The Israel Innovation Authority on Tuesday selected a consortium of foodmakers and VC funds to run its new foodtech incubator in the north of Israel.
The authority said that after an eight-month competitive process, it had selected a group comprising Tnuva, Israel’s largest food manufacturer; Tempo Beverages Ltd., an Israeli beverage company; Jerusalem-based equity crowdfunding venture OurCrowd; and US VC fund Finistere Ventures LLC, for an eight-year license to run the Sparks incubator in the northern city of Kiryat Shmona.
The partners will assist entrepreneurs who have innovative ideas for the food industry — from alternative proteins and nutritional value improvements to functional ingredients and supply chain efficiency. Using the partners’ extensive industry network, entrepreneurs will gain direct access to leading global food and beverage giants, the winners said in a separate statement.
Last month, the members of the consortium said they planned to jointly invest up to $100 million in Israeli agricultural and food startups.
“The idea is to bring innovation to the biggest industry in the world,” said Jon Medved, the CEO of OurCrowd. “If people from all over the world come to Kiryat Shmona to invest in Israeli technology, then that is biblical.”
Throughout the duration of the franchise, the partners in Sparks will invest in innovative startup companies: 85 percent of the funds invested in each startup will be through grants provided by the Innovation Authority up to a total sum of about NIS 6 million ($1.7 million) for a period of 3 years per startup.
The incubator will seek to create and invest in five new startups a year, aiming for at least 40 new firms by the end of eight years, Medved said.
The partners will also use their contacts locally and globally to support the selected startups though their entire lifespan and “significantly strengthen the food innovation ecosystem in Israel,” the authority said in a statement.
“After the Israeli success in cyber, autonomous cars and medical devices, we are now targeting FoodTech as the next big thing,” said Economy Minister Eli Cohen in a statement.
“The decision to select Sparks FoodTech was based, among others considerations, on the extensive experience of the partners and the team that will lead the incubator’s management, investments and support of foodtech companies,” said Dr. Ami Appelbaum, chairman of the Israel Innovation Authority and chief scientist at the Economy and Industry Ministry.
OurCrowd has raised $1 billion in investor commitments and has made investments in 170 companies and funds. This includes an investment in Beyond Meat, a California based maker of plant-based meats that recently completed what is being called this year’s most successful IPO. The firm’s shares have surged since its IPO on the Nasdaq, and the firm is trading at a value of close to $10 billion.
Finistere Ventures LLC is a US VC firm that invests in early stage agriculture technology companies.
Tnuva, controlled by China’s Bright Food, is Israel’s biggest food conglomerate, with $1.7 billion in revenue and some 16% market share of the total food and beverage market in Israel.
Tempo, the longest established beverage company in Israel, is a maker of alcoholic and nonalcoholic beverages and has global partners including Heineken Enterprises and PepsiCo.
Quenching concerns that via Tnuva’s activity in the incubator, its owner, China’s Bright Food Group, could get access to Israeli food technologies, the CEO of the Israel Innovation Authority, Aharon Aharon, told The Times of Israel that Tnuva is an Israeli company and that all of its IP is retained in Israel. In addition, he said, startups within incubators in Israel retain ownership of their IP.
From 2014 through the end of 2018, Israeli firms operating in the food and agricultural industries raised some $800 million across more than 250 deals, according to data compiled by Start-Up Nation Central, which tracks the industry. And whereas Israel has always had an edge in agricultural innovation — thanks partly to its lack of natural resources and its kibbutzim, the farming communes it pioneered — it is now starting to produce food technology, including meat alternatives, new ingredients, plant-based proteins, restaurant booking and other technologies.
The other contender for the incubator was a consortium made up of Israeli VC fund JVP and US food behemoth Mars Inc.