FOODTECH HOTSPOT: ISRAEL

The Q·CAPITAL VENTURES Food Team is constantly observing new trends in the food & beverage sector and analyses this sector’s venture capital streams. Recently we looked at Israel’s food scene. Here a short summary of the most important points that make Israel a foodtech hotspot.

Israel is well known as startup and innovation nation. The reasons for this status are manifold:

• Very good education in the technology sector
• The most important tech-companies have offices in Israel (e. g. Google, Facebook, Microsoft, etc.)
• Lots of international VCs have offices in Israel
• Young age structure
• Many co-working spaces
• Startup spirit

Why food in Israel?
Israel is a frontrunner in stem-cell research, tissue engineering, microbiology and nanotechnology. This expertise was already perfected in agriculture technology (agrotech) and is now streaming into foodtech innovations. With this knowhow, Israel provides an ideal ground for food startups in the foodtech sector. Today, Israel is among the top 5 countries when we talk about innovations in foodtech.

Foodtech
Foodtech is a rather loosely defined concept and the term is often used for different products in the food sector. The most common definition is: Foodtech is dealing with technology that revolutionizes what we eat. To this category belong for instance: Alternative Foods (vegan alternatives to milk and meat), Cultured Meat (meat out of the Petri dish), technologies that optimize production processes, or technologies that change, reduce, or add ingredients.

A good overview of foodtech startups from around the world gives CB Insights.

Here some examples of Israeli foodtech startups:

• Hargol FoodTech – grasshopper protein powder
• Hinoman – proteins out of the plant Mankai (mineral- and vitamin rich)
• DouxMatok – increases the sweetness of sugar, so less sugar can be used
• Inspecto – scanner and smart shopping app to detect pesticides in food
• ChiCK.P – taste neutral chickpea protein

VC & foodtech in Israel
With the increasing number of foodtech startups, also the interests in foodtech as investment area increases. Investors are searching for new investment options, as other technology areas are already saturated with VC. Therefore we see a lot of movement in the foodtech VC market:

• 36 % of all foodtech deals have a ticket size of more than USD 10 millions
• In 2015, 275 foodtech startup raised USD 5.7 billions (according to the Israeli foodtech investor FoodLab Capital).

Many VC funds and investors see in foodtech a „window of (investment) opportunity“.

Out of the similar reason new institutions and venture capital vehicles to support and finance foodtech startups are also rising in Israel, for example:

• New Jersey-Israel Healthy, Functional and Medical Foods Alliance
  A corporation between the Rutgers University in New Jersey and the Tel-Hai College in Israel’s Galilee region. Their aim is to support scientific research, technological commercialisation and startup-incubation for the „healthy, functional and medical food industry“.
• The Kitchen FoodTech Hub
  The investment hub is founded by the Strauss-Group (Israeli food and beverage producer). Their claim: „We invest in and nurture cutting edge technology startups that can add value across the global food chain.”
• FoodLab Capital
  An investor specialised in investing in foodtech startups. Their slogans:
  “Investing in companies at the forefront of Foodtech” and “Funding the future of food”.

Undeniably there is a strong growth in the food and foodtech sector. With this, new food & beverage innovations get on the market and nearer to changed consumer needs. Investors’ money is needed to make these innovations market-ready and bring them to a broader circle of consumers. After the USA (pioneer in food startups and food VC), now Israel caught up. In our opinion, soon also in Europe the topic food & VC will be a less exotic one.