With over 6,000 start-ups and more venture capital per person ($170) than any other country, Israel is one of the biggest producers of start-ups in the world, only topped by the Silicon Valley. With 506 Israeli high-tech companies raising $3.2bn in the first three quarters of the year, predominantly from private equity bankers and Chinese investors, this start-up scene is showing no signs of stopping.
In order to get a better insight into this booming market, we spoke to Amir Zaidman, vice president of business development for The Kitchen, a recently launched food-tech incubator in Israel. Supported by the Strauss Group, The Kitchen is seeking to help new start-ups and enhance the food-tech sector in the country.
What inspired you to start up a food tech incubator and what type of start-ups are you hoping to help?
Founded in 2015 by the Strauss Group, The Kitchen is Israel’s first food-tech incubator. The inspiration for starting up The Kitchen came from understanding the enormous challenges that the food and beverage industry is facing and will face in the coming decades, and realising that technological innovation is the only way to overcome these challenges. Israel is known as the “startup nation” and as such is a perfect location for our incubator. We invest in and nurture cutting-edge technology startups that make the world’s food value chain more productive, affordable, sustainable and healthy. We address global food challenges by harnessing Israel’s renowned innovation eco-system.
What type of difficulties do start-ups most commonly face and how are you planning to help them?
There are many difficulties in the life of every start-up ranging from technological challenges to talent acquisition, however, in my view the two most challenging areas are getting financed and access to the market. We provide our start-ups with a support umbrella which range from basic infrastructure (office space, communications, etc), through technology experts and all the way to refining their business models.
Specifically to the topics mentioned above – regarding financing, first and foremost we are an investor. We invest approximately $500,000 in seed stage companies. We have a close relationship with a network of potential follow-on investors including venture capital funds, corporates and individuals. These investors are getting an early exposure to our portfolio so when companies mature from The Kitchen they will already be on these investors’ shortlist.
Regarding access to the market, we have very strong connections with the local and global food and beverage industry. Executives from companies such as PepsiCo, Danone and Nestlé (to name only a few) have already visited The Kitchen. We open a channel between each one of our companies and a relevant potential industry partner so products development is market driven from day one.
How do you go about picking which start-ups to invest in?
We are looking for entrepreneurs who are driven by desire to change the world by improving food or the food industry. Our criteria for selection include a strong team; a unique technology which creates a barrier for competition; a disruptive solution with clear value and global scalability.
The project was initiated by the Strauss Group; what role will they play now that The Kitchen is up and running?
The vision for The Kitchen was conceived within the Strauss Group, with the desire to expand the food-tech ecosystem in Israel. However, it is very important to note that our investment strategy is not based on Strauss’s areas of interest but on the challenges of the food and beverage industry as a whole. We are looking for the most promising technological innovations.
The Strauss Group is supporting our operation in every aspect of our business. We have access to experts in food R&D, nutrition, manufacturing, packaging, supply chain, marketing and consumer insights and more. Being a global food company, the Strauss Group is also very instrumental in providing access to global markets and to potential partners.
The Kitchen’s portfolio companies are not obliged to get support from the Strauss Group, however the ones that choose to do so gain tremendous value.
How do you view the food and beverages start-up scene in Israel at the moment? Where do you see it in five years’ time?
Israel was named the “startup nation” for a good reason. It has the largest number of start-ups per capita in the world, and in absolute numbers it is second only to the California Bay area. The food-tech startup scene is still in its early days. We see very innovative ideas but the number of start-up companies in this area is still not very high. At The Kitchen, we have screened close to 200 investment opportunities since the beginning of the year.
The stage of food-tech today reminds me of where the Israeli med-tech innovation scene used to be ten years ago. Today, Israel is a home to many successful med-tech startup companies; some are traded on public exchanges such as Nasdaq while others were acquired for hundreds of millions of dollars. Most of the global medical devices companies are operating R&D centers in Israel.
I believe the food-tech startup scene is heading in this direction. I expect to see significant success stories within three to four years. The number of active food-tech startups is growing rapidly and the amount of money that will be invested in these companies will increase dramatically.
What role will The Kitchen play in its development?
The Kitchen is taking a leading role in creating a vibrant food-tech community and eco-system in Israel. We are managing a meet-up group, arranging and hosting meet-ups every few weeks. Together with Alpha Strauss we are hosting Israel’s Annual FoodTech Symposium. We had close to 400 attendees in our 2015 event, including entrepreneurs, academia, investors and food companies. The number is growing every year. We are also managing a LinkedIn group (Israel FoodTech Innovations) which acts as an open platform for sharing industry news and exchanging ideas. At The Kitchen we are doing our best to help every entrepreneur or startup in the food-tech scene. In our view, a functioning community of innovators, investors and corporates is a key to creating a food-tech valley in Israel.
© FoodBev Media Ltd 2019