Boost for Israeli food-tech: US$100m investment to increase disruption and penetrate global markets

27 May 2019 --- Agri-food technology investor Finistere Ventures is joining forces with equity crowdfunding investment platform OurCrowd and two food & beverage companies to create the largest consortium focused on championing food-tech and agri-tech innovation in Israel. Centered on Israeli technologies throughout the food and beverage value chain – from alternative proteins and nutritional value improvements to functional ingredients and supply chain efficiency – the consortium will invest up to US$100 million in local best-in-class agri-food start-ups.

The venture demonstrates Israel’s growing reputation as “fertile ground” for agri-food innovation and comes at a time of rising collaboration within the food-tech start-up space, with Israel proving to be an important player to watch. 

The collaboration involves some key Israeli players. Joining Finistere will be Tnuva Food Industries Ltd, which is the largest food manufacturer in Israel having been controlled by Chinese state company, Bright Food since 2014. The country's second-largest beverage company, Tempo Beverages Ltd. – which produces pale lager brands, imports Heineken lager, juice-based drinks under the Jump brand and is also the local bottler of PepsiCo soft drinks – will also be part of the consortium. 

Together Finistere, OurCrowd, Tnuva and Tempo, will actively encourage, support and invest in Israeli entrepreneurs building new companies to meet evolving consumer demands and transform the current agri and food chain. Thanks to the partners’ extensive industry network, entrepreneurs will also be able to gain direct access to leading global food and beverage giants such as PepsiCo, Bright Food, Heineken and Nutrien.

“Israel has become a top innovation hub in the food-tech and agri-tech arena. 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,” says Co-Founder and Partner at Finistere Ventures, Arama Kukutai.

“Food-tech is now one of the hottest dishes on the Israeli innovation menu. When four innovation master chefs Finistere, OurCrowd, Tnuva, and Tempo get together to cook and create the newest companies the results are going to be scrumptious,” Kukutai adds.

Finistere Ventures is a global US$150 million fund dedicated to investments in agri-food technologies and supported by investors such as AVAC, Bayer, Ireland’s Strategic Investment Fund, Nutrien, PepsiCo and Unigrains. Entrepreneurs will gain access to OurCrowd’s extensive Israeli start-up power including a community of 30,000 registered investors from more than 180 countries and Finistere’s global network of the leading agrifood investors, accelerators/incubators, and public research institutions.

Finistere and OurCrowd already work together in partnership with US-based Radicle Growth Fund, which recently announced its intention to make seed investments in Israeli food-tech and agri-tech companies as well.

With an ever-increasing number of food-tech and agri-tech companies, Israel is earning a reputation as a pioneer in this space with Israeli innovation really gathering momentum in recent years. 

Investments in the Israeli agri-food start-up sector have boomed from 2014 to 2018, raising almost US$800 million in funding over this period, according to a recent investing report from venture capital (VC) platform AgFunder. 

Agri-food tech is a growing segment of the start-up and venture capital universe that is aiming to improve or disrupt the global food and agriculture industry. In this space, Israel is seeing increasing growth as the country with long practiced innovation in farming techniques, breeding, and water conservation that has allowed its farms to feed the local market and export produce. 

Due to the country’s location and unfriendly desert climate, agricultural practices prove challenging – however, Israel continues to rise to the occasion. 

This latest partnership has been created following the Israeli government’s establishment of a food-tech innovation incubator in Kiryat Shemona, located in northern Israel. The consortium will bid to operate the incubator.

The Kiryat Shmona food-tech hub was initially announced last April and is part of an initiative to incentivize start-ups and tech companies to launch activity in Israel’s north and south regions.

“Today, more than half of Tnuva's activity is located in the north of Israel. The Ministry of Economy's decision to establish the food-tech project in the Northern city of Kiryat Shemona is a unique opportunity for us to reach groundbreaking results. The fact that we have joined a number of strong partners with extensive activity and experience creates a strong foundation to promote and advance food-tech innovation around the world,” adds Tnuva CEO, Eyal Malis.

“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. At Tempo, having internalized the need and desire to be at the forefront of this development, we have innovated and renewed all our areas of activity,” says Tempo Chairman and CEO, Jacques Beer.

“In both products and processes, we have worked closely and intensively with our international partners. This is the knowledge and experience we seek to bring into the consortium. 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 food-tech,” Beer adds.

Jerusalem-headquartered OurCrowd has invested in 170 companies and funds, including public company Beyond Meat, which recently completed its IPO and is currently trading at a value of over US$4 billion.

The collaboration also closely follows Mars Incorporated and international venture capital (VC) fund Jerusalem Venture Partners (JVP) embarking on a “first-of-its-kind” research and development agreement in Israel. This pioneering partnership also promises to spearhead disruptive solutions specific to the array of global challenges in the food system related to agri-tech, nutrition and food security. By exploring the converging fields of food, health and technology, the partnership hopes to fuel the next generation of agriculture and nutrition.

Unlocking opportunities in the emerging space of personalized nutrition is one of the key objectives of the Mars-JVP tie-up. Tackling major global sustainability issues by providing scalable solutions to the challenges of feeding humanity in an environmentally-friendly way is also at the core of the partnership.

By cementing its place as an “innovation hub” for agri-tech, Israel is promising to maintain its reputation as an agricultural leader continually pushing the boundaries of what sustainable food and beverage NPD of tomorrow might look like. 

By Gaynor Selby