Something’s Cooking in Israel’s Food Tech Kitchen

The most exciting and impactful innovation happening in the world right now is aimed at our food: what we eat, how it affects our bodies, and how it impacts our planet

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SodaStream CEO Daniel Birnbaum. The company was recently bought by PepsiCo for $3.2 billion
SodaStream CEO Daniel Birnbaum. The company was recently bought by PepsiCo for $3.2 billionCredit: AP

It's been a big year for Israeli Food Tech, with four major deals this year already: 

  • AB InBev bought Weissbeerger for $80M. This was about analytics.
  • International Flavors and Fragrances (IFF) bought Frutarom for $7.1B – this was about R&D and market share.
  • bought online food marketplace 10bis for $157M – this was about buying a successful platform for hungry techies and exporting it abroad.
  • And the banner deal: PepsiCo bought SodaStream for $3.2B. This is hugely important for Pepsi, which has been trying to buy SodaStream for a while.

Steady increase in investments

Something is definitely cooking in Israel's Food Technology sector. Investment activity has been strong for years now, with between 19–33 VC-backed investments rounds annually since 2014 and an overall annual increase in total funding. In 2017, the companies brought in a total of $117M in 27 rounds. Exits – even excluding Frutarom – have been growing in value as well as quantity.

So far in 2018, investment has been steady over the first two quarters: $15.15M in four rounds (one other undisclosed), then $16.6M in four rounds (two others undisclosed).

Two areas that are emerging as exciting are clean meat and personalized nutrition. In the area of clean meat, two companies (Future Meat and SuperMeat) completed rounds in the first half of the year ($2.2M and $3M, respectively), while in personalized nutrition, there was Nutrino ($8M), DayTwo (undisclosed) and Metaflow ($7M). Other areas that have been appraised highly lately include logistics (Bringg – $12M) and ready-made meals (Genie – $10M).

Exits have been spread out over the sector: consumer and bar analytics (Weissbeerger–ABInbev, $80M), supply-chain coordination (SimpleOrder–Upserve, undisclosed), e-commerce between restaurants and the high-tech community (Ten Bis–, $157M), and ingredients (IBR–Frutarom, $21M). Notice that there’s a theme of interest in platforms that facilitate connectivity between different parts of the supply chain (IBR–Frutarom excepted).

Areas where Israel stands out

Foodtech in general is a growing trend around the world, and there are specific areas where Israel especially stands out.

Alternative protein/clean meats – with three Israeli companies leading the field (SuperMeat; Future Meat technologies, which recently raised a funding round from Tyson foods; and Aleph farms, part of the Kitchen). Israel’s academic strengths play into this – these companies came out of research at Technion and Hebrew University.

Reducing sugar – Douxmatok, AIC foods and Amai Proteins provide interesting solutions to this pressing issue (they were all recently in the news and getting a lot of traction). If this kind of tech works – and there’s still a long way to go for mass market adoption – we could see a major shakeup of the sugar industry, the food and beverage industry, and even healthcare (the costs of diabetes and other sugar-related diseases are vast).

Food safety and traceability – leveraging data analytics to ensure food safety across the supply chain, as well as additional methods for ensuring that the food is safe.

For all of these, Israel’s strength lies in the combination of technology, academia and research, and cross-sector culture – leading players from high-tech in general are moving into the field to solve this major, growing challenge. Also, the strengthening ecosystem and ecosystem culture play an important role, with all players collaborating and working together to promote the sector.

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