GreenTech, the environment division of the Mofet BYehuda Technological Incubator, has launched Israels first environmental VC fund. The GreenTech Venture Fund plans to raise $10-$20 million.

The Fund gives investors the opportunity to invest in pre-seed environmental start-up companies, with minimal risk. This is because Israels technological incubators are supported by The Office of the Chief Scientist of Israels Ministry of Industry and Trade, which provides 85% of new companies pre-seed financing. The companies spend two years on R&D in the incubator, during which time they are given administrative support, office and research space, and assistance in running a start-up company.

The goal of the incubator program is to assist entrepreneurs to develop their technologies and attract funding to enter the open market. Once a company graduates they are able to receive additional government support outside of the incubator program.

With the establishment of the GreenTech Fund, private investors will give 15% of the initial funding. The Fund will then continue investing in GreenTechs successful companies. An added benefit for Fund investors is the ability to buy the governments share of the company at the initial price.

Says Yossi Ron, GreenTech CEO, There is no other fund in which the government makes the initial investment and takes the initial risk and the investors reap the profit.

The Fund was founded in response to the planned privatization of the incubator program. The government will continue to fund new start-ups, but they will raise their initial investment to a maximum $500,000, from the current $300,000, and the management of the incubator will be privately run.

GreenTechs management team will work with the Funds portfolio companies to help them market their technologies internationally. According to Hillel Lerman, GreenTechs business development manager, the teams accumulated knowledge and experience working in diverse environmental fields will enable them to match companies with key players.

Thus far GreenTechs companies have made breakthroughs in the fields of rubber recycling, production of coloring agents using scrap iron, livestock wastewater management, natural pesticides, and municipal sewage disposal.