ISRAEL Law and Practice Contributed by: Benjamin (Benny) Sheffer and Lance Blumenthal, S. Horowitz & Co.
2. Establishing and Exiting Early- Stage Companies in the Energy and Infrastructure Industry 2.1 Establishing and Financing a New Company Israel is a practical and efficient location to establish new ventures in energy and infrastructure. Affection- ately known as the “Start-Up Nation”, Israel has pro- gressed at an incredibly fast pace towards a more resilient energy future. The government has set ambi- tious goals for renewable power and monumental infrastructure projects. Accordingly, entrepreneurs looking to invest in solar power, energy storage, micro-grids, infrastructure and other innovative solu- tions would not be found wanting for opportunities. Incorporating locally enables companies to make use of government incentives supporting clean energy, grid development and climate-related innovation. It also ensures that investors, regulators, and commer- cial partners can operate within a familiar legal envi- ronment. Although some founders later choose to form a par- ent company overseas for tax or global investment reasons, initial incorporation in Israel is generally straightforward: time required for registration is short, the process is digital, and no minimum share capital is required. Choosing the Right Corporate Vehicle Most early-stage companies in this sector begin as a private company limited by shares. This protects shareholders from personal liability, supports flexible governance arrangements, and is widely accepted by both domestic and foreign investors. As a company’s ambitions expand, for example, when it intends to own large renewable projects or raise sub- stantial finance, alternative structures may be needed. If the business aims for a stock exchange listing or major institutional investment, converting to a public company becomes relevant. For developers build- ing specific assets like solar facilities, energy storage systems, or infrastructure concessions, establishing a separate special-purpose company for each project helps limit risks and satisfy lender requirements. Lim-
ited partnerships are also used, though they are less common for technology-driven start-ups. Securing Initial Investment At the early stage, funding usually comes from a com- bination of private investors and public support pro- grammes. Angel investors, family offices and individu- als with industry experience are often the first backers. Alongside this private capital, the Israel Innovation Authority and other government-supported initia- tives may provide grants or pilot programme support, which is particularly important in regulated markets such as electricity and infrastructure. These early investments are first documented in a short-term sheet recording the main commercial terms. Once agreed, the parties sign more detailed agreements (typically a shareholders’ agreement and a subscription agreement) which set out the as-of- yet undefined provisions with an emphasis on founder responsibilities and investor protections. Scaling Through Venture Capital When the business demonstrates market readiness or global potential, venture capital becomes more significant. Funds based in Israel as well as interna- tional investors are active in areas including renewa- ble-energy technologies, energy storage, advanced power-grid tools and infrastructure solutions. As funding rounds grow, companies frequently restructure operations to suit investor and lender expectations. For example, they may create subsidi- aries dedicated to individual infrastructure assets so that financing and licensing can be managed more efficiently. Legal Documentation and Governance Practices The contractual structure used in Israeli venture financing follows widely recognised international practice. Many documents are adapted from models used in major global markets, ensuring that rights and obligations are clear and that investors receive familiar protections. These typically include liquidation pref- erences, anti-dilution rights, director appointments and decision-making controls, as well as vesting of founder equity to support long-term commitment.
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