Gigi Levy-Weiss’s NFX to invest in climate-tech

US-Israeli investment fund NFX, controlled by technology entrepreneur Gigi Levy-Weiss, is starting to invest in climate-tech. Investments will be made on the fund’s fast investment track, which offers companies submitting an investment proposal for up to $2 million an initial response within three days, with investments on the basis of a standard contract and fixed terms.

Last October, NFX, one of the most prominent seed and pre-seed funds in its field, completed the raising of a $450 million third fund, and it now has some $1 billion under management. This year, it will start to invest in companies working on technologies to limit global warming, at the pre-seed and seed stages.

For many ventures, this is a critical stage, and one at which funds are not keen to invest these days, because of the risk in technological ventures at the initial stages and the large amounts of capital required for future development.

Climate-tech investment is mostly the province of specialized funds, but because of global developments and the road maps many countries have drawn up for reaching zero greenhouse gas emissions by 2050, large funds and many other investors have begun to eye this field.

NFX is one of the first general funds to enter the field, with the intention, over time, of expanding its investments in developing and promising technologies in it. The fund will look for initial investments in Israel, in collaboration with climate technology community PLANETech. For NFX, the program will be led by Sarai Bronfeld, an associate in the Israeli investment team.

“Many climate-tech companies have approached us in the past, but we chose to sit on the fence and see how the field would develop,” Bronfeld says. “Cleantech has a reputation among investors of not being particularly successful, apart from some very special technologies, but now we’ve decided to be at the forefront of climate-tech. There’s no doubt that it’s the order of the day. We have to support it and bring brains into it from the Israeli high-tech industry. We expect thousands of proposals in this field, and believe that other funds will follow in our footsteps.”

Opportunity for breakthrough ventures at critical stages

One of the biggest obstacles in this field is that investors focus their efforts on mature companies, and not at early stages. Despite general growth, the number of investments in climate technology companies at the seed and A-round stages has not changed since 2018, according to accounting firm PwC. NFX’s decision to invest in these companies is therefore very significant from the point of view of the ability of breakthrough ventures to develop at the most critical stages and succeed in overcoming the barrier that the industry has faced for years.

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Bronfeld explains that the decision at NFX to go into climate-tech investment stemmed from the synergy between the declarations of governments, creating long-term regulatory stability for entrepreneurs, and the new interest in the field in the business sector. “We listen to Larry Fink, CEO of BlackRock, who estimates the next unicorns will be in this field, and to Bill Gates, who believes that climate technologies will create ten companies like Tesla, Google, Amazon and Microsoft in the coming years,” she says. “This is no longer just an academic vision. Venture capital funds now see the potential and the future market.

“We also pay attention to the public. This is what interests generation Y and generation Z, and we echo that voice. With the years, the investments will rise. You can’t continue investing in gaming and marketplaces when the climate crisis threatens supply chains, food, water, and our economy and society.”

“Raising money won’t be hard

NFX invests in dozens of startups every year. Its aim over the next few months is to identify early-stage ventures in emissions reduction, the sharing and circular economy, alternative proteins, mobility (smart transport), green construction, treatment of the oceans and water, waste treatment, and so forth. “We want to say to entrepreneurs who are looking at this field, ‘Go for it,'” says Bronfeld. “It won’t be a field in which it’s hard to raise money. For good entrepreneurs and good ideas, there will be support. You don’t have to be afraid of going into this sector.

“The biggest companies in the economy will also have to support climate ventures. I want to see strong entrepreneurs from software and gaming change direction towards climate crisis solutions. That’s our vision. Along with state regulation and support, we can deal with the climate crisis only if we channel a great deal of capital to this area. There’s no other way.”

Published by Globes, Israel business news – en.globes.co.il – on March 29, 2022.

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