September 7, 2018

Ruti Alon, former senior life sciences partner with Pitango Venture Capital, and Ilanit Kabessa-Cohen, a 20-year veteran in the consumer food sector, have announced the official launch of Medstrada, Israel’s first venture capital fund targeting food tech and personalized nutrition.

Seeking out investment opportunities backing emerging food technologies, Medtrada (“Med” referring to not only the medical field, but to the Mediterranean Sea region and the Middle Eastern diet, and “strada” referring to a highway), will be managed as a conventional venture capital fund, and aims to raise enough capital “to invest with any fund in this field”, Alon told Globes.

Given Alon’s deep experience in the life sciences space, she is aware of the role that food plays in a healthy life and the prevention or delay of the onset of diseases, but also in the general well being of consumers.

Toward this end the fund will focus on four main pillars of investment:

Food: new foods and foods that are free of harmful ingredients; functional foods that perform without a doctor’s prescription; foods with new flavors; and proteins that are grown in a laboratory setting.

Personalized nutrition: using knowledge of the interaction between genetics, the environment, and microbiomes to create diet plans for each patient.

Analytics throughout the food supply chain: this will include a range of opportunities from data driven activities that gain information on consumers to robotics in food production.

Sustainability: food tech and sustainability are deeply connected from biodegradable packaging to reduced emissions at production facilities.

“The food industry is one of the world’s largest industries, with an $8 billion turnover, compared with $2 billion for the pharma industry and $1 billion for medical devices,” Kabessa-Cohen told Globes. “These are also giant industries, but in order to make substantial profits in this industry, you need something special, and this something is usually supported by technology.”

The Right Time in the Right Place

Israel has made a name for itself as a global leader in the advancement of ag and food tech. The country is ranked second out of 138 countries (outranked only by Switzerland) by the World Economic Forum’s Innovation Ranking, due in great part to a combination of distinct factors:

Land: The semi-arid nature of Israel’s landscape and the constraints placed on its agricultural sector drive a need for innovation. Furthermore, the density of the country’s geography creates a close-knit network of innovative companies.

People: Israel’s history of being a country built by immigration has led to an open, entrepreneurial culture where the goal is innovation; while the influx of people of vastly different economic backgrounds has led to a multidisciplinary approach to problem solving. The cross-field aspect of the country’s expertise – from military, to gaming, to pharma adds a depth to the pool of experience that can be pulled from for R&D initiatives.

Infrastructure:  The Israeli government has supports in place, while academic research is widespread. Meanwhile, the country’s military teaches its young people how to build, problem-solve, and meet failure with the understanding that knowledge has been gained.

This environment has led to an investor landscape conducive to all investors from generalists, to focused agtech, impact, global, and corporate investors.

Within this landscape, Medstrada has launched at a time when Israel has been seeing increasingly dynamic movement in its food tech sector. Forbes reports that in 2017 food tech companies in the country raised $117 million across 27 funding rounds, and in the first two quarters of this year, there have been a total of 11 rounds (three of which did not disclose funding values) that raised $31.75 million combined.

Since January of this year, GAI News has discussed a variety of deals occurring in Israel’s food tech industry.

In January, Tel Aviv-based biotech startup SuperMeat, a company dedicated to developing cultured meats in a laboratory setting raised a Seed round of $3 million backed by U.S.-based venture capital fund New Crop Capital, mission-focused venture capital firm Stray Dog Capital, and European poultry producer PHW.

In May, there was a flurry of activity. Future Meat Technology, an Israeli startup focusing on developing next-generation technologies for the efficient commercial production of lab-grown animal fat and muscle cells without genetic modification or the harvesting of animals, successfully raised $2.2 million in Seed funding.

The round was co-led by Tyson Ventures, and included Israeli food conglomerate the Neto Group; Chicago-based venture capital fund S2G Ventures; Chinese foodtech venture capital fund BitsXBites; Agrinnovation, the investment fund launched by Yissum; the Technology Transfer Company of The Hebrew University; and HB Ventures.

The same month also saw SuperMeat, another Israeli clean meat player, add follow-on funding to its Seed Round bringing the round to $4 million with the addition of investors from the U.S. and Asia. Additionally, International Flavors & Fragrances Inc. (IFF) announced its agreement to acquire Israel-based, global flavors giant Frutarom Industries for $7.1 billion including debt.

-Lynda Kiernan