A letter from Israel: Ecosystem-defining culture and the positive role of government

Editor’s Note: Hello, dear AFN readers. This is the first of a planned monthly column I intend to write to share thoughts on events I’ve attended, conversations I’ve had, and general musings on our agrifoodtech industry. It’s been a while since you’ve read regular reporting from me, so hopefully this will rectify that in some way. Please excuse brevity from time-to-time — or maybe brevity is your preference, if so I apologize for the below tome — but hopefully, my thoughts will be helpful in some way. Any views expressed here are my own and do not necessarily reflect those of the wider AFN and AgFunder teams.

When I wrote the first draft of this a week ago, I was on a plane returning from a four-day trip to Tel Aviv, Israel. The trip was kindly organised (and, disclosure, paid for) by The Kitchen FoodTech Hub and the partners behind the Agrivest event. I was invited to speak at both The Kitchen’s FoodTechIL conference and Agrivest, hence their covering of the expenses which I think is the right approach for events keen to get the right people on the stage. (But that’s another post for another day!)

In any case, I’m very grateful they brought me out to Tel Aviv for the first time ever. It was a long time coming, given Israel is one of the original ecosystems for both agtech and foodtech. It was certainly on my radar when I started reporting on agriculture investment nine years ago.

In fact, this year was the 10-year anniversary of Agrivest, which was first held in 2012 and attracted an impressive 100 attendees; I remember when Agri Investor, the publication I set up with PEI Media, held its first event several years later in 2015, corralling anywhere close to 100 attendees to talk about our then niche area was a big deal! Israel was already way ahead.

The indomitable Nitza Kardish, CEO of Trendlines Agrifood, one of the first-ever agtech incubators, hosted the inaugural event at the agricultural school Mikveh Israel where she studied in high school. The following year, none other than our own Rob Leclerc joined the event right around the time he and Michael Deal launched AFN‘s parent company AgFunder.

I have ultimate respect for the OGs of agtech in Israel. This group also includes Gideon Soesman from Greensoil Investments, another key partner behind the Agrivest event, and moderator of the investment panel I was on. Interestingly, Gideon had the foresight others didn’t when setting up his first fund back then. He told me last week that it was an open-ended fund with no expiry date. Given we’re now approaching the 10-year vintage for many of the first-ever agtech funds and exits are still pretty much as elusive as ever, he must be feeling pretty smug about that decision right now!

Have you read my article about where the next agtech exits will come from? It was reported from Tel Aviv. Find it here.

Fast forward to 2022 and both events were completely sold out. FoodTechIL reached a whopping 1,800 attendees, while Agrivest welcomed over 850, 40% of whom were from abroad. Those are impressive figures and not far off the biggest global events in our industry. Both events had great content as well as networking, and I was particularly excited that both events were opened by women, including the FoodTechIL keynote, which was delivered by the inspiring chairperson, Ofra Strauss, of Israel’s leading food company Strauss Group (pictured above.)

Israel’s ecosystem-defining culture

I wanted to share a bit about the culture in Israel, which may be a bit out of my comfort zone as a financial and technology journalist.

But having lived in three of what I’d call “hard cities” in the world– London, Hong Kong, and New York — and visited many more, the country really left an impression on me.

Leaving the Israeli security questioning at Heathrow aside(!), the warmth of the Tel Aviv people really stood out, from caring cab drivers going out of their way to help me to the random man in the lift (elevator) who insisted on carrying my bag when there was really no need. Countless entrepreneurs and investors welcomed me with open arms — literally — and the country’s overall culture speaks volumes about how the agrifoodtech ecosystem has been built through collaboration, support and a sense of belonging you may not find elsewhere.

As you may have heard, I recently launched a podcast with Danielle Gould from Food+Tech Connect called New Food Order. In it, we really try to explore the human element of our food systems as much as the businesses and technologies trying to transform it. In fact, if you listen to our recent episode with Paul Polman, former CEO of Unilever, about creating net-positive companies, there’s no reason we can’t be having one conversation linking humanity, technology, and business. Paul created a 300% increase in shareholder returns while ranking number 1 for sustainability for 11 years, all while, as he describes, “leading with heart.”

Is the world better off because your business is in it? Listen to New Food Order, with Paul Polman, here.

And so while I may like to think of myself as a hard-nosed journalist, I’m increasingly sensitive to how people treat others at work and in business. We’re in an incredibly challenging time right now. Everywhere you look there are crises: climate, social, political, ecological, and the list goes on. And it’s affecting a lot of people, literally and emotionally. A little heart goes a long way today.

So while this is of course a generalization from a mere our-day trip to Israel, my overwhelming impression was that of warmth and collaboration.

Government funding support

One thing that no doubt helps and that can’t be discounted is the incredible government support on offer through various programs in Israel. There is also some direct investing predominantly through the Israeli Innovation Authority. Not to be forgotten is the funding programme for incubators that contributes to their investments into very early-stage startups — The Kitchen, Fresh Start, and Trendlines are all part of this — and the Ministry of Economics, which offers funding to innovation communities to support the development of ecosystems in certain categories, including agrifoodtech. GrowingIL, one of the co-organizers of Agrivest — is an example of the latter.

There’s a school of thought that believes too much government support can be detrimental to a startup ecosystem. For example, it could support crap technologies that ultimately fail for too long. By contrast, “fail fast” is a key mantra for VCs and startups in designing the most successful technologies.

I put this to two locals and they said it’s true that there’s a lot of government support, although “it’s a lot less than you’d think.” Amir from The Kitchen said the Israeli government invested $15 million in their companies over an eight-year period. He added that they are not artificially held up over the long term — more they are given a fighting chance.

When you think about the increasingly apparent long-term cycles of adoption in, agtech particularly and some areas of foodtech, combined with the urgent challenges we face, this level of government support might benefit other countries, too. We need all the tools in the toolbox and some might take longer to figure out than typical venture capital investors are prepared for. I actually think some other smaller agrifoodtech ecosystems have missed a trick here by not organising better government funding structures around them.

Aleph Farms was created by Israeli government-backed incubator The Kitchen’s venture studio model. Since then, the company has raised hundreds of millions of dollars from a range of global private investors, including VCs and agrifood corporates. Without doubt, it is now Israel’s leading foodtech startup. After meeting CEO Didier Toubia at their offices outside of Tel Aviv, I’m more excited than ever by the cultivated meat company’s approach and progress (more on that coming soon). In short, they will have products ready for sale next year, with regulatory approval looking very likely in both Singapore and Tel Aviv.

Aleph Farms is one of the first in the category to release a sustainability report and has committed to be net zero by 2025. But it’s the holistic approach to meat production and local ecosystems that really stood out. I don’t think there are many, if any, alternative meat companies engaging with the animal agriculture industry; most choose instead to try and completely destroy and vilify it. Didier recognizes the benefits regenerative livestock farming can have on local biodiversity and cultures. He’s also committed to bolstering local customs and ancient recipes with the high nutritional profiles that have all but been lost in recent times.

For me, this thoughtfulness and focus on culture epitomizes a lot of what I saw and felt during my trip.