Product, Service & Design Innovation
TechForGood:
The Israeli Incubator Helping Investors ‘Get’ Social-Tech Startups

It’s easy to see why Israel refers to itself as the “startup nation.” With a population of just 8.4 million people, the success of its small-to-scale business landscape is widely acknowledged as something of a miracle, home to more startups than any other country in the world.

Today, Israel has more Nasdaq-listed companies than any country outside the US and China. It also has more venture capital per capita. In 2016, Israeli startups raised a record $4.8 billion in venture funding, and saw exits worth $9.2 billion. If you want help in starting a business – especially if it’s tech-based – heading to Israel is a safe bet right now.

A proactive government and interested corporate community has given rise to such a hotbed of startup activity. However, most of the cash, support and encouragement has so far flowed into the more traditional sectors of financial technology (FinTech) and e-commerce.

When Omri Boral and Nir Shimony developed a plan to launch an incubator and accelerator programme to sit alongside Israel’s plethora of such ventures, they had spotted a gap that needed filling.

“I was very frustrated that both the impact and financial potential of social enterprises – those small companies with ideas to create social good – were limited and hard to scale. We wanted to change that,” Boral recently told Sustainable Brands.

So, TechForGood was born to support the entrepreneurs with innovative technological solutions that both solve a particular social or environmental problem at scale, and give solid financial returns at the same time.

“Israel is known for its startup scene. If you’re a FinTech startup, it’s fairly clear what your path will be; angel investors and venture capitalists will be interested in you and there are certain incubators to help you on your way,” Boral explained. “But if you’re using a technology to eliminate poverty or use remote radiotherapy for people that are not able to leave their homes, for example, people just don’t get it because there is no specific vertical sector.

“That’s why we set up TechForGood,” she said.

Much like other incubators, by giving entrepreneurs the professional support, insight, expertise and an opportunity to network and meet with other potential partners and funders, the organisation is building an impressive roster of companies it has helped to grow and succeed.

One of these is AclarTech, which developed a mobile application that can predict the ripening time and quality of fruits and vegetables. Right now, operational decisions – such as the best time to pick fruit, when to market it and how much to pay for it – are made based on lab results or guesswork. But this startup offers farmers, retailers and wholesalers a specific way to link data about product quality to price and value, using input from mini-spectrometers as well as visual data. 45 percent of fruit and veg is being thrown away between farm and fork; companies can use this solution to manage their entire value chain and tackle food waste.

In the past, startups such as AclarTech would have been fearful of marketing themselves as social enterprises for fear that the investment community would turn its back, insisting they go in search of government grants instead, for example. Boral calls it “mission drift,” when entrepreneurs start off with a great idea, take money from wherever they can find it and then quickly disappear when they run out of steam.

TechForGood has been hugely successful in stopping this happening by educating the entire ecosystem – from investors to corporations – to accept that, just because you are doing something good in the world, it doesn’t mean the financial returns have to be compromised.

“Our expertise lies in helping startups structure their impact model and then embed it into their business model – not only so that it doesn’t damage their financial potential, but so that it actually adds value and is more attractive,” she said.

It is no wonder that more than 400 organisations, from all over the world, approach Boral and her team every year (“a crazy, crazy number which was practically zero just a few years ago”) to make use of the TechForGood programme, which is largely funded via corporate sponsorship.

There is a four-pronged selection criteria when determining which startups will be supported: First, how pressing is the problem being solved, and how meaningful might the solution be? Second, how innovative or practical is the technology itself? Third, they assess the team behind the startup – “a hunch about how well we think they will work and achieve their goals.” And lastly, it is all about the financial models and whether the technology solution is commercially viable and attractive to investors.

“When you look at recent trends in the business sector – and the way in which the next generation of high net worth individuals and millennials link business with the purpose they believe companies should and could have in the world – Israel can be an incredible leader in this sphere,” Boral asserts. “Having an influence on the success of such amazing entrepreneurs who have dedicated their careers to doing good makes me feel like I’m doing something good, too.”