The World Bank estimates that the global food and agriculture industry is valued at over $8 trillion and makes up more than 10% of the global GDP. That’s huge for innovation and technology.
Foodtech covers an array of areas that includes nutrition, packaging, food safety, processing systems, cultured meat, novel ingredients, retail and restaurant tech, health and wellness, and alternative proteins.
Israel is home to over 400 foodtech companies, around half of which were founded in the last five years.
Source:https://en.wikipedia.org
The foodtech sector, requires expertise from multiple fields such as chemistry, biology, physics, artificial intelligence, robotics, computer vision and more.
But it takes more than just having the knowhow and the right group of people to form a successful foodtech company, entrepreneurs need to look at foodtech as a sector. The classic Israeli entrepreneur would target investment-attractive fields such as cyber and fintech, but in recent years, entrepreneurs have a growing desire to generate an impact on the environment and humanity’s health.
Israeli foodtech has become an appetising prospect for global investors, attracting money from some of the world’s largest food corporations such as Coca-Cola, Mars, Mondelez, Tyson Foods, Nestlé, Danone, AB inBev, Starbucks, PepsiCo, McDonalds, Heineken and Unilever.
At the end of 2022, Future Meat Technologies, which produces cultured meat, secured $347 million, marking the largest investment in the foodtech start-up industry in Israel. Israeli cultured meat Aleph Farms has completed a $105 million Series B financing round led by the Growth Fund of L Catterton. Remilk, which produces animal-free milk and dairy products by generating milk proteins via a microbial fermentation process, raised $120 million this year in its Series B – the single largest investment in a cow-free dairy company to date.
According to a recent report by The Good Food Institute (GFI) Israel, the Israeli alternative protein sector alone raised $623 million in 2022, a 450 percent increase from 2020’s $114 million. Israel came second, behind the US, in terms of total value of investments secured. There are more than 100 alternative protein companies in Israel – over 40% are considered start-ups with breakthrough technology that could shape the future of protein, according to the GFI Israel report.
According to Invest in Israel, a report by the Ministry of Economy and Industry, the government has targeted the north of Israel and the Galilee region as the main geographic zones for government investments and via four main areas: the establishment of Israel’s first foodtech industrial compound – The National FoodTech Centre – in Kiryat-Shmona, the establishment of a new foodtech research centre as part of the compound in addition to the formation of the Sparks’ Fresh Start Incubator, a government-backed incubator for food technology, led by some of Israel’s largest food corporations as well as various food-tech VCs, and the ‘high salary plan’, managed by the Ministry of Economy and Industry. The plan provides subsidies to high-tech companies that employ workers at high salaries.
Perhaps one of the most significant and original incubators in the country is renowned The Kitchen FoodTech Hub. Founded in 2015 by the Strauss-Group as a part of the Israeli Innovation Authority incubators’ program, The Kitchen addresses global food challenges by harnessing Israel’s renowned innovation eco-system. It has raised over $222 million in capital, creating more than 250 jobs and comprises a portfolio of 22 companies across a range of foodtech areas.
According to a separate report by the Good Food Institute (GFI) Israel, and consulting multinational EY, about $450 million will be required over the next 10 years to build the infrastructure to support the local industry in the form of multidisciplinary research centres, technology transfer programs (from university labs to industry), research grants and training, and an additional $74 million should go toward building specific innovation hubs for cultivated meat, plant-based proteins, and fermentation tech start-ups. It said the Israeli government should supply 56% of this funding, or almost $291 million, and the rest will be drawn from private investments in Israel and abroad, according to the report. The researchers estimated that, through the establishment of more foodtech companies, the creation of thousands of jobs, possible future acquisitions, and foodtech exports, the government could stand to gain $8.4 billion in tax revenue.
The Israel Innovation Authority has just approved the establishment of the cultivated meat consortium, one of the biggest in the world, to invest in cell-based meat.
Together with the business sector and academia, $20.4 million will be invested in the consortium over three years, half of the sum by the government. Market sources believe that the total amount invested may eventually be more than $21.6 million.
The consortium will be led by Israel food giant Tnuva and comprise 14 companies and 10 academic laboratories. Consortium members will also include Aleph Farms, SuperMeat, the Hebrew University of Jerusalem and Tel Aviv University. One of the main aims of the consortium is to connect between academia and industry and bring academic research about cultivated meat ‘down to earth.’ Israel cultivated meat companies raised $507 million in 2021 led by Future Meat, which raised $347 million for a production plant in the US, and Aleph Farms, which raised $105 million.
The ever-growing world population requires new ways of producing food. Unless the Government is involved in funding and setting-up regional clusters, there is a gap between research and commercialisation. If we are smart we could learn from Israel.
Reference:
The ‘start-up nation’: the ecosystem of Israel’s foodtech sector, Candice Krieger, www.foodmatterslive.com, 20 April 2022
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