Scarce resources, much chutzpah set stage for Israel’s lead role in food tech

Scarce resources, much chutzpah set stage for Israel’s lead role in food tech

A food and agriculture hub, Israel is ranked among the top 5 countries for number of investment deals as global demand for agtech innovation grows

Aleph Farms Ltd. uses the ability of animals to grow tissue muscles, and harvests the cells to grow meat outslide the animal (Courtesy)
Aleph Farms Ltd. uses the ability of animals to grow tissue muscles, and harvests the cells to grow meat outslide the animal (Courtesy)

Ilan Samish exudes passion and enthusiasm when he talks about the origins of his food tech startup, Amai Proteins, which is developing a designer protein that he hopes will replace sugar.

“You have to be a little bit crazy to leave a safe job as an academic and start your own company,” Samish said at his lab in Rehovot, outside of Tel Aviv.

The startup is now part of the Kitchen Hub Incubator, owned by the Israel-based foodmaker Strauss Group. Samish’s company has also partnered with SodaStream and is in the process of collaborating with global brands including PepsiCo (which owns SodaStream) and Danone, both of which are also partners of the Strauss Group.

When it comes to innovating within the agricultural and food sector — one of the least digitized industries in the world — Israeli chutzpah and out-of-the-box thinking are even more important than in other entrepreneurial endeavors, said Amir Zaidman, VP of business development at the Kitchen Hub. Entrepreneurs must pitch products that are considered high-risk because of the health and environmental regulations that make it harder to get from concept to store, to customers — namely farmers — who are traditionally hesitant to adopt new technologies.

Ilan Samish, left, the founder and CEO of Amai Proteins working in his lab (Courtesy)

“Food is an industry that’s in need of disruption. And we’ve created a critical mass of entrepreneurs that are innovative in food and agtech,” Zaidman said in a phone interview.

Despite its size and population that are dwarfed by sector leaders like the US, China and India, Israel has developed into a competitive and attractive global hub for agricultural and food technologies, ranking among the top five countries for number of investment deals, according to Start-Up Nation Central, a nonprofit that tracks the Israeli tech industry.

With the global demand for agtech innovation predicted to grow, and global VC investment in the industry jumping from $1.93 billion in 2017 to $2.2 billion in 2018, “Israel is poised to come out as a big-time winner,” said Zaidman.

A net greenhouse in Los Pinos, Mexico, the largest greenhouse tomato project in the country, developed with Israel’s Netafim drip irrigation and greenhouse technology (Courtesy Netafim)

“We got a head start,” said Zaidman, alluding to the early days of the state, when Israel had to devise methods of feeding its growing population with scarce natural resources.

“The major advantage that we have over those other countries that are establishing themselves now is that we identified the need for innovation in the food sector pretty early on,” he said. “And [we’ve] worked together to create an ecosystem which supports new entrepreneurs.”

Setting the stage

Long before the global community began discussing the challenge of how to feed the 11 billion people predicted to be living on this planet by the year 2100, Israel was innovating on the farm.

“The best innovation comes out of necessity,” said Tamar Weiss, the strategic projects manager for the agtech sector at Start-Up Nation Central, noting that the question of how to feed a growing population while lacking reliable access to water and arable land has been a question on Israel’s mind since half a century before independence in 1948. “A lot of the challenges that the world is facing today, and suddenly needs to think how to overcome, are things that Israel has had to deal with for a very long time.”

She added that this innovation, together with governmental and institutional support of the startup sector, has helped make Israel “an outstanding hub in both ag and food.”

The Israeli government has renewed its support for agtech companies by committing to invest NIS 20 million in new grants this year.

The close proximity of cities and the country’s small size enables closer collaboration and cross-fertilization of a variety of sectors and ideas in the agtech scene, Weiss pointed out.

Abroad, she said, agtech hubs focus on a specific area: “St Louis is biotech, the Valley is precision technology, while China and India are much more consumer downstream.” Israel, she explained, is a much more diverse ecosystem. “There are over 700 companies throughout the supply chain working in ag and food tech,” ranging from precision technology startups to ones focused on improved nutrition. “That’s a large amount of technology and startups in the field that you can find all in one place.”

Being able to easily tap into the minds of academic researchers at universities across the country has also been an essential tool for early-stage entrepreneurs.

A model of a sweet protein developed by Amai Proteins (Courtesy)

Samish, the founder of Amai Proteins, explained that though his Rehovot lab is small, employing a team of about a dozen, he often finds himself utilizing the resources of the Technion’s state-of-the-art lab and thus he is able to test new proteins with expensive devices that his early-stage startup would most likely never have access to in another environment.

Also pushing Israel’s agtech scene ahead of the rest, said Weiss, is the culture of people switching from sector to sector.

“People go wherever there’s a challenge,” she said. Some may begin working in cybersecurity at a place like Microsoft, she explained, but then make their way into agtech later on in their career. “And that’s quite unique, to have such strong tech talent in the ag sector like this.”

CEO and co-founder of Aleph Farms, Didier Toubia (Courtesy)

An example of this can be seen playing out in almost every ag startup, Weiss said, but one that particularly embodies this shift is Aleph Farms, an Israeli company that’s creating environmentally friendly meat from lab-grown animal cells.

Its founder and CEO, Didier Toubia, spent the lion’s share of his career in biotech, developing medical devices for companies including NLT Spine and IceCure. He was approached by the Kitchen Hub in 2017 to set up a cultured meat company, an idea he says he loved because it utilized his background in biology and medical research and was in line with his goal of having a “project with [a] real mission.”

Looking ahead

Collaboration is also a factor that’s driving the Israeli agtech industry into the global market, said Kirk Haney, the co-founder and managing partner at US-based accelerator and venture capital firm Radicle Growth.

“I think one of the things that I love about Israel is the willingness to partner,” he said from his office in San Diego. He added that this cooperative mentality was part of what motivated his company to launch the first of its kind geographical Radicle Growth Challenge in Israel, announced earlier this month during OurCrowd’s Global Investor Summit. The challenge will reward the most promising Israeli early-stage agtech or food tech company with up to $250,000 in financing and provides further evidence of the global interest in “a market where agtech innovation is on fire,” said Haney.

“Israel does such a phenomenal job of seeing this opportunity and looking at its own unique skill set — entrepreneurship, global view, exporting technologies — and partnering that with the optimism in Israel,” Haney said. “One of the things that I like about agtech is that you may innovate locally but you have a global view.”

Israeli startup Equinom is a good example of how locally developed technology is targeting a global market.

Equinom recently launched a new kind of sesame seed that is high-yield and shatter-resistant, allowing it to be harvested by machines rather than the traditional manual approach. The seed, which was developed through a selective breeding process called genotyping and not genetically modified, is being marketed as highly sustainable, as it not only grows in hotter and drier conditions than other seeds (soybeans, for example) but will ultimately produce more bang for its buck, said CEO and founder Gil Shalev.

Sesame plant with buds developed by Israeli startup Equinom (Courtesy)

“You make the farmer much more sustainable because he can farm in desert area, or an area that’s become a desert,” Shalev said from St. Louis, where he was currently marketing his company to new customers.

“Because sesame can survive in drought, unlike soy or other crops, I really think it could be a revolution over here” in the US, he said. His sesame product was also gearing up for commercialization in arid climates like the Australian outback, he added.

This more sustainable seed variety could also replace animal feed and the oil used for the biofuel industry. “My belief is that it’s going to change the entire oil industry,” he said,

A cautionary tale

Dr. Evan Fraser, the director of the Arrell Food Institute at the University of Guelph, where he holds the Tier 1 Canada Research Chair in global food security, studies how to feed the world sustainably. He agrees that agtech is an essential tool to see this goal through.

“I believe the market is probably our only good mechanism for taking ideas and embedding them in society,” he said from his office in Guelph, Ontario.

Dr. Evan Fraser, the director of the Arrell Food Institute at the University of Guelph (YouTube screenshot)

But, he cautions, the public has a tendency to oversell market solutions for niche problems without considering their implications on other issues in a highly interconnected global context.

Policies and technologies, he said, should be implemented in tandem, with an overall view.

“You know a software developer developing an app without working in the context of urban unemployment and rural labor isn’t necessarily going to solve the problem,” he said. “There are a few cautionary examples of situations where we’ve taken technologies that seem theoretically very promising and we end up finding that they create secondary or tertiary problems.”

So, even if Fraser strongly believes that the solution for feeding 11 billion people will stem from new technologies, “startups and entrepreneurialism and investments in agtech technology [are] a necessary but insufficient condition.”

New technologies must be coupled with environmental and other regulations to economically protect marginalized populations — such as migrant laborers — who would lose out on work when harvesting is mechanized, for example. Only in this way can sustainable agtech be achieved, he said.

“For me that’s where the magic is likely to happen,” he said.

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