Connecting the Israeli Innovation to the World
Connecting the Israeli Innovation to the World

Dramatic Growth Fostered by Healthy Investments & Governmental Support

Dramatic Growth Fostered by Healthy Investments & Governmental Support

Foodtech is one of the hottest areas in Israeli industry – and it only keeps growing

By Dan Catarivas

Currently, Israel boasts over 200 Foodtech startups that innovate to create solutions for healthier, higher quality and more sustainable food. These companies specialize across many areas, but alternative protein has become clear industry leaders, receiving about 60% of all investments in Israeli Foodtech in 2022. These companies work towards creating technologies that allow for the replacement of conventional proteins in meat, dairy, egg, and seafood products, while still maintaining taste, texture, and quality standards.

Foodtech, which refers to technology and digital solutions employed to develop efficient and sustainable foods, is one of the hottest areas in Israeli industry – and it only keeps growing.

In 2022, the GoodFood Institute Israel (GFI) published a report emphasizing that Israel will need a strong national plan to support its thriving Foodtech industry, as this organized structure can enhance food security and become a “strategic national asset” for Israel. In a similar manner, the Israeli government officially announced Foodtech as one of the nation’s top 5 investment priorities with the Ministry of Science, Technology, and Space.

Investment activities and economic trends

In the past two years, about $1.1 billion has been invested into Israel’s Foodtech industry, causing an overall 26% increase in investment deals in this period. With over 60% of these funds going towards the alternative protein sector, Israel has quickly become a world leader in alternative proteins, fermentation, and cultivated meats, and the capital raised in these areas ranks second to only the United States. GFI estimates that Israeli alternative protein startups raised US$454 million in 2022, accounting for 15% of the capital raised for this sector worldwide. Fermented protein startups raised US$147 million, 18% of global investment, and the cultivated meat subsector’s US$105 million composed 12% of total global investments.

The increased prevalence of Foodtech startups, especially pertaining to alternative proteins, can be attributed to many factors. On the global level, food insecurity has been rising over the past few years, causing less people to access constant sources of sufficient, safe, and nutritious food. Especially in the wake of the COVID-19 pandemic, Russia’s war with Ukraine and climate change, commodity prices have drastically increased due to supply chain and bottleneck issues, energy has become more expensive, and persistently high fuel and fertilizer prices have made it more challenging to grow traditional food. Consequently, governments and investors around the world searching for more efficient, resilient, and sustainable ways to produce proteins have turned to Foodtech companies, many of which operate in Israel.

Israeli cooperation in Foodtech

Israel’s Foodtech sector receives both public support – from the government’s Ministry of Health, the Ministry of the Economy, the Ministry of Science, Technology, and Space, and the Israel Innovation Authority – and private support from an array of sources. Over the past decade, the government has distributed over NIS 230 million in grants for the Foodtech industry and has pledged to continue granting money towards Foodtech development.

Dan Catarivas

Much of the sector’s private funding comes from Foodtech “hubs” like The Kitchen and Fresh Start, which invest in innovation across the entire food value chain. The Kitchen, established by the Strauss Group as part of the Israel Innovation Authority, is Israel’s leading Foodtech seed investor and tech incubator. It has already invested in 23 companies, allowing the companies to grow, conduct R&D activities, and constantly innovate to refine their technologies.

Some of the most prominent venture capital and public market funds that invest in Israeli Foodtech are OurCrowd, Hanaco, Millennium Foodtech  and JVP.

Finally, Israeli academic institutions – including the Technion Israel Institute of Science, the Hebrew University of Jerusalem, Ramot Tel Aviv University, and the Weizmann Institute of Science – have been contributing to the Foodtech sector through research and development. In fact, the technologies behind two of the leading Israeli alternative protein companies were developed by prominent academicians in tissue engineering from Technion and the Hebrew University.

Beyond these individual funding efforts, in the Galilee region, the Israel AgriFood-Tech Valley was jointly established by the academia, industry, and public and private sectors, with the goal of promoting Foodtech as a “regional growth engine” and fostering collaboration via incubators, entrepreneurship centers, municipality-level action and more. So far, these strategies and initiatives have accelerated the growth of the region, pushed multiple companies into advanced development stages, and spiked greater interest in international cooperation.

The future of Israel’s Foodtech industry is bright, and companies are innovating regularly to contribute to this progress. But, as many startups look to “scale-up” and expand into global markets, there is a big opportunity for governments and non-equity funding sources to support Foodtech growth and invest in the future of the industry.

Development of sustainable and efficient food solutions

International cooperation is an essential element in assuring the growth, success and the development of Israeli Foodtech companies.

The Israeli Federation of Bi-National Chambers of Commerce with 49 Bi-National Chambers as its members, can help Israeli companies and assist them in finding partners and open doors in the international market place.

Dan Catarivas is the President of Israeli Federation of Bi-National Chambers of Commerce and Industry

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