Israel invests in the Galilee as hub for food of the future

The government is promising companies setting up foodtech businesses in the north of Israel subsidies, free land and tax breaks; a new JVP accelerator will mentor startups

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

A falafel sandwich ready to be eaten, part of the pantheon of Israeli food. (Orel Cohen/Flash90)
A falafel sandwich ready to be eaten, part of the pantheon of Israeli food. (Orel Cohen/Flash90)

Food technology startups are being encouraged to cast their eyes northward, with the government offering subsidies, free land and tax breaks to those that set up in the north of the country, and a new accelerator in Kiryat Shmona promising to help entrepreneurs by providing mentorships.

The initiatives are part of a bid to transform the north into a hub for agriculture and food technology companies.

Over 60 food companies and dozens of startups participated Tuesday in an inaugural event for a foodtech innovation community in Kiryat Shmona, where Erel Margalit, founder and chairman of the venture capital firm JVP, announced the accelerator.

At the event, Economy Minister Eli Cohen said the state would allocate NIS 110 million ($30 million) in the coming year for foodtech ventures in the Upper Galilee and in Kiryat Shmona, Israel’s northernmost city.

JVP’s Erel Margalit (left) with mayor of Kiryat Shmona Nissim Malka (center) and Ami Appelbaum, the Chief Scientist at the Economy Ministry at a food tech conference in Kiryat Shmona on July 3, 2018 (Courtesy)

In addition, a foodtech high-tech park, a micro-industry hub and a foodtech innovation institute will be set up in the city, providing companies with the infrastructure and services “to develop the food of the future,” JVP said in a statement. The goal is to develop R&D centers and set up advanced food and agricultural industries, based on a government resolution that allocates millions of shekels to the effort.

Foodtech is an innovative sector that includes everything from smart agriculture to new ways to deliver, distribute and pay for food, as well as healthier food options and alternative proteins for consumers. The total market of agrifood reaches $11 trillion annually and essentially connects biotechnology, health, big data and innovation to the food industry. In Israel alone, there are over 300 foodtech startups, 253 established companies and 14 academic institutions that work in the field of food and agriculture innovation, according to data provided by JVP.

Israel, known as Startup Nation, sees most of its tech bustle in Tel Aviv, the nation’s business capital, and in other cities in central Israel like Herzliya and the up-and-coming Jerusalem and Ra’anana. The idea of the initiative is to spread some of benefits of the industry to the geographical periphery of the country, which suffers from higher unemployment and poverty. Beersheba, a southern city in Israel, is undergoing a transformation into a hub for cybersecurity startups and multinationals.

Nachum Itzkovitz, the director of the Investment and Industrial Cooperation Authority at the Economy Ministry, said at the event on Tuesday that foodtech companies setting up in the north of Israel will be eligible for subsidy of up to 35% of salaries of up to NIS 30,000 a month.

Large companies moving to the Galilee will be eligible for a decreased corporate tax of 6% instead of the current 23%; free land; a grant of up to 30% of their investment in building and equipment; a 90% subsidy for their development costs; and subsidies of 60% for implementing R&D processes.

Future Meat Technologies’ first cultured chicken kebab on grilled eggplant and tahini sauce at the Machneyuda restaurant (Courtesy)

Overall, he said, more than NIS 400 million has been allocated by the government for foodtech incentives for companies moving to the Galilee, he said, adding that he’d like to see the Galilee attracting multinationals just as the southern city of  Beersheba has become a hub for cybersecurity startups and multinational corporations.

The accelerator set up by JVP in Kiryat Shmona will collaborate with the Economy Ministry and an NGO set up by graduates of the elite 8200 IDF technology unit. The six business ventures selected for the accelerator program will receive business, legal, marketing and fundraising mentorship.

Among the attendees at the event, which was backed by Margalit, the Economy Ministry and the region’s mayors and aimed to showcase the benefits of the Galilee, were food giants Tnuva, Osem, Uniliver and Nestle.

The mayor of Kiryat Shmona, Nissim Malka, said he said he believed that the food companies and entrepreneurs coming to his city as part of the government’s resolution to boost the region were “creating a historic turn for the city and for the Israeli economy.”

JVP’s Margalit said the idea was to connect all different players in the field from academia to entrepreneurs to multinational corporations in order to transform “Israel and the region into an agrifood tech epicenter.”

“An entrepreneur from the Galilee no longer needs to move to Tel Aviv” for his business to succeed, Margalit said at the event. “The accelerator we are opening together with our ecosystem partners will be an ideal platform for the startups in the region, along with the international network and the connection to investors. We will create an ecosystem just like Tel Aviv.”

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