After a year of interviews with companies and officials in the cleantech industry in Israel, a group of students from IDC Herzliya has made a comprehensive list of causes for cleantech failures in Israel and recommendations for avoiding ‘death valley.’
Shahar Chai|Published: 05.12.16

A group of students from the IDC Herzliya has initiated a comprehensive study that seeks to understand why numerous cleantech projects in Israel have failed. The study offers several effective solutions to the issue.

Cleantech projects include energy, water, chemicals, agriculture, construction, waste recycling and others—areas that are critical to life presently and in the future.

The study found that the main problem is that cleantech projects succeed in attracting investors, but encounter difficulty when it comes to attracting customers. When there are no customers, there is obviously no income. Similarly, when there is no income, investors prefer to step back, and the projects are more often than not shelved in short order. This phenomenon is referred to as “Valley of Death.”

As part of the group’s project, Yaniv Izaki, Ziv Eliyahu, Elinor Azuelos and Jane Michaelov interviewed officials from 21 cleantech companies and their clients over the course of a year. Clients included the Israel Electric Corporation, Mekorot, and Housing & Construction Holding Company Limited. Additionally, the group also interviewed a variety of companies that went bankrupt, passed the “Valley of Death” stage and/or are near it now. Their goal was to understand the reasons for the collapse of these projects after years of research and development and how to extend the lives of such projects.

“At first, we assumed the main problem was lack of interest on the part of large corporations,” the group explained. “However, during our research we understood that the main obstacles are regulative and economic.”

The group concluded during their work that among other things, the state restricts the freedom of large companies and corporations to experiment with new technology which can lead to anything innovative or groundbreaking.

The group further found that the cleantech industry has been restricted by regulation for years—making development and progress difficult—and has not been given access to incentives due to lack of public discourse.

“From the business-economic perspective, Israel is a country where the infrastructure is very centralized, such as with water and electricity. In every place in the world where infrastructure is centralized, the motivation for innovation suffers, and Israel is no different in that respect,” the students explain. “Today, most venture capital firms are not built to invest in cleantech projects, because they demand a return on investment at a point when most cleantech projects are still only in research and development.”

As a result of the research, the students recommended providing incentives for cleantech clients, promoting new projects and encouraging the establishment of new technological research divisions in companies, which will ultimately allow for the purchase of the cleantech project.

“We are seeing a change that is beginning mainly in industry and large companies, which are starting to build divisions for project development within in addition to looking for the latest technological projects to meet market needs.”,7340,L-4888735,00.html