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Israel: A Leading Food-Tech Ecosystem


By Jonathan Levy

Israel has set the bar high in terms of its ability to apply smart technological innovations to its shortage of natural resources, becoming a world technological leader along the way. This is in spite of only 20% of the land area being naturally arable. As a result of Israel's agricultural technologies and innovations, the agricultural sector has grown significantly, attaining a food security index of around 95% and contributing significantly to the Israeli gross domestic product. As a consequence, Israel has reached record heights in productivity per unit for dairy cattle, cotton, olives and other products, while its vegetable seeds industry is considered among the best around. The country is at the forefront of the global effort to increase crop yield.

The Volcani Center, the research arm of the Israeli Ministry of Agriculture, is a world leader in agricultural research, with over 200 researchers working on 800 projects. Some eye-catching examples of Volcani's innovations include: wheat varieties which can grow in the desert and thermal imaging drones that inform farmers immediately how much water each crop needs, allowing them to conserve both money and water.

Many of Israel's food and agro-tech companies also specialize in the host of related fields, such as agricultural production equipment; poultry and dairy farming technologies; fertilizer and pesticides; seeds and seedling production; veterinary products and food suppliants. Examples of Israel's innovation expertise include in-soil and in-tree sensors, cutting-edge swarming robot drones for pollination, plant genetic platforms, cultured meat, alternative proteins, smart irrigation, and big data analytics software.

According to Israel Venture Capital, which monitors the Israeli tech industry, the country has amassed nearly 347 food-tech startups (according to data from a 2019 report of IVC), while investment in this field has increased fourfold in the last five years. Each year Israeli agro-tech and irrigation companies export more than $3 billion to other countries, and there are hundreds of Israeli technologies committed to making farms smarter and more efficient worldwide, driving innovation in the global food industry. In the first half of 2019, $109 million was invested in food-tech companies in Israel, a higher amount than the $103 million invested in 2018.

As part of the Israeli government's decision to boost the economy and industry in the northern region of the country, several initiatives have evolved in recent years. In June 2019, a consortium consisting of Tnuva, Tempo Beverages (led by Jacques Beer), crowdfunding platform OurCrowd, and US agri-tech and food-tech fund Finistere, won a tender to run Israel's second fully dedicated food-tech incubator in the north, pledging to bring investments worth hundreds of millions of dollars. The government will funnel NIS 100 million in funding for the incubator over the eight-year franchise period.

The Ministry of Economy and Industry has also announced plans to establish a first-of-its-kind micro-industry site that will open opportunities for small and medium-sized food-tech businesses, tasked with providing manufacturing solutions for PoD technology. This is a unique approach, unrivaled by any other nation. Another intended project is the foundation of an applied research institute for food innovation that will serve as a knowledge base of the food-tech industry in Israel and worldwide, conducting applied research for companies and corporations. There are also further private initiatives in the field of food-tech, some of them supported by the government.

In 2015, the Strauss-Group, an international food company based in Israel, established The Kitchen, a tech incubator focused on food and beverages and a seed investor in related startups, based in the city of Ashdod. It invests in 3-4 new food-tech startups per year. During the incubation period the startups benefit from close support from The Kitchen's team and a large range of experts. So far, 12 joint investments have been made between the Kitchen and the Israeli government for a combined total of $ 6.75 million, leveraged in excess of $20 million, alongside other external investment. FoodLab Capital is another initiative aimed at attracting investments to Israeli food-tech startups.

In April 2019, Israel-based venture capital firm Jerusalem Venture Partners (JVP) also announced a strategic partnership with Israeli drip-irrigation company Netafim Ltd. Together, the two companies will scout for startups in the fields of agro-tech and food-tech.

JVP, too, is a partner of Mars, the American global manufacturer of confectionery, pet food, and other food products. In May, Mars announced a plan to create a research and development center in Israel dedicated to scaling and commercializing tech solutions that touch any aspect of the global food industry, ranging from farming to nutrition. It is planned that the R&D center will provide funds to Israeli startups and will also work with researchers in academic institutions. JVP will actively seek lucrative investment opportunities for the leading US company.


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