The following three sectors represent hot deal making opportunities for Israeli innovation and technology to be leveraged into the United States’ market.
(1) Water Security
The availability of clean water has emerged as one of the most serious problems facing the global economy in the twenty-first century. While over 70% of Earth’s surface is covered in water only 2.5% of all water is fresh water, and only ~1% of all fresh water is accessible for direct human uses.
To address water security Israel has led the world in developing technology for membrane processes for microfiltration (MF), ultra filtration (UF), nano-filtration (NF), reverse osmosis (RO) and other innovations for water treatment, reuse and desalination. Israel was the first country to seriously embrace desalination after a bad drought in the 1990s. The government has built five desalination plants along the Mediterranean and now more than one-quarter of Israel’s fresh water is created through desalination.
Impact investors should look to leverage Israeli water innovation and invest in start-ups operating in drought stricken regions near large populations. A good example is IDE Technologies, an Israeli company operating the United States’ largest and most advanced desalination plant. As of December 2015 the plant had already produced more than $1.5 billion gallons of water for San Diego County and will be the first water infrastructure project in California to have a zero net carbon footprint.
(2) Sustainable Agriculture
It has been said if Israel had the size and soil of Zimbabwe it would feed the world. With smart drip and micro-irrigation technology – like that developed by NetaFim – such statements are closer to truth than exaggeration.
The food market in the United States is enormous. According to Nicholas Heymann of William Blair & Company, it will take a $1.75 trillion investment to enable the U.S. to become largely self-sufficient for its vegetable and fruit requirements. Impact investors should look towards Israeli companies working with “distributed agriculture” or “Controlled Environment Agriculture” (CEA) to achieve the highest social, environmental and financial return. In basic terms C.E.A. removes the reliance on the land or weather by growing food in indoor or controlled greenhouses to optimize productivity and conserve water. Given that agriculture is responsible for 87% of the total water used globally, the time is now to invest in companies that conserve water and optimize food production.
(3) Medical Cannabis
Innovations in sustainable agriculture are not only being used to grow more and better quality food, but they are being used to grow the most advanced natural medicine. Nowhere is there a greater opportunity to leverage Israeli impact innovation into the U.S. market than the emerging medical cannabis industry.
I firmly believe the largest opportunity for medical cannabis in the United States is in palliative and end of life care as an opiate replacement. According to the U.S. Census Bureau there are 76.4 million baby boomers. They represent close to a quarter of the estimated U.S. population. This means over the next 10 years there will be over 70 million people age 65 or older. Whether your are an investor or entrepreneur think about that for a moment. How many people will pass through end of life care the next 10-20 years? What is the opportunity to provide quality of life in end of life care for millions of Americans? To me, it is an investment opportunity 10X more exciting than the tech boom.
Although cannabis is still federally illegal in the United States, entrepreneurs and investors should be encouraged by legalization in numerous states and the United States-Israel Free Trade Agreement. Upon federal rescheduling or de-scheduling, the market for medical cannabis will be open for business. According to the U.S. Department of Commerce, two of the five largest import sectors (from Israel into the United States) in 2014 were Pharmaceutical Products ($4.6 billion) and Medical Instruments ($1.4 billion). If you are a cannabis entrepreneur or investor those numbers should excite you about the opportunities that exist between our two countries. They certainly do for me!
About the Author
Sean Murphy is the Managing Partner at Miracle Ventures, an impact investment firm based in Denver, Colorado. He is a hospice specialist in the Department of Veteran’s Administration, and is a gateway for Israeli innovation in medical cannabis to reach the 76.4 Million Baby Boomers in the United States. He can be reached at Sean@MiracleVentures.com.