Tnuva, Tempo Join Venture Funds to Put $100m Into Foodtech

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Agrotech greenhouse, Israel.
Agrotech greenhouse, Israel.

Israeli food makers are teaming up with high-tech investors to forge a giant $100 million partnership that will invest in food and agrotech startups in Israel, the participants announced on Monday.

The partners include Finistere Ventures, a California-based agricultural technology and life sciences venture capital investor; the Israeli companies Tnuva and Tempo Beverages; and the Israeli venture investor Our Crowd.

The partnership will help startups across the food and beverage value chain – in areas ranging from alternative proteins and nutritional value improvements, to functional ingredients and supply chain efficiency.

In addition, it was announced that Tnuva and Tempo would be bidding to operate a foodtech incubator being built under a government program in the northern Israeli town of Kiryat Shmona.

“Israel has become a top innovation hub in the FoodTech and AgTech arena,” said Arama Kukutai, co-founder and partner at Finistere. “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.”

However, news of the partnership also elicited concern about Chinese involvement in Israeli technology at a time when U.S. President Donald Trump is engaged in an increasingly bitter trade and technology war with Beijing.

Tnuva is not only Israel’s biggest food maker but is controlled by the Chinese company Bright Food. Washington has warned Israel about its growing tech ties with China and Chinese involvement in key infrastructure projects.

“The Chinese company Bright Food is interested in controlling Israeli foodtech. The Americans are going to be angry and concerned about this development,” said an Israeli source, who asked not to be identified.

The new group will have to compete for rights to operate the incubator, but it brings powerful assets to the competition.

Finistere is a $150 million fund backed by investors including Bayer, Ireland’s Strategic Investment Fund, Canada’s Nutrien, PepsiCo and Unigrains. OurCrowd, a crowd-funding investor company, has invested in 170 startups, including the plant-based meat maker Beyond Meat, which went public this month in the U.S..

Food has become a hot arena for global technology. Last year startups in agriculture and food raised $16.9 billion, a 43% increase, according to a 2018 AgFunder report. Israel has more than 230 active “agrifood” tech startups.

Two weeks ago, Mars, the U.S. company whose brands include M&Ms and Snickers, said it was forming a partnership with Jerusalem Venture Partners to apply high-tech to the food, agriculture and nutrition sectors.

The pace of change sparked by growing food tech investment is forcing old-line companies to act quickly.

“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,” said Jacques Beer, Tempo CEO.

Tempo produces products in Israel for PepsiCo, Heineken, Nestle Waters, Pernod Ricard, San Benedetto and, XL Energy among others.

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