philanthropic, and market building contributions.
Within the mainstream market, we see a clear chasm between companies who say they are generating social or
environmental impact and those that are measuring. With our survey as an indication, the gap is a sizeable 70%.
By tying together these two parallel challenges – one confronting the impact market, the other the mainstream market
- a market-building opportunity becomes clear.
In the last two years the local impact ecosystem effectively doubled to over $260M, thanks to increased interest
and activity by financial institutions, government, philanthropic players and local entrepreneurs. With investment in
“impact related” sectors totaling close to $1.6B in 2018, the Israeli impact ecosystem is on a path to exceed $500M in
the coming years.
Such ambitious growth will only be achieved by working more closely with “impact-related” startups and the
mainstream ecosystem, helping them demonstrate to global impact investors the social and environmental returns
they are generating. This must be done through enhanced market education, more effective impact measurement,
and increased engagement with companies and investors in the global impact investment market.
The local ecosystem is growing rapidly and shows clear potential to be a leading player, well positioned as a source of
deal flow of innovative companies addressing social and environmental challenges. There is substantial opportunity to
harness these market forces towards establishing Israel as a global leader in impact investing.
Among companies who serve both underserved and well-served clients, the lack of relevant expertise about
those markets, bureaucratic delays in government contracts, non-governmental organization and other strategic
partnerships, and high costs accounted for main obstacles to reaching more underserved.
Generating Impact
Who is experiencing improved outcomes?
Among all respondents, 48% answered that their products and services have the potential to offset public sector
costs. This finding has important implications for federal and municipal governments who are actively searching
for innovative technologies to offset mounting systemic costs stemming from chronic disease, aging populations,
climate risk, as well as the many targeted challenges referenced by the UN Sustainable Development Goals.
In terms of populations who might benefit from startup innovations, of the 69 companies who responded their
companies generate impact, 83% indicated that their end-users include underserved individuals and nearly
half are selling in emerging and developing markets, including India (46%), China (40%), Latin America and Sub
Saharan Africa (32%).
What is your biggest obstacle to reaching more underserved groups?
26.5%
Still waiting for partner (NGO, government, etc.) approvals
Too costly
Team's current expertise does not extend to those markets
Not relevant to company model or offering
52 responses
29.4%
14.7%
29.4%
The majority of the company’s end-customers are:
7.1%
Underserved (low-income, minorities, non-citizens,
or customers who lack access to mainstream suppliers
of goods and services, etc.)
83% of impact-related companies
indicate that they serve
underserved populations
Well-served (middle-high income, etc.)
Company reaches both well-served
and underserved customers
69 responses
17.1%
75.7%
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