Zafrir Yoeli On Building A $2.5 Billion Business And Now Funding Startups In The Renewable Energy Sector

In the dynamic world of entrepreneurship, few stories are as compelling as the journey of Zafrir Yoeli, the founder of Enlight Renewable Energy. This company went public on both the Tel Aviv Stock Exchange and Nasdaq, reaching a peak valuation of $2.5 billion.

Today, Zafrir is venturing into the world of climate tech investments, leading the charge at Gravity Climate Fund, with his partner Bracha Halaf. The company has investors like Caffeinated Capital and Eclipse Ventures.

In this episode, you will learn:

• Zafrir Yoeli’s journey reflects a shift from engineering to entrepreneurship, driven by a desire to understand the business side of technology.
• Enlight Renewable Energy’s success stems from its unique business model, evolving from a renewable energy developer to a comprehensive power producer.
• The success of In Enlight is attributed to a focused and execution-oriented team, emphasizing the importance of team dynamics in a competitive market.
• Enlight prioritized building a strong executive team, attracting top talent, and creating high barriers to entry for competitors in the renewable energy sector.
• Going public on the Tel Aviv Stock Exchange and later on Nasdaq provided In Enlight with crucial access to capital, enabling rapid growth and expansion into new markets.
• Zafrir’s move to lead the Gravity Climate Fund underscores a commitment to combat climate change by supporting early-stage entrepreneurs in the climate tech space.
• Gravity Climate Fund aims not only to provide financial support but also strategic guidance, recognizing the potential in early-stage climate tech ventures and contributing to a more sustainable future.

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About Zafrir Yoeli:

Zafrir Yoeli is the CEO of Gravity Climate Fund. He previously worked at Vectronics LTD as a CEO. Zafrir attended Reichman University (IDC Herzliya).

Connect with Zafrir Yoeli:

• Bloomberg
• MarketScreener
• Crunchbase
• LinkedIn

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty hello everyone and welcome to the deal maker show. So today we have ah another founder joining us from startup nation. What an amazing country and incredible founders there now we’re gonna be talking today about lots of good stuff. You know going from engineering to being more on the business side. Ah, to going from. You know, just just being an employee to all of a sudden being a founder being a founder of a company that has gone public. You know, not only in Israel but then also on Nasdaq listed. You know at the peak we’re talking about two point five billion valuation and now he’s doing incredible stuff too. Now on the investment side. He went to the other side of the table and they more oriented towards say climate change ah type of um investments. So again today we’re going to talk about all the good stuff that we like to hear like what makes a company unique, especially in a segment where maybe there’s not a competitive edge. That is clear how you design your organization how to bring senior you know and talented folks. You know to really help you and get behind the trenches with you and lots of inspiring stuff so without further ado. Let’s welcome our guest today safre yoelli welcome to the show.

Zafrir Yoeli: Thank you happy to be here.

Alejandro Cremades: So originally born in Israel and raised Tina Kibbutz there were you know think about dormitories and all types of interesting and unique stuff there. How was life growing up, give us a walkthrough memory lane.

Zafrir Yoeli: So yeah I was I was born in a kibbutz near the northern border of Israel this means during the 80 s being a kid in a kibbutz was being brought up together with other kids in dormitories more ah of a socialist. Community ah no relation whatsoever to to equity or to capitalism but we got a pretty good education in in all ah in all aspects. So um I think we we became educated but but with 0 understanding of how economy really works. And I think this was something to to catch up later but the very strong value that we got was was being yeah you know compridership and and working as a team and you know collaborating. So maybe this is something I took with me later on to the business side as well.

Alejandro Cremades: And what what got you into engineering and and problem solving to begin with.

Zafrir Yoeli: Ah, well you know it was the the days where where people were contemplating whether to study law or or engineering in Israel and it it went more and more towards engineering I came from one of the.

Zafrir Yoeli: Elite intelligence units in in the idf. So this led me more to to a technical profession but I knew that you know I wanted this most and mostly as the basis for later, you know, development in in the business side rather than staying as an engineer. So I went ah to study engineering is the first degree but um, ah, sort of ah looked for my way out. Let’s say.

Alejandro Cremades: Um, and so so what was that way out.

Zafrir Yoeli: So the the way out for me was that after working as an engineer during my my university days I took a product management position in one of the communication companies in Israel. Ah, but pretty quickly I decided to change courses. Let’s say and and um, go more to to sales sales and marketing where I joined the semiconductor a small relatively small semiconductor semiconductorductor company.

Zafrir Yoeli: As a vp vp of sales just to feel the business more closely I felt that in engineering and in in tech in general in large corporations. You’re not very close to the business. So when I went to that company started in sales and then I became Ceo of the company for for several years um it was definitely more about you know how? how an organization you know how cash flow profit and loss really works and this also gave me the push to to start my own thing to go more to to founding a new venture rather than being employed. In 1.

Alejandro Cremades: So Then let’s talk about a you know this too because I think it’s a very interesting transition when you go from engineering to the business side. How is how was that transition for you. I mean people typically find it very difficult very Challenging. So How was it for you. You know, making that type of transition in your career.

Zafrir Yoeli: Um, yeah I think it’s very you know personality related. Some people are great engineers and they enjoy it and and they want to you know they look for this type of of a position others. That you know, enjoy more like the dealmaking dynamics or you know being more working closer to the business side. They would have a tough time staying in engineering roles for for the longer term. So for me, it was pretty clear that I wanted to. You know touch the business side more and so I sort of um, directed myself to to more business oriented first marketing and then sales and and general management positions. But I think it’s very it’s. Very personality related. You know, don’t try to to force yourself into roles that that do not match your your personality preferences.

Alejandro Cremades: So Then let’s talk about you know what was it like to ultimately start your own business. So How did that come across you know, like what was the process like of really incubating the thought and then being like Wow I think I I got a. I gotta venture into the unknown.

Zafrir Yoeli: Yeah, so it started with ah um, basically with we partner? Yeah I mean I met giladi aviz um later I founded the co-founded in light renewable energy with. And together. We you know both of us felt we we needed a change I was then Ceo in this semiconductor company. He was a vp in ah in ah, another tech company and both of us felt that that we needed change and and so we start to you know, contemplate together and throw ideas in the air. And we we saw the renewable energy spaces. This was two thousand and seven eight we’re talking about we we thought this is a very interesting segment but we wanted to find the right model. You know how do we do? We enter into this market and what type of business model and then. We identified that that we identified basically the model of being a renewable energy developer and power producer as an interesting one. We just we saw the the valuations and the the potential for the energy transition basically moving from. Ah.

Zafrir Yoeli: Producing or generating electricity through Fossil fuels to generating based on renewable energy sources but not being just the the one that is selling the you know the project or the equipment but actually being the owner being the the. Like Utility Two Dot O Yeah, being the one that develops finances and then constructs and sells electricity. This was the most interesting business model that we identified so we said yeah I mean this this looks very interesting. What do we need to do in order to make it happen and from that. Point Forward. We started basically to design how the company should look like in terms of the business model the financing structure the executive team and everything that follows.

Alejandro Cremades: So what? what? what ended up being you were talking about the business model. What ended up being the business model of in light. How were you guys making money as well.

Zafrir Yoeli: So in light is a it’s a renewable energy developer and power producer. So basically it does everything from a to z in order to eventually hold renewable energy assets and sell the electricity that is being generated in them by them. So it starts with identifying the right pieces of land land plots for either solar or or wind turbines or or energy storage systems in inutility scale and we’re talking about Tens and and hundreds of megawatts of of power. And then it works on getting all the regulation approval of regulatory approvals permits everything you need in order to operate such a facility. This is you know this takes a lot of time energy and and knowhow and then it finallys. Basically it supports it. It finances both the development stage. But then also the construction. So and this this involves a lot of capital expenditures so you need to be very well funded on your corporate level and the product level. Um and eventually after financing and constructing the facility through subcon subcontractors. Basically the company holds the you know the asset the solar farm or the the wind turbine farm and sells the electricity from this facility to different offtakers. It could be the local utility. It could be the Googles and Microsofts of the world that that wants to buy and.

Zafrir Yoeli: Green Energy Green electricity and by that basically supporting and advancing the energy transition from Fossil fuels that emits greenhouse gases to fully renewable electricity that that does not emit any greenhouse gases.

Alejandro Cremades: So I guess too You know one thing that is interesting is that here you guys were operating ultimately in a market where there’s not a clear competitive edge. So how did you guys go about really developing that uniqueness you know for the company.

Zafrir Yoeli: That’s a very good question because indeed in ah in this type of a business model where we were not a technological company. We. We knew you know about technology we we you know we come from technological companies and and fields. But ah. And light itself as a business model did not hold any technological ip and during the time where we started the company. There were already several active players in the market in the israeli market and the european market and many more were added during those years so what turned the light into one of the leading players. Basically I think you know retrospectively that first of course the the fact that we were quite unexperienced and very much execution oriented executive team. So. Gila and myself and then the additional co-founder joined us Amit Paz was ah who joined us the lead of engineering and also the additional executive team members that that we brought and were joined to our team. All very you know, talented and execution oriented people. So of course the team and its relative advantages and focus is is critical and it also plays a role when you go to talk to the you know with the ecosystem like the banks the the investors so when they see.

Zafrir Yoeli: Very focused team and you know with a very good execution track record they they feel more confident with this team rather than others. So that’s that’s one the second key is is you know trying to imagine and design your first of all and really understand. Your business model. What do you want to? What do you want to be what type of business you want to play in and how to implement it not just around you know if you’re a technological company just what is the technology if you’re a developer just you know, eventually who do we want to sell to but. You know the full cycle whether if you’re a developer you want to know about the regulation you need to know about the financing and you need to know about selling electricity eventually and you know build a company around it. So what we did is first we focused on the business model that. Was maybe the the toughest because it it involved a lot of understanding and skills in different verticals and it needed it required a lot of financing very capital intensive. Um, but it also created the very high barriers of entry to to others once we. Established a cluster of projects and managed to bring financing for those projects we were in a different state with different Let’s say step than other other players that just did you know sold projects or systems.

Zafrir Yoeli: What have you so being very focused on the business model and you know having the the right team in place. These are 2 critical points and the third one is after you you. Understand what your business model is and and how the company should should achieve it. We work very hard on designing the company’s structure around the business model to basically best support this business model and what does it mean it means that if we are doing development. Financing and then construction and and asset management. We want to have a very clear lead and very strong lead for each and every one is one of those verticals so on the business development side. We were very strong in execution of new product of entering new markets on. But financing. We were very very hard to become experts in corporate financing and project financing for renewable energy projects. We brought the best financing team that that we could find with our Cfo and. You know he’s still the same guy for 10 years now even more one of the most you know expert cfos in in corporate and product financing and this is critical. It sounds like you know you’re doing something in the utility space in in the development space but eventually it’s a very.

Zafrir Yoeli: Financial business so you need to build your expertise in this segment and then in the construction management and in the asset unit. Yeah.

Alejandro Cremades: So.

Alejandro Cremades: So so I was just going to ask you really quickly there you know on the because you were alluding to it on the team. You know would you mind double clicking on the team. You know like what? what do you? think you guys got right? when he came to really bringing on such great talent to the business.

Zafrir Yoeli: I Think it was first you know it’s the initial click and you know who are the the original founders and how do they work together and divide their responsibilities. This should be This should be clear enough and again very execution Focused. It’s it’s it’s you know? Yeah I wouldn’t say there’s no time to think because you have to think but you have really you you really have to execute and show the results and you you need to bring the the projects the the agreements and the customers and you know show that you you achieve the milestones. And then I think that once we understood what type of people we need like a very strong cfo A very strong commercial management for for the for the wind and and solar Farms. We sort of looked for these type of people. And and we’re very focused on finding them and you know it’s something that also creates a It’s like a cycle if you have a very strong kernel team other people other strong people would want to join you and then you bring additional good people and then the other. You know more good people would want to join so you know investing and in the good people in the executive roles would help you bring more good people for for the next roles and keep your competitive edge through the the quality of the team.

Alejandro Cremades: Now obviously you know the company has say gone public not only on the stock exchange in Israel but then also on Nasdaq so what was the um and and and at a peak valuation of two point five billion which is absolutely remarkable. What was the journey of capitalizing the business like you know from raising you know, private money to go in public you know in Israel and then also to go in public in in Nasdaq you know how was that journey like.

Zafrir Yoeli: So that was definitely one of the keys that that we understood pretty quickly that in order to to be able to grow as ah, a utility scale energy renewable energy developer. You need to have very very good access to capital. And very flexible access so it started with being you know, taking some and um concessions through our first first. Ah significant financing where we became a publicly traded company in Tel Aviv basically this was through. Setting the control in the company and becoming a publicly traded company in Tel Aviv stock exchange from 1 hand we gave up control but from the other end we gained access to the public markets to to both equity and debt and this enabled ah enables us to. Really support the business model and expanding the business model to to other markets. So um, it was a tradeoff but but we believed it. It’s worthwhile and it it really justified itself by supporting the expedited growth of the company and then you know. Almost let’s say every year or so we took a look at you know what are the the um sources and uses of of our funds and when we saw that the uses are increasing. Dramatically we understood that that you know we need to go to the next level.

Zafrir Yoeli: Financing the the business of course our financing became cheaper and cheaper and better and better throughout the years also through the telviv stock exchange at a certain point where we became you know, quite big even in in Israel terms standard. We decided that it makes sense also to become duly listed. And this was actually very much based on the the expansion and the penetration into the us market that we did 2021 um, a significant portion of the pipeline of the future business became and the the pipeline of the acquisition in the Us. And that enables us basically to approach the Us markets you use investors and and then go to the successful ipo in the Nasda.

Alejandro Cremades: And how was it like like ringing the bell in the nasak I’m sure it was like a dream come true. What was going through your mind.

Zafrir Yoeli: So actually for me and that’s definitely one of the most amazing achievements of the company I was leading the business development worldwide for the company until 2021 then after closing the deal in the Us. . decided to leave the executive role for my next thing which is which is basically climatictic investments that we can discuss in a while. Um and then so my my pals were leaving the the ipo when I was of course. Ah. With them in my heart and then encouraging them. It was very very exciting to see the company being you know doing this ipo successfully especially in 2023 which was not an easy year for ideals.

Alejandro Cremades: Yeah, no kidding no kidding I mean what are what are remarkable. You know, ah milestone. You know for a company that that you’ve seen you know being built you know from nothing and where you had that level of impact as well. No as a co-founder so congratulations now obviously as you were saying.

Zafrir Yoeli: Are you.

Zafrir Yoeli: Thank you.

Alejandro Cremades: In 2022 in around July you know is when you decide that is time to take action around climate change and you decided that the pronoun was meaningful enough for you to go to the other side of the table to become an investor and to get going as a venture capital. Um. You know in this case so why did you think that that was the ah prone that was meaningful enough to you and then also why transition into the investment side.

Zafrir Yoeli: So you know it’s been ah, almost thirteen years I think with a light in in an executive role and I thought that the team the executive team and the the company has become really you know good at at you know. Preserving and and ah being able to support the the roles and but through it’s it’s organizational structure and my dream was always you know trying to distribute between The let’s say the development side but also being closer to technologies and I saw something very exciting and new happening in the in the climate technology space where more and more entrepreneurs entering the market both in quality quality and in quantity and I wanted to take part of this. So I thought that okay and light is in charge of the energy transition of you know building more renewable energy projects through the the amazing team that is there I can you know and leave the executive role and and go to try to. Really boost up the the climate tech space while and light is doing the right thing for the energy transition side. So this is when he decided basically to to step down from the executive role and start to you know examine again. The business model. What’s the right way to impact and enter.

Zafrir Yoeli: The the technological side in order really to help the climate tech space get to the next level and so that’s basically where I where I decided to to make this change and go to basically fund. Structure but not a regular fund but a designated expert led fund that focuses on climate Tech led by climate experts.

Alejandro Cremades: So I guess say in this case for you, You know? Obviously you guys are now at an amazing you know moment in time where you are now in the process of closing what is going to be your first fund. Ah and I guess you know the question here is what kind of Investments. You’re going to be doing. You know what are ah those same ideal type of companies that that you’re looking to onboard ah in what’s the vision. You know what does the future look like for you know the company for gravity climate fund.

Zafrir Yoeli: Great. Yeah, so we think that something very different is happening in climate tech. First of all when I say we so together with me I joined you the fund Dr Brox of Halaf she was the chief scientist for the israeli ministry of energy so she saw basically everything that was around in. Let’s say about five years ago more or less and she she could also identify the change and the difference in in the quality and and the offering. Of new ventures that that you know are now entering the climate tech space and um, what we’re seeing is that there is a lot of new potential in relatively early stages because most of the entrepreneurs are new. The business models are more or less in the making the the market is not mature yet and so so it’s through going through different. Let’s say crystallization processes and in such a market that in such a technological market where most of the potential. Is in the early stages and there is a lot of expertise required in different verticals like in financing and in understanding understanding the ecosystem and and the regulations these are things that impact the success rates of ventures um in this type of market.

Zafrir Yoeli: In terms of you know pure benchmarking expert led funds are performing better. This is generally speaking and this is why we we thought it’s such a you know, great opportunity to establish such an investment platform from people who come from the Market. Basically built executive teams built large scale projects Sold Energy. We understand that that you know the different different business models and we know the players the ecosystem and by that really try to bring value to entrepreneur entrepreneurs in in. Working with them again in identifying the business model and you know structuring the executive teams in accordance to the business model and by that trying to you know, boost their their success rates eventually.

Alejandro Cremades: So So then obviously you know like we’re talking about you know here? What the future is going to look like as well and and I want to talk about you know. Also the the past and doing so with a lens of reflection if I was to put you into a time machine. And I bring you back in time you know maybe to 2009 where you guys were thinking about starting something of your own and you have the opportunity of having a chat with your younger self with that younger sufferer and you’re able to give your younger self one piece of advice for launching a business. What would that be and why given what you know now.

Zafrir Yoeli: So yeah, that that you know requires a chat The fireside chat it’s ah there are so many listened learned and now what I usually tell new.

Zafrir Yoeli: Startup leaders is that you know how do you know that you’re on the right track until you’re getting dragged on the you know road and then feeling your skin being ah peeled off you then then you’re not after you’re there then then you’re probably on the right track. So definitely. You You should know that there are always the challenges that are you know that you you might face a challenges that that you cannot cross that that’s for sure. Um, So I think you should.

Zafrir Yoeli: The optimism is always a key feature but coming back to what we discussed earlier you know work with a team of of you know the best team you can find the best partners you can find in terms of execution skills and and you know their. Character Basically that the the strong character features and then don’t wait and before really defining. Well your business model. What what? you’re going to do and how the companies is going to look like in order to match this business model. Don’t think that this is something for later stage. The sooner do this the better and I think that um this is something that we we we thought ah we we did probably better than others at the time and this is what led us to to be. Maybe more successful than others.

Alejandro Cremades: I Love it So suffer for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.

Zafrir Yoeli: Ah, in in a how to to get into in contact. Yeah, so um.

Alejandro Cremades: That’s correct.

Zafrir Yoeli: We have. You can always contact us through the gravity website. It’s gravityclimaticticch dot Com or also through my private private email. It’s a zafrir at Gravityclimaticch.com And so yeah, happy to. And you know relate to any questions or you know new ideas that that come to mind in in the clitic space and and in general and I think that um, it’s really a very exciting point in time right now that the you know Burden of proof is on us. Need to demonstrate that this market really can leave up to this to this potential. But I think that with the right mixture of talented entrepreneurs expert investors and later on you know Generalist investors that will go in with. You know the the full scale of investments that are required in this field we can make it very successful.

Alejandro Cremades: Amazing. We’ll suffer. Thank you so much for being on the deal maker show. It has been an honor to have you with us.

Zafrir Yoeli: Thank you very much I Really appreciate it and yeah, good luck to all of us.

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