Continued from here

A possible factor in a country’s balance of upstream and downstream innovations and its investment sizes is its domestic consumer market and farming industry. The ten largest deals of 2018 were struck by companies in countries with either very large domestic consumer markets or farming industries with global exports, such as India, China, Brazil, and the USA. [1]

Start-ups in these contexts have immediate markets to adopt them and thus natural paths for scaling up, meaning that investment goes in part toward building out their corporate infrastructure and network. Israel’s home market, however, is too small to target for business, which leads its innovators to be more naturally inclined to hone a technology and incrementally build an international customer base. It is far less expensive for Israeli AgriFood-tech start-ups to develop a product and SaaS-based coverage of international customers – enough to elicit acquisition – than for an American or Chinese start-up to develop a product, grow a workforce, offer competitive compensation packages, and establish branches throughout the country.

Majority of Exits in Downstream

Despite the distribution of the sector activity in favor of upstream, the majority of, and all notable exits – with the significant exception of one – occurred downstream. Four downstream companies were acquired in 2018, a few for some of the highest prices the sector has ever fetched. Tapingo, Ten Bis, and Weissbeerger all cater to restaurants, stoking interaction with consumers. Tapingo and Weissbeerger especially had powerful investors behind them for years, including Khosla Ventures, Qualcomm Ventures, and Israel’s Viola (for Tapingo), and Innovation Endeavors with Israel’s ICV and Gigi Levy-Weiss (for Weissbeerger). The Weissbeerger acquisition inaugurated global beverages corporate AB InBev into the Israeli innovation scene.

The largest and most notable acquisition occurred in 2014, when Allflex acquired SCR for $250M. Allflex, (now known as Antelliq) divided its business into three: Livestock, Pet Care, and Aquaculture, with SCR related directly to its Livestock segment. Since Antelliq was recently acquired by Merck for $2.4B, Israeli technology has helped make the largest M&A in Agritech history possible. Aside from SCR, Israeli upstream has yet to attract major exits. There have been several other upstream acquisitions over the 2014 – 2018 period, but most of these are undisclosed, probably indicating that they were small.

A Global Competitor

Even though the Israeli AgriFood-tech sector has raised comparatively smaller investments, and inspired only a few notable exits, it is proving prominent among other countries in international competitions. At the AgFunder Awards ceremony during the World Agri-Tech Summit 2019 in San Francisco, Israeli AgriFood-tech start-ups won four of the 13 awards. Winners were FieldIn and Seed-X in Farm Tech, Amai Proteins in Supply Chain, and Ukko in Retail & Consumer. If we exclude US start-ups (since six spots were automatically reserved for them), Israel was the most represented country among the winners, though 15 other countries were represented among the nominees. Coinciding with investment patterns revealed in the AgFunder Israel report, three of the Israeli winners offer products founded on data-processing tech.

Israeli Finalists in IFC Transformational Business Awards

Subsequent to the AgFunder Awards, the International Finance Corporation of the World Bank, partnering with the Financial Times, published the finalists for their Transformational Business Awards 2019. Three of the seven finalists in the Food, Water and Land category are Israeli Agritech start-ups: Evigence, N-Drip, and TIPA. Finalists in all categories are considered to have particularly high-potential for achieving the UN’s Sustainable Development Goals.

Radicle Growth Israel Challenge

Finally, showing a vote of confidence in the amount and quality of Israeli AgriFood-tech innovation, in March, Radicle Growth announced its first ever Israel-focused challenge. The San Diego-based accelerator fund, whose partners include Bayer, Corteva, Finistere, and Israel’s OurCrowd, will issue up to $250k for a young start-up in the sector. Radicle initiated the challenge with a visit to Israel by managing partner Kirk Haney, who spoke at a meetup co-organized and hosted by Start-Up Nation Central, which drew one of the largest ever turnouts from the sector. This opportunity constitutes a fast track to seed capital and the business expertise and networks of both Radicle and its high-level partners.
Applicants are currently being reviewed.

In conclusion

The Israeli AgriFood-tech sector has yet to wield sweeping impact on value chains around the world. However, we believe that when international partners pair their scaling mechanisms with Israeli technology, major market penetration and larger rounds will ensue. The strong showing of high-tech combined with current biological science, the generally smaller investments that go a longer way than they would in other ecosystems, and the predominance in international surveys both competitive and impact-oriented all anticipate significant output.

Later this year, together with other local partners from the sector, Start-Up Nation Central will host both the AgriVest and Food Tech IL conferences for the international community of investors and corporates to become better acquainted with the Israeli sector. We look forward to measuring new growth and news in the sector by then and hope to see you there.

Click here to download your copy of the AgFunder Investing Report.

1.AgFunder AgriFood Tech Investing Report 2018, AgFunder (March 2019) 48, 49

Shmuel Rausnitz researches Israeli innovation and world market activity relating to the AgriFood and Water industries worldwide, supplying knowledge and insight to Start-Up Nation Central, the Israeli AgriFood-tech sector, and its global partners. Mr. Rausnitz earned an MA in Comparative Religion from Hebrew University, and a BA in Classics and Jewish Studies from Vassar College in New York. He served in an infantry brigade of the IDF as a lone soldier after immigrating to Israel in 2010.

    Related posts