Company Visits, pt1

Once again, I'm a few days later than I'd like writing about one of our many events. As is probably already evident, we've had a really packed schedule this summer in Israel. It seems like at any moment we've been on the road - always either heading to or from our next engagement. From technology conferences and historical sightseeing, to company visits and business meetings, the Smith team has been busy, busy, busy!

Anyway, on to the issue at hand. Last Sunday, June 13, we had the opportunity to engage with three different Israeli companies. In our first meeting we met one-on-one with a founding partner of an Israeli venture capital firm at our hotel in Jerusalem. In the other two we did so through on-site meetings and visits at each of the other two company's headquarters, both located in the city of Be'er Sheva.

Photo by Kristin Thompson

Our first meeting of the day was with Israel CleanTech Ventures (ICV). Established in 2006, ICV is the first Israel-focused cleantech venture capital fund - dedicated to providing value added growth capital to entrepreneurs specializing in energy, water, and environmental technologies. ICV raised $75 million for its first fund in 2007, drawn from a diverse (predominantly European and American) client base, which included Robeco, Piper Jaffray, as well as other institutional investors and family offices.

Our guide to Israel CleanTech Ventures was Glen Schwaber, a founding partner and originally a native of Boston, who emigrated from the United States to Israel in 1994. Glen has a wealth of experience in the Israeli investment community, having begun his career at Jerusalem Global, a private equity firm for Israeli hi-tech start-ups before transitioning to Jerusalem Venture Partners, one of the most successful venture capital firms in Israel, and then later founding ICV with two other initial partners.

Unlike a few of our previous VC meetings - where our hosts spent a significant portion of the meeting talking generally about the market in Israel - Glen dove right into a detailed discussion of a few current portfolio company investments - as well as the Israeli cleantech sector in general. Over the course of about an hour, Glen walked our group through an analysis of ICV's strategy, including a thorough breakdown of their investment criteria, market approach, and screening process.

There were two portfolio companies I found particularly interesting. The first was CellEra, which is a a fuel-cell company with a revolutionary new type of fuel cell, the Platinum-Free Membrane Fuel Cell (PFM-FC). CellEra's solution eliminates major cost components in current fuel-cells, such as very expensive platinum. The second investment was in a firm, Scodix, which has developed a revolutionary Digital UV Embossing press. The machine and associated process are inherently environmentally friendly - the process requires no plates or silk, minimum electricity power, and results in virtually no printing waste.

All together, our meeting with Glen was really interesting, and no doubt about it, ICV's current portfolio investments (and investment strategy generally) are really cutting edge!

The Electric Future

This past Wednesday we had an opportunity to attend a speech at the Technion by Mr. Shai Agassi, founder and CEO of Better Place. Before starting Better Place, Shai was previously the President of the Products and Technology Group at SAP AG. He resigned from this position in March 2007 to pursue interests in alternative energy and climate change - ultimately leading to his founding of Better Place. Per TED's online profile:

[Shai's] approach to solving the puzzle of electric automobiles could spark nothing short of an automotive revolution. Through his enthusiastic persistence, Agassi's startup Better Place has signed up some impressive partners - including Nissan-Renault and the countries of Israel and Denmark.

The topic and the content of Shai's address was very compelling. Additionally, since the Smith team will be visiting Shai's company, Better Place, later this summer, his speech was a perfect introduction prior to our visit. To give you a taste of what we heard, Shai gave a speech very similar to one he had given previously at TED, which I've posted below.

Ethical Investing, pt1

This past Wednesday, the Smith team had the opportunity to listen as one of our program's benefactors, Rick Zitelman, presented to the Technion Entrepreneurship Club. Rick - who maintains an apartment in Jerusalem - is in Israel for the next few weeks and took time out of his schedule to give a talk on three topics close to his heart, 1) business ethics from a Jewish perspective, 2) investing in Israel, and 3) investing in general. In fairness to the amount of information Rick covered, I'm splitting my coverage into two posts.

Owner and president of the The Zitelman Group (TZG), a Maryland merchant and investment bank, Rick has over 30+ years experience in the financial services sector. TZG provides asset management, investment and merchant banking, investment advisory and active investor services. Additionally, Rick is a principal at Valuation Services, a Washington, D.C. financial valuation firm. He speaks frequently on the topic of business ethics and corporate social responsibility. Further, Rick is a strong advocate for the University of Maryland, the Robert H. Smith School of Business, the Dingman Center for Entrepreneurship, Judaism and Israel.

The presentation kicked off with Rick leading a discussion on business ethics from a Jewish perspective. This topic was definitely of interest to our team - especially in light of the fact that we had all just completed Professor Lele's business ethics and social responsibility course this past term. As we came to find out, business ethics has long been considered an integral component of Jewish written law. From the Mishnah and Gemara to the Talmud and Mishneh Torah, all contain concrete advice on behavior in certain business situations.

"Individuals have a responsibility to conduct themselves in an honest and forthright way. Organizations, even while increasing profits, need to recognize some form of corporate social responsibility." - Business Ethics: A Jewish Perspective

Rick's presentation also incorporated a business case study as well. The meeting's participants (us included) broke out into separate groups and analyzed the case, as well as attempted to answer a few questions that had been provided.

"Rick Zitelman talks with an ethics breakout session"

Photo by Kristin Thompson

After a few minutes to confer with our group - and discuss the case in breakout sessions with Rick himself - he led us through a discussion of the case and possible options. Rick then supplemented this with the proscribed actions from a Jewish perspective. Altogether, it was definitely enlightening to explore and discuss this topic - and it helped us gain insight into an integral aspect of the Jewish and Israeli business mindset.

Israel's Buffett

On Friday morning, after arriving in Tel Aviv, we went directly to a meeting with one of the most esteemed - yet understated and humble - entrepreneurs in Israel, Yossi Vardi. Our meeting took place at a local primary school in Tel Aviv, where we had a brief, but rewarding conversation with Yossi. The school, which is government run, had been at risk of closure five years ago. However, with the help of Yossi and other generous benefactors, the school has prospered enormously - improving its performance across the board.

"Children playing at the local school sponsored by Yossi Vardi"
Photo by Stephen Kushner

The school draws its students from both locals, as well as the children of foreign workers. Its student body is a veritable United Nations, with pupils from Africa, Asia, and South America. Unfortunately, many students are the sons and daughters of undocumented immigrants, and are at serious risk for deportation. This issue remains an enormous challenge and as such, Yossi and others are leading the charge to quickly and fairly address this issue by bringing their cause to the governments attention.

"Anne makes some new friends" 
Photo by Kristin Thompson

In many ways, Yossi is the consummate entrepreneur. Some might even call him Israel's Warren Buffett. Interestingly, I think Yossi is like Buffett - less because of investing - but more because both individuals come across as very down to earth and very connected to real life. To be sure, Yossi talked with us about key trends in the technology and internet markets. However, he made a serious (and well received) argument about social entrepreneurship as well. According to Yossi, incorporating social values significantly and measurably increases the overall value of a venture.

"The team shoots the breeze with Yossi Vardi"
Photo by Kristin Thompson

At a conference in 2007, Yossi quoted Teddy Roosevelt - drawing a clear analogy between Roosevelt's speech and current entrepreneurs - which I think is worth sharing.

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

Yossi definitely has a presence - and though known for his lighthearted nature - can also be quite serious (as I think his words, deeds and actions reveal) when he needs to be. Over the course of our meeting we learned a little bit about Yossi's philosophy. Additionally, Yossi made a pretty compelling case for being involved in (and selecting) investment projects that fit the dual criteria of creating both social and economic value. All in all, it was a highly rewarding visit. For some additional commentary on our program from Yossi himself, there's a short video after the jump.