How ZORA - and Israeli Tech - Are Tackling the SDGs
As impact investors, we are constantly scanning deal flow to identify companies with exceptional potential to deliver social or environmental impact that moves the needle on what we see as one of the world’s largest ‘problems to solve’.
But how to define which ‘problems to solve’ are worth working on? And how impactful does a company need to be before we’ll seriously consider investing?
ZORA, along with a growing number of impact investors worldwide, uses the UN Sustainable Development Goals (SDGs) as a helpful if imperfect framework for identifying and quantifying the global challenges that we, via our portfolio companies, want to tackle in a meaningful and measurable way. The quantification of specific problems – say, for example, tons of carbon emissions that contribute to climate change or number of households without reliable access to electricity – allows us to contextualize the impact potential of a given company and its technology.
We want to see that our investments are capable of moving the needle on a major social or environmental challenge. Sometimes moving the needle means an investee is able to deploy their technology with significant depth (how life-changing is this product for a particular person or audience) and sometimes with significant scale (how many people will be impacted). Ideally, a company has potential to do both.
ZORA’s diligence process ensures that we’re investing in companies with the highest potential for impact. In addition, we’re keeping a pulse on where and how the Israeli tech ecosystem at-large stands to make quantifiable progress on the SDGs. For us, part of the appeal of the SDG framework is that we can see how our efforts mesh and aggregate with other impact actors –investors, entrepreneurs, NGOs, governments – to demonstrate that, as a whole, we’re making progress toward the world that the SDG envisions.
Below are a few of the SDGs where we expect Israel to knock it out of the park over the next decade, along with a few examples of companies tackling each SDG:
Zero Hunger #2. How do we feed 10 billion people in 2050 without degrading our ecosystems? Solving this challenge includes: enhancements to seed performance and plant productivity (Groundwork BioAg, PlantArcBio, BeeHero); better management of growth cycles via earth observation, IoT and analytics (PlanetWatchers, Taranis, Farm Dog); post-harvest and food loss solutions (Amaizz, Sufresca, Wasteless);clean meat (SuperMeat, BioFood Systems, Aleph Farms); and alternative proteins and nutrients (AlgaeInnovation, Chick.P, Hargol, Flying Spark).
Good Health and Well-Being #3. Global 2030 health targets include elimination of epidemics including tuberculosis, malaria, HIV and other communicable diseases (#3.3), a challenge that companies like Keheala and EfA Technologies are addressing. Other targets to drastically decrease premature deaths will benefit from remote diagnostics innovations like those of MobileODT and RespiDx. Israel’s biotechnology, personalized medicine, and digital health sectors will continue to improve efficacy and decrease costs of treatments for communicable and non-communicable diseases (SDG 3B), although accessibility for developing markets will remain a challenge. Reduction of global deaths and injuries from road traffic accidents (SDG 3.6) will likely prove a long-term result of technologies being developed by Israel’s booming autonomous driving sector.
Clean Water and Sanitation #6. Water quality and scarcity is of growing concern with one in four of us (1.7 billion) living in areas with rapidly depleting water supplies and increasingly contaminated water sources. Lack of proper hygiene results in nearly 1,000 child deaths daily due to preventable sanitation-related diseases. Companies like Soapy are addressing the hygiene challenge, with Pears Foundation’s Innovate for WASH program recently introduced to stimulate further innovation in the space. Meanwhile, in water, companies like Tethys, Watergen, Fluence and Aquallence are bringing new small-scale, off-grid and biological solutions to complement Israel’s long-standing expertise in large-scale desalination and water recycling projects.
Affordable and Clean Energy #7 involves bringing electricity to the 800 million of us who do not have it and cost-effectively increasing the proportion of renewables in our global energy supply. These objectives require: creation of new clean energy sources (Electreon, GenCell); development of renewable projects (Enlight, SolarEdge, Energiya Global); smart energy storage to manage peaks and ebbs in demand (Nostromo, Brenmiller), and low-cost and off-grid solutions for end users (Lumos, HomeBioGas).
Partnerships for the Goals #17. Israeli entrepreneurs and institutions are hyper-focused on where the global growth is and are actively forming partnerships for tech transfer, piloting, trade and investment with corporates and governments in these regions (read: India, Africa and China). Israeli initiatives like Startup Nation Central, Pears Program and TOV are focused on these markets now, while most incumbent companies and organizations in North America and Europe continue to view these markets as too risky.
As impact investors, we’re also careful to underscore and be transparent about where Israel – and, by extension, ZORA’s portfolio companies – aren’t likely to be groundbreakers. Given our geography, tech focus, small population, and local industry trends, these are a few SDGs where we anticipate only marginal impact from the Israeli tech world (although we’d love to be proven wrong):
End Poverty #1. Interventions that effectively reach the poorest of the poor – the one in ten of us living on $1.90 or less (783 million people) – typically involve some combination of policy change, government safety nets, philanthropic aid, and provision of basic goods and services. Israel’s sweet spot of technology hits higher up the income ladder and proves largely irrelevant for this population, a demographic that is still extremely challenging to reach with market-based solutions, even for the most innovative microfinance programs and ‘base of pyramid’-focused CPG companies.
Gender Equality #5 goals are largely dependent on local and national policy, which Israeli tech has little opportunity to influence in markets abroad and our diplomatic efforts are not likely to address. That said, tech entrepreneurs and investors would do well to apply gender-smart principles in their product development and go-to-market strategies to uncover hidden opportunities to include and empower women as customers and distributors. As our tech is picked up by large governments and corporates, our gender smart business models could have potential to reach hundreds of millions.
Financial Infrastructure #9.3. Israel’s sizable fintech community (approx. 450 companies) has to date had little focus on the financial infrastructure – banking, payments, SME financing and market integration, remittances, etc. – required in developing markets. No doubt regulatory hurdles are a challenge, but we hope to see more innovation in these sectors. A few notable exceptions in N-Frnds, Neema, Rewire, Sling (acquired by Avante)
