Israeli startups rank second after US in alternative protein investments in 2022

Israeli startups rank second after US in alternative protein investments in 2022

Israel ranked second to the United States in investments in alternative proteins in 2022, with local startups in the field raising some $454 million in capital, according to a report released Sunday by the Good Food Institute (GFI). Israel, a non-profit organization that seeks to promote research and innovation in food technologies.

The institute estimated that the $454 million in investments in alternative proteins, a segment of Israel’s vibrant food tech industry, last year accounted for about 15% of global capital raised for the sector worldwide, and were just behind the United States. In third place comes France, attracting $184 million in investment, followed by Singapore with $170 million. It was, however, down from the roughly $623 million in investment leveraged by local startups in the field in 2021.

Last year, 60% of all investments in Israeli food tech companies went to alternative protein startups, GFI Israel said.

The Alternative Protein segment includes plant-based meat, dairy and egg substitutes, cultured dairy, cell-based meat and seafood, and various fermentation processes and products. Cultured protein startups and fermentation technology startups often overlap.

“What we have seen in 2022 is that the sector is becoming a global arms race, so to speak – a global protein race,” GFI Israel CEO Nir Goldstein told The Times of Israel.

“We have seen major countries follow President Biden in the United States, who ordered to put in place a strategy to strengthen biotechnology, including alternative proteins. China has a five-year strategy, and smaller countries like the UK and Denmark have made significant investments, raising the question of what the future holds for Israel after we get an advantage now as a start-up nation? Can we become a scale-up nation?

“We believe that food should be made as close to where it is consumed as possible for sustainability and economic reasons, but Israel can certainly become a center for R&D and industrial manufacturing.”

Nir Goldstein, CEO of the Good Food Institute (GFI) Israel, a non-profit organization that seeks to promote research and innovation in food technologies. (Courtesy)

In fermented proteins, which use microorganisms such as bacteria and fungi, Israel also ranks second behind the United States, absorbing 18% of global investment in this area with $147 million in investments in 2022. , according to the report. In the cultured meat sub-sector, Israeli companies attracted just over $105 million in investment, which is about 12% of total space investment worldwide in 2022, and also behind United States.

In the plant-based alternative protein sector, Israeli startups have attracted $200 million in capital, or 16% of global investment.

Over the past year, 12 local startups have been created or newly entered the alternative protein space, including four in the cultivated area, four plant-based and four from fermentation.

Over the past two years, alternative protein startups have raised over $1 billion in funding from venture capitalists.

In the report, it was noted that investment in food tech in Israel was least affected by the market downturn compared to other tech sectors. While private investment in Israel’s tech sector fell 42% year-on-year, investment by venture capitalists in alternative protein startups fell 20%, from $553 million. dollars in 2021 to $445 million in 2022. The amount of capital raised by alternative protein startups via the stock market fell 88% from $68 million to $9 million over the same period.

“In 2021 and most of 2022, the issue of national food security has become increasingly dominant in food technology, due to the crisis we have seen in Ukraine and all that has to do with it. to do with the pandemic and the swine flu. , etc. “said Goldstein. “We have seen governments and, subsequently, investors thinking about how we can prepare for the future when the prices of the global food supply will rise more rapidly and sharply.”

“Governments and investors are looking for stronger and more efficient ways to produce proteins,” he added.

Israeli startup Remilk uses a yeast-based fermentation process to produce animal-free milk protein that the company says is indistinguishable in taste and function from cow’s milk protein, but free of lactose, cholesterol and hormones of growth. (Victor Levi)

The most notable deal in Israel’s plant-based protein sector in 2022 was the $135 million investment in Redefine Meat, a maker of 3D-printed plant-based meat products, to fund production lines in Israel. and in the Netherlands, as well as to expand its partnerships with restaurants and restaurants.

The company’s products include animal-free cuts of lamb and beef, burgers, sausages, lamb skewers and ground beef, and are sold in some 200 restaurants and establishments in Israel and Europe.

The second-largest investment raised by an Israeli food tech startup was $124 million for Remilk, a developer of animal-free milk and dairy products. The company uses a yeast-based fermentation process to produce milk proteins that the company says are indistinguishable in taste and function from cow’s milk proteins, but free of lactose, cholesterol and hormones. of growth.

While slowing financial markets led to a decline in total investment in Israel’s tech sector in 2022, the largest positive trend was recorded by start-up or seed-stage startups, which saw an increase in investment. A similar trend was also seen for seed investments in alternative protein startups, which increased by 130% in 2022 compared to the previous year, GFI Israel said.

Many technologies used in the food tech industry are firmly based on academic research. The technologies behind two major Israeli cultured meat companies, Aleph Farms and Future Meat, are based on bioengineering research developed by their respective co-founders, Prof. Shulamit Levenberg of the Technion – Israel Institute of Technology and Prof. Yaakov Nahmias from the Hebrew University. of Jerusalem. Both are leading academics in the field of tissue engineering.

In 2022, the Israeli government declared food technology among the five new national priorities for major investments over the next five years. Earlier this year, the Israel Innovation Authority announced a plan budgeted up to NIS 50 million to build an R&D center for cutting-edge fermentation technology of microorganisms, such as yeasts or fungi. , in order to eventually produce alternative proteins on a larger scale and maintain the country’s edge in the field.

Last year, the Israel Innovation Authority granted $18 million for what he dubbed the “world’s largest consortium” for cultured meat development, made up of 14 companies, including leading Israeli food-tech startups, and 10 universities and institutes of research.

Over the past decade, the Israel Innovation Authority has allocated NIS 230 million in grants to the food tech industry, including more than NIS 140 million spent on alternative proteins.

Moving forward, Goldstein suggested that an updated national policy plan for food technologies and alternative proteins is needed, as the Israeli government has done, for example, for renewable energy.

“In order to stay competitive as big governments around the world invest a lot of money trying to get Israeli startups to open manufacturing sites overseas, we need to move quickly and make sure we have plans for the sector. university and startups that are struggling given macroeconomic conditions and that we have a plan of industrial incentives and regulations,” Goldstein said. .”

Goldstein proposed that the Israeli government could offer state-guaranteed loans to allow startups in the sector to invest the “hundreds of millions of dollars” needed in capital expenditure to build factories.

“This would allow startups to overcome the relative dearth of venture capital-backed investment in current market conditions,” he said.

Although Israeli companies in the field continue to expand, the majority are moving overseas, according to the GFI Israel report. Already looking elsewhere, Remilk announced plans in April to open the world’s “largest” factory for cow-free milk production in Denmark.

“R&D in the field of food technology, and alternative proteins in particular, is constantly growing in Israel,” said IAA CEO Dror Bin. “Going forward, the biggest opportunity is to develop scaling technologies for production plants and expand our reach to consumers in the global market.”