csua.org/u/egv -> businessweek.com/technology/content/dec2005/tc20051230_495029.htm
Most Popular For decades, water has been an extremely precious commodity in Israel. A Already, 60% of the country's sewage wateris recycled, and in September, the world's largest desalination plant was opened along Israel's southern Mediterranean coast. Now, new ventures are sprouting up to develop technologies for a global market where demand is growing rapidly. Israel is looking to exploit its expertise and become a majorplayer in the global market for water technology. "The water industry is where the telecommunications industry was 20 years ago, highly regulated and on the verge of a major change," says Ori Yogev, chairman of Waterfront, a newly formed industry lobby made up of academic institutions, the state-owned water utility, and private companies. His goal is to turn Israel into water technology's equivalent of Silicon Valley, with $5 billion in water-related exports by the end of the decade. A But the industry's technology segment is growing at double that pace and already accounts for a quarter of all revenues. Israeli companies that focus on desalination, drip irrigation, and water purification witnessed a 30% jump in export sales in 2005, to $810 million.
IDE) and France's Veolia Water is supplying drinking water to much of Israel's southern Negev region. A "We're now seeing annual growth of 30% to 40% in the desalination market due to demand in places like the US, India, China, and Spain," says Avshalom Felber, president and CEO of IDE. The Israeli company recently won contracts to supply desalination plants to Spain and India. Local experts note that drip irrigation -- a method used to water crops in arid and semi-arid climates -- is used on 60% of the agricultural land in Israel, while the US figure is only 6%. A But the real explosion in demand, as Meltzer sees it, will happen when water subsidies for agriculture in countries like the US and Australia are phased out or eliminated. The big change in the past few years is the establishment of dozens of startups focusing on the development of new water technologies. The process is reminiscent of the early 1990s, when Israel's high-tech industry took off with the backing of a nascent venture-capital industry. "We're starting to see substantial deal flow of startups focusing on water-related technologies and interest in investing in this sector," says Nir Belzer, senior partner at Millennium Materials Technologies Fund. The Tel Aviv-based fund is in the process of raising $100 million for its third offering focused on water, energy, and environmental ventures. In the past, a lack of exit options led venture funds to steer clear of the water sector. But Belzer believes this is rapidly changing with the growing interest of huge corporations and stock markets in water technology. The chief scientist of Israel's Industry & Trade Ministry has decided to fund water projects at two of the country's 24 incubators for seed-stage ventures. Up to now, funding has focused on software, telecommunications, biotech, and life sciences. In addition, the state-owned Mekorot water utility has agreed to serve as a testing ground for new technologies. "We'll identify the needs, test the technology, and commit to purchase," says Mekorot Board Chairman Booky Oren. This kind of close cooperation is expected to open a lot of doors for many of the startups. Mekorot is already testing about a dozen new locally developed technologies. One startup that has already received a local stamp of approval is Atlantium, a company based in Bet Shemesh that plans to start exporting its novel technology for disinfecting municipal and industrial waste in 2006. "We're looking for $6 million in sales next year and a three-fold increase in 2007," predicts Atlantium President and CEO David Waxman. He bases his upbeat forecast on the growing demand for nonchemical solutions in the $5 billion global market for water disinfecting. Israel hopes to become a key player in the fast-growing global market for new technologies such as those developed by Atlantium. It won't be easy, as local companies will no doubt face increasing competition from huge corporations entering the field.
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