New consortium to invest up to $100 million in Israeli foodtech, agtech

New consortium to invest up to $100 million in Israeli foodtech, agtech

VC funds Finistere Ventures, OurCrowd and foodmakers Tnuva and Tempo will scout for startups innovating in alternative proteins, nutrition, ingredients and supply chain efficiency

An illustration of a steak prototype produced in an Aleph Farms Ltd. lab out of cow cells (Courtesy
An illustration of a steak prototype produced in an Aleph Farms Ltd. lab out of cow cells (Courtesy

A new consortium up of venture capital firms and food-makers will jointly invest up to $100 million in Israeli agricultural and food startups. The move marks the creation of “the largest consortium focused on championing FoodTech and AgTech innovation in Israel,” the companies said in a statement.

Members of the group include Finistere Ventures LLC, a US VC firm that invests in early stage agriculture technology companies; Jerusalem-based equity crowdfunding venture OurCrowd; Tnuva, Israel’s largest food manufacturer; and Tempo Beverages Ltd., an Israeli beverage company.

The focus will be on the full food and beverage value chain — from alternative proteins and nutritional value improvements, to functional ingredients and supply chain efficiency, the partners said in a statement.

The partnership will also be bidding to operate an incubator that is being built in the northern city of Kiryat Shmona, where an innovation center is being built as part of a government initiative to make the north of Israel a hub for foodtech.

Tnuva cottage cheese in a Jerusalem supermarket. A 2011 price hike on the foodstuff sparked a popular protest over the cost of living in Israel (photo credit: Nati Shohat/Flash90)
Tnuva cottage cheese in a Jerusalem supermarket.(photo credit: Nati Shohat/Flash90)

Together, Finistere, OurCrowd, Tnuva and Tempo will actively encourage, support and invest in Israeli entrepreneurs building new companies to meet changing consumer demands in the agriculture and food chain, the statement said. Because of the extensive industry network the four partners have, the entrepreneurs chosen to be part of the incubator will also be able to gain access to global food and beverage giants such as PepsiCo Inc., Bright Food Group, Heineken and Nutrien with which they work.

“Israel has become a top innovation hub in the foodtech and agtech arena,” said Finistere Ventures co-founder and partner Arama Kukutai in the statement. “We are committed to expanding our local partner network and, most importantly, increasing our investment in, and support of, Israeli disruptors across the entire food and ag value chains as they look to penetrate the global market.”

Agrifood tech is a small but growing segment of Israel’s startup and venture capital world, aiming to change both the food and the agriculture industries.

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.

“FoodTech is now one of the hottest dishes on the Israeli innovation menu,” OurCrowd CEO Jon Medved said in the statement. He added in a text message that the partners are committed to the investment amount even if they don’t win the bid for the incubator.

Newly elected CEO of PepsiCo, Ramon Laguarta (right), and SodaStream’s Daniel Birnbaum at the signing of the acquisition deal, August 20, 2018, at SodaStream’s offices in Israel (Lens Productions)

Investors internationally are starting to notice Israel’s budding field. In March, McDonald’s Corporation said it would acquire Israel’s Dynamic Yield Ltd., a startup whose software enables the personalization of content to specific users.

In April, the US maker of Oreo cookies and Toblerone, Mondelēz International, said it will scout for food technologies in Israel and in May, Mars, Incorporated, the maker of candy and pet food, said it will seek to invest in food and agriculture R&D projects in Israel, together with Israeli venture capital fund Jerusalem Venture Partners (JVP). Last year, beverage maker PepsiCo signed a deal to buy home seltzer machine firm SodaStream for $3.2 billion in a bid for healthier, alternative drinks.

OurCrowd has to date raised $1 billion in commitments and has made investments in 170 companies and funds, including foodtech portfolio company Beyond Meat -which recently held an IPO on Nasdaq and is currently trading at a value of around  $4.8 billion.

Finistere Ventures is a global $150 million fund dedicated to investments in agrifood technologies and supported by investors such as Bayer, Ireland’s Strategic Investment Fund, Nutrien, PepsiCo, and Unigrains.

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, the statement said. Tempo, the longest established beverage company in Israel, is a maker of alcoholic and non-alcoholic beverages and has global partners including Heineken Enterprises and PepsiCo.

Tnuva and Tempo have a history of working with startups and academic institutions in the field of food innovation. Both firms have extensive operations in northern Israel, and are keyed into the local food industry and changing consumer/sustainability needs. They also have a large network of farmers and industry contacts that the new startups can leverage.

“The food industry, a traditional industry at its core, is experiencing the challenges of the new world, one of rapid change and innovation, in both product and process,” said Tempo chairman and CEO Jacques Beer. “We are confident that together with our partners, we will develop in Israel’s Northern region, the next great technological breakthroughs of Israel in the world of FoodTech.”

The partners will give entrepreneurs guidance for growing their firms as well as setting up seed and Series A investment strategies and bringing their product to market, the statement said.

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