Investments In Early-Stage Israeli Alt Protein Companies Grew 130% Between 2021-2022: Report
4 Mins Read Good Food Institute Israel details the strength of the alternative protein market in Israel in a new state of the industry report. The new…
Good Food Institute Israel details the strength of the alternative protein market in Israel in a new state of the industry report.
The new Good Food Institute Israel (GFI) report, entitled Israel – State of Alternative Proteins, showed that in 2022, Israeli startups raised more than $450 million in investments for alternative proteins, making it the second-largest country for alternative protein investments after the U.S.
Israeli companies accounted for approximately 15 percent of the total capital raised for the sector and 60 percent of all investments in Israeli food tech firms went to alternative protein startups. While the amount of investment in the industry decreased in 2022 from $623 million in 2021 to $454 million, GFI says Israel is still a key player in the global food tech market. Seed investments in alternative protein startups grew 130 percent in 2022, according to the report.
The alternative protein sector in Israel includes plant-based substitutes for meat, dairy, and egg, cultivated dairy, meat, and seafood made from cells, and various fermentation processes and products using techniques.
GFI Israel CEO Nir Goldstein said the global trend in 2022 was moving toward an “arms race” for alternative proteins, with countries such as China, France, the U.K., and Denmark making significant investments in the field. Goldstein said that while Israel could become a center for both R&D and industrial manufacturing, there’s every reason to emphasize regional manufacturing of food in order to further drive down the sector’s carbon footprint.
“We have seen large countries follow along with President Biden in the U.S., who ordered to put together a strategy to bolster biotech, including alternative proteins,” Goldstein told The Times of Israel. “China has a five-year strategy, and smaller countries like the U.K. and Denmark have made significant investments, and this raises the question of what is the future of Israel after we got an edge now as a startup nation? Can we become a scale-up nation?
“We believe that food needs to be manufactured as close as possible to where it is consumed for sustainability and economic reasons but Israel can definitely become a center for both R&D and industrial manufacturing,” Goldstein said.
Israel ranks second to the U.S. in fermented proteins, attracting 18 percent of global investments with $147 million secured in 2022. In the cultivated meat subsector, Israeli companies drew more than $105 million in investments, accounting for approximately 12 percent of the total investment in the sector worldwide. In the plant-based alternative proteins sector, Israeli startups attracted $200 million in capital, or 16 percent of the global sector investment.
Funding local startups
According to GFI, local startups entered the alternative protein space last year, with four in the cultivated area, four in plant-based, and four in fermentation-derived products. Over the past two years, alternative protein startups raised more than $1 billion in funds from venture capital firms.
GFI Israel noted that food tech investments in Israel were impacted the least by the market slowdown compared to other tech sectors, with private investments in the tech sector dropping by 42 percent YoY, while investments by venture capital firms in alternative protein startups declined by 20 percent, from $553 million in 2021 to $445 million in 2022.
Goldstein said that the issue of national food security became more dominant in the food tech industry due to crises in Ukraine, the pandemic, and increasing cases of swine flu. Governments and investors are looking for more resilient and efficient ways to produce proteins, he said. Notable deals in the Israeli plant-based protein sector in 2022 included a $135 million investment in Redefine Meat, a maker of 3D-printed plant-based meat products, and a $124 million investment in Remilk, a developer of animal-free milk and dairy.
“In order to stay competitive as large global governments invest a lot of money to try to get Israeli startups to open manufacturing sites overseas, we need to move quickly and make sure that we have plans for the academic and startup sector that is experiencing difficulties given macroeconomic conditions, and that we have a plan for industrial incentives and regulation,” Goldstein said. “Those are the four pillars of that the government must address in the coming months.”
Goldstein says the Israeli government could offer state-backed loans to get startups in the sector up and running. “That would allow the startups to overcome the relative shortage in venture capital-backed investments in today’s market conditions,” he said.
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