New York City sets up climate tech innovation hub with Israeli venture firm JVP | The Times of Israel

Two years after launching a $100 million cybersecurity innovation hub in downtown Manhattan, tech investor and entrepreneur Erel Margalit is back in New York City this week to inaugurate a first-of-its-kind global center for climate technologies.

Climate tech is an umbrella term that includes technologies for clean energy, transportation, water treatment, food manufacturing, waste reduction, and supply chain improvements.

Margalit’s Jerusalem Venture Partners (JVP), one of the oldest and most established venture capital companies in Israel with 160 portfolio firms, will operate the new climate tech center in partnership with the city of New York as well as with key sponsors such as German luxury automaker BMW, its British-born subsidiary MINI, and the latter’s startup program Urban-X. Energy corporation Chevron and Columbia University are also key partners.

JVP and Urban-X teamed up four months ago to support emerging startups working on climate and urban technologies that will shape future cities through early and later investment rounds.

Those operations will now be part of the new International ClimateTech Center, next to the existing cybersecurity hub in the trendy SoHo offices of Margalit Startup City NYC, a city-private venture firm partnership that brings together public, private, and social impact stakeholders.

It’s a thematic model that creates public-private partnerships for regional, tech-driven ecosystems and which Margalit and JVP have replicated in a number of cities, mainly in Israel. The format rests on the idea of connecting prominent tech and business players with social and cultural entrepreneurship while drawing on local talents in a given city with the support of municipal or national governments.

Last year, Margalit inaugurated a digital health tech innovation center in Haifa together with the Israel Innovation Authority, chip multinational Nvidia, Dutch medical equipment conglomerate Philips and Israeli HMO Clalit, among others, followed by a food tech innovation center in the Upper Galilee city of Kiryat Shmona.

Those hubs join the long-established Startup City Jerusalem, which houses Israeli startups, multinational companies, an investment center and research and development centers in the capital, as well as a cybersecurity center in the southern city of Beersheba.

Margalit Startup City NYC was JVP’s first outside Israel, and two years on, operations at the cybersecurity hub are going splendidly, according to Margalit.

“We started with eight startups and now we have 36, some of which are generating $70-80 million in ARR [annual recurring revenue]. I’m amazed at the high level of these companies that are creating jobs, generating ideas, and offering interesting solutions,” Margalit told The Times of Israel ahead of the event on Wednesday.

The companies based at the hub have raised over $1.4 billion funding over the past two years, Margalit said.

The new climate tech hub will follow the same model, and house between eight and 10 climate tech startups in its initial stages while helping them scale their businesses and expand their reach. Some 500 companies from Israel, Europe, and the US applied to join the hub, Margalit said, and the participants in the first cohort will be announced Wednesday at the launch event.

“Climate tech is more than alternative energy or smart mobility,” he explained, adding that JVP was looking to take a different approach and search for synergy between sectors.

“It’s also about, for example, a major cybersecurity company that’s already protecting banks and other financial institutions now also protecting sustainable energy grids, refineries, and water and transport infrastructures. And about fintech companies encouraging sustainable behaviors,” he said.

“So we are calling all our existing companies and partners,” said Margalit. “They are all part of the climate tech revolution.”

Food and agritech companies and those in other subsectors also have key roles to play and can change “the future of our world and the future of cities.”

While investors, generally, have been slow to put their money into climate initiatives as they are relatively high-risk and profits may be too long-term, there is increased investor activity and interest in climate tech, including Israeli technologies.

“We can’t afford not to be involved,” said Margalit. “We need a repositioning. We need to change the way cities and urban centers conduct themselves and how younger generations need innovation to build sustainable cities.”

With some 56% of the world’s population living in cities and urban areas, accounting for about 70% of all carbon dioxide emissions, innovation in cities should be at the forefront in the global fight against climate change, JVP and Margalit posit.

A climate tech center also makes good business sense. Out of the 500 or so applicants, “half are scale-up companies and they are growing in a huge way. Climate tech activity is the future is not just about [saving] polar bears, it’s also about [building] unicorns,” he said in reference to private companies valued at over $1 billion — a celebrated but contentious milestone.

And New York has positioned itself as the place to be in climate tech. In 2019, the state passed the Climate Leadership and Community Protection Act (Climate Act) which commits to 100% zero-emission electricity by 2040 as well as other sustainable goals such as transport electrification and increasing the number of electric vehicles and charging stations on the roads.

Last year, a study of hundreds of US incubators and accelerators of climate and energy tech solutions published last year by the American Energy Society found that New York state had “the most dynamic and innovative” ecosystem.

NY is also home to the Urban Futures Lab, a climate tech innovation hub for clean energy, sustainable urban infrastructure, and decarbonization in partnership with NYU, and runs climate tech programs through the New York State Energy Research and Development Authority (NYSERDA), a well-funded public benefit corporation devoted to the energy transition, and the New York Power Authority’s NY-Israel Smart Energy Innovation Challenge.

The challenge comes with a competitive award of up to $1 million and allows the state to partner with Israeli startups on unique solutions. On Tuesday, New York State Governor Kathy Hochul announced that Zooz Power, an Israel-based company that developed a fast electric vehicle charging system, had won the most recent challenge.

Margalit said that, separately, cities like Copenhagen and Stockholm have reached out to discuss climate tech centers in the Danish and Swedish capitals, respectively, and JVP has been engaging with the municipalities of Paris and Dubai on Margalit Startup City centers in those metropolises as well.