It started with bombastic declarations: “The food-tech campus in Kiryat Shmona is another important step toward making Israel a food technology powerhouse,” said then-Economy Minister Eli Cohen in 2019. “The food-tech campus is an important development for the eastern Galilee that will create significant economic value for the area, draw significant investment, industry and human capital. We’ll continue advancing industry in general and outlying areas in particular. This is at the top of our priorities list.”
Cohen had spoken soon after Spark Foodtech won a government tender to launch a food-tech incubator in Kiryat Shmona in 2019. Spark is an equal partnership between Tnuva, Tempo, Finistere Ventures and crowdfunding platform OurCrowd.
A senior Tnuva executive said at the time, “it’s enough to have three such start-ups to change the perception of innovation and technology in our food chain, from the farmer to the fork. We want to create companies such as Mobileye or Check Point, that bring change at a global level.”
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But a review by TheMarker found that the Kiryat Shmona food tech campus has struggled to get off the ground, primarily because the government didn’t live up to its commitments.
The idea to turn Kiryat Shmona, a small northen town far from Israel’s industrial centers, into a food-tech center arose out of government decision 3740 in April 2018, as part of a broader decision to develop Kiryat Shmona and the nearby towns of Shlomi and Metulla. The decision included an Economy Ministry commitment to invest more than 65 million shekels ($19.7 million) to develop a food-tech industry in the Galilee.
The eastern Galilee was chosen due to the area’s agriculture industry, and its proximity to the Tel Hai college and the Migal research institute.
The plan had three main components. The first was a food-tech incubator, to be set up as part of the government’s incubator program. The incubator, FreshStart, was indeed launched in September 2019. As part of the program, Spark was to invest some $50 million in 40 startups, and the government was to invest another $25 million.
Less than a year after its founding, the incubator’s CEO left, and replaced by a new one. The infrastructure construction also hit hurdles, and for several months the incubator operated out of Kiryat Shmona’s community center.
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The incubator has made two investments so far: One, a start-up named Blue Tree, is working to develop low-sugar natural juices; the other, a start-up named Pigmentium, is developing natural food coloring. The incubator is slated to announce a third investment within the next few days and is evaluating others.
Thus, the private sector is upholding its commitment to develop the food-tech campus. The problem, however, is the government, which hasn’t met its commitments.
The second component was a food research institute to enable start-up companies to conduct experiments and develop new technologies. The institute has a website, but that’s it.
The website says that “the institute’s goal is to be a home for food industry companies and start-ups to develop their products and their production lines through use of innovative technologies. The food institute will have a physical infrastructure including advanced pilot facilities and analytic tools, which along with the institute’s expertise will enable the development and enhancement of dozens of food products every year.”
Such institutes are already in operation in countries such as Germany and Holland, and the Economy Ministry committed to invest 21 million shekels ($6.4 million) in an Israeli institute, whose revenue would come from the services to companies as well as its intellectual property developments.
However, beyond a website, no institute exists yet. The first stage of the process - a request for information (RFI) from market players - has been completed, but the government hasn’t published a tender to launch the institute. According to the institute’s website, the tender should have been published in November, a winner should have been announced six months later, and the institute should have opened a year after that. This means under a best case scenario, the institute will begin work in two years.
The third component was supposed to be a micro-industry complex that was supposed to serve early-stage companies that are not yet ready to build or finance their own production facilities. The site was slated to include joint production lines for several companies, similar to WeWork’s model of shared workspaces.
A tender to launch the complex was published in August 2019, and it included a government commitment to invest some 27 million ($8 million) shekels and to grant other benefits worth 10 million shekels ($3 million), including land, subsidies for infrastructure development and salary subsidies.
But no one applied for the tender, forcing the Economy Ministry to declare a “lack of interest” and return to the planning board. In September the ministry said it would conduct a new needs survey and republish the tender.
Thus, two out of the three components of the Galilee’s would-be food-tech ecosystem are still far from being realized.
John Medved of OurCrowd said, “real entrepreneurs don’t wait. We’re at the incubator with an excellent team and investors, and we’re seeing a lot of great companies. We’d want the government to move faster, and it will ultimately happen. The food institute and the micro-industry complex will be excellent additions, but they’re not preconditions for the ecosystem’s success.”
The Economy Industry said in response: “In keeping with the timetable set by the government, 2018-2022, and in coordination with the Finance Ministry’s budgets division, the Economy Ministry has been drafting a plan to advance the food-tech industry in Kiryat Shmona. The tender for the micro-production facility was published at the end of 2019 and was open for six months. During that period the ministry published ads, held conferences and contacted individuals in a bid to advance it.
“When the coronavirus pandemic struck, it appears to have affected new projects. The Economy Industry conducted research and drafted a new model, which will meet the time table even with a second tender publication. The national food research institute also necessitated research and adaptations due to the coronavirus pandemic, and after fine-tuning through an RFI, a tender is due to be published within the next few weeks, in keeping with the time table.”