Investors turn to Israeli agritech as demand for food swells
Israel tech aimed at farmers has drawn 7% of global investment in on-farm technologies, raising $80m in the first half of the year, report says
Shoshanna Solomon was The Times of Israel's Startups and Business reporter
Israeli agriculture technologies for farmers have attracted some seven percent of global investment in the first half of 2017, a new report shows.
Israeli agritech firms, whose technologies are used by farmers to improve the yield of crops and better monitor produce — called on-farm technologies — raised $80 million in the first half of the year, according to data released by Start-Up Nation Central, a nonprofit organization that connects companies and organizations to Israeli technology firms.
The amount raised by the whole agritech sector — which includes on-farm technologies and other products such as supply chain monitoring — totaled $131 million in the first nine months of the year, 35 percent higher than the amount raised in the full year of 2016, when the sector raised $97 million.
In 2016, Israel placed among the top five countries in terms of number of investment rounds in agritech, and the amount raised in the sector per capita was double that raised by US firms, the report said. Even if in dollar terms the US received the highest amount of global capital in 2016, followed by China and India, American agritech firms raised $5.80 per capita, while its Israeli counterparts raised $10-$12 per capita, according to the report.
The smart farming sector, in which data-driven solutions and high-performance hardware for increased resource efficiency and crop yield are used, is a fast-growing sector within agritech in the so-called startup nation — with half of the 60 Israeli companies that operate in the field having been set up in the last five years.
In the past decade, the Israeli agritech sector has produced a high number of new, technologically innovative companies addressing global agricultural issues, such as food insecurity and safety, manual labor shortages, and environmental strains, the report said. There are more than 460 active Israeli agritech companies operating in Israel today, over 25% of which were founded in the last five years, and 50% of which were founded in the last ten years, the data showed.
Israel is known globally for the inroads it has made in agriculture since its early days of existence. Its pioneers, through sheer hardheadedness and the use of innovative methods like drip irrigation, managed to drain the swamps and make the desert bloom.
Ever since, the country has maintained its agricultural expertise, with research and development in universities and institutes producing cherry tomatoes, drought-resistant cucumbers and heat-tolerant tomatoes, among others.
Now, with the world forecast to have a population of about 10 billion by 2050, overall demand for food will jump, and policy makers, farmers and investors are looking to new agriculture technologies to produce better and more resistant crops and to improve the health of existing produce.
“Agricultural technology (agritech) promises to overcome global agriculture challenges by means of digital, mechanical, and biochemical innovation. Sensors, communications, and data analytics empower farmers to make informed decisions about their crops, resulting in increased yields, as well as reduced water and chemical usages,” wrote analyst Fredrik Liljedahl in the report. “Robotics and advanced machinery automate tasks, replacing manual labor. Gene-editing processes make breeding new crops with favorable traits more efficient. Growing systems for alternative-protein sources substitute resource intensive meat production. Monitoring technologies ensure food safety from farm to table.”
The global agriculture market is estimated to be worth $3.2 trillion, and yet, wrote Liljedahl, the sector is still “a largely untapped source of business,” as these companies have a long gestation period and VC firms have been hesitant, until recently, to commit funds for the long term.
Since 2012, however, investment in the global agritech sector has grown from $500 million in 2012 to $3.1 billion, in 2016, the report said. And Israel has the ability to play a leading role in this sector, and in smart farming in particular, the analyst said.
“It is common in Israel for innovators of one high-tech sector to apply their expertise to another, and this trend is reflected in the array of Israeli Smart Farming solutions,” he said.
Israeli entrepreneurs are using IoT systems, machine-learning algorithms, and big-data analytics to spearhead innovation in farming, and they use these technologies to analyze soil, water, and plant tissue, “providing crucial information for farmers, who can then make precise, data-based decisions,” Liljedahl wrote.
Solar-powered, wireless sensors that enable crop and livestock monitoring are being used to analyze the fields, along with smart irrigation systems, digitalized farm management systems and drone technology to map out the crops and to oversee the distribution of fertilizers and pesticides.
“With a significant pool of highly skilled yet affordable labor, and an influx of expertise and technological innovation from academia and the high-tech ecosystem, there is still plenty of room to grow,” wrote Liljedahl. “As global agriculture challenges become ever pressing, farmers and agrobusinesses around the world are turning to Israeli Agritech for collaboration. Investors, too, are realizing the promise of deal flow, and the field is not yet crowded.”
