Pentalum, an innovative Israeli wind power company, just closed a $9M venture financing round from Cedar Fund, Evergreen Venture Partners, and an as-yet unnamed US fund. Pentalum is interesting both because it’s a great company with a really interesting technology and offering, and because it’s an interesting reminder that great VC cleantech opportunities can exist where you might least expect them – even in Israel.
Pentalum’s technology – called SpiDAR – is based on something called LIDAR. LIDAR (Light Detection and Ranging) is an optical sensing technology that can be used to measure distances as well as other atmospheric conditions such as cloud density, pressure, wind, humidity, trace gas concentration, etc. (if you are really interested in the details, you can start with Wikipedia). The team that founded Pentalum actually got their start in military applications of LIDAR. Specifically, they were working on advanced sights for sniper rifles that can adjust for wind along the route to the target and on systems for measuring wind over large areas to help predict the dispersal of poison gas from enemy missile strikes. One of LIDAR’s unique abilities is to measure wind at a great ranges – and this is the ability that Pentalum is leveraging.
Pentalum has been fairly quiet about what they are actually building, so I am not planning on blowing their cover. That said, I think Pentalum is an important reminder of a few things:
- Israel can be cleantech powerhouse. Great investment opportunities are few and far between, but they do exist. The jury is, of course, still out on Pentalum, but they can be added to a long and growing list of proven and/or potentially super exciting cleantech opportunities coming out of the Israeli eco-system: BetterPlace, Ormat, SolarEdge, Xjet, Tigo, Emefcy, Brightsource, bSolar, to name just a few.
- VCs and other investors will need to think out of the box. Israel hasn’t yet proven its ability in wind energy – but alternative energy in general is still an emerging space, and Pentalum has a great shot at success. Our job as venture investors is to get comfortable in new and uncomfortable spaces. Lots of the successful companies have operated in unconventional spaces and many of them have required unconventional (non-VC) financing.
- Brown-fields are greener: The aftermarket is your friend. Growing and scaling an alternative energy company typically takes a ton of capital. Technological innovation that increases generation efficiency often needs to be integrated into complex systems (solar cells, turbines, generators, etc.) – and this integration often happens at the point of production – the manufacturing line itself. This means you either need to endure a long sales cycle to a manufacturer or you need to build a line yourself to prove that it works before you can scale. If, however, you can find a way to build a self-contained product that can be added to an existing system in the field at minimal cost and that can drive higher efficiency – that means three good things: lower capital needs, faster time to revenues, and a much larger market.
- Swords can indeed be turned into plowshares. Israel’s high-tech military plays a huge role in sparking and supporting the innovation eco-system that benefits us all – entrepreneurs and investors. Historically, military-related technology in Israel typically had to do with advanced communications systems, security/encryption, or intelligence systems that drove world-leading IT prowess. In Pentalum’s case, the military origins of the technology come from an unlikely source: LIDAR. It takes a real visionary to take a system used to build sniper sights and predict the harmful effects of poison gas and turn it into a system to that makes wind turbines more efficient. But, then again, Israel has never been short on vision.
Pentalum is good news – for wind energy and for the Israeli innovation eco-system.
