The US and Israel topped the charts in alternative protein global investments last year. Israel came second to the US for the second year running, with Israeli start-ups in the field raising more than $450 million in investments, according to the Good Food Institute (GFI) Israel’s State of Alternative Protein report.
The recently published report shows that Israeli companies accounted for around 15% of the total capital raised for the sector with 60% of all investments in Israeli foodtech firms going to alternative protein startups. Investments in Israeli alternative protein companies crossed the billion-dollar mark over the last two years.
Alternative proteins include plant-based substitutes for meat, dairy, and egg, cultivated dairy, meat and seafood made from cells, and various fermentation processes and products. The sector has soared in recent years due to an increasing demand for innovation amid concerns over food security, ESG and supply costs.
And while not immune to the global market slowdown last year – investments in Israeli alternative proteins dropped from $623 million to $454 million between 2021 and 2022 – Israel’s alternative protein sector remains a tasty prospect for investors.
Israel’s tech sector saw a 42% decrease in investments, but foodtech took a smaller hit. It was down only 18% compared to over 50% in other tech areas (investments in the cyber sector fell by 54% and fintech by 66%). Seed investments in alternative protein start-ups grew 130% in 2022, according to the report.
Nir Goldstein, CEO of GFI Israel, says: “2022 brought immense challenges, from failures in global food supply, to macroeconomic declines and geopolitical tensions. Yet it remains crystal clear – there is no way to mitigate climate change and create a resilient food system, without shifting away from industrial animal farming. Alternative proteins are the only scalable way to do that, and the Israeli ecosystem is paving the global way.”
Israel has shown sustained leadership in alternative proteins over the past three years. Since 2020, the ‘Start-up Nation’ has raised 10% of all global investment in alternative protein companies – more than double the investments of the UK ($438 million). Other countries have been hit harder by the slowdown. Third placed France raised $184 million in 2022, followed by Singapore ($170 million) and the UK ($167 million).
Israel is home to more than 100 alternative protein companies, and the market has been boosted by some significant deals. Future Meat Technologies (now known as Believer Meats) marked the largest investment in the foodtech start-up industry in Israel so far when it raised $347 million in 2021, and Remilk, a developer of animal-free dairy, raised $120 million last year – the second-largest investment raised by an Israeli foodtech start-up and the single largest in a cow-free dairy company. Remilk plans to open the world’s largest precision fermentation facility for production of cow-free milk, in Denmark. Believer Meats is building what is believed to be the world’s largest cultivated meat facility in the US.
Professor Yaakov Nahmias, co-founder and President of Believer Meats says: “The fact that Believer Meats raised this massive investment round got a lot of people to recognise that cultivated meat has massive potential to become the biggest player yet in the sector. We raised a significant fraction of the investment in the entire Israeli industry and it got a lot of people very excited about the innovation potential in the Israeli ecosystem.
“Investors from around the world were taking note that the Tel Aviv and Jerusalem ecosystems were really unique.”
But start-ups will have to work hard to secure investment as investors are scrutinising the technology a lot closer says Prof. Nahmias. “They really want to see that you can scale up and know what you’re doing and know how to get into the market.”
2022 saw a record 12 new Israeli start-ups entering the space. They include Mermade, a cultivated fish company with a recyclable fermentation-based process for the sustainable creation of seafood, PluriNuva, a collaboration between Pluristem and Tnuva, working to develop cultivated meat products, and Medium Well, which aims to solve the cultivated meat market barriers (cost and scale) with an innovative medium recycling and monitoring system.
Aviv Oren, Business Engagement and Innovation Director GFI Israel, says: “Israel continues to lead as an alternative protein innovation hub with over $1billion in VC funding in the last two years. In 2022 we also saw an increase in government funding and the announcement of new academic research centres. This is an opportunity for more international collaboration in order to bring this innovation to global markets.“
Israel is certainly committed to the cause. In June 2022, GFI Israel, the Ministry of Innovation, Science and Technology and the Ministry of Agriculture announced a joint call for alternative protein proposals with a budget of over NIS 4 million (around £905,418) to support 15 academic studies that offer scientific and technological solutions in the fields of cultivated, fermentation-derived, and plant-based meats.
The report shows a 50% growth in the number of active Israeli alternative protein researchers in 2022. Investments in Israeli start-ups commercialised based on academic research make up 48% of the total investments in the field – going to only 26% of start-ups. The leading institutions in terms of start-ups fundraising are: Tel-Aviv University, the Hebrew University, and Technion – Israel Institute of Technology – which announced the establishment of the world’s first multidisciplinary research centre for alternative proteins. In October the Hebrew University announced the establishment of an Innovation FoodTech Centre that will work to provide innovative solutions for the growing problem of food security.
Hadar Huberman, Clean Growth Sector Lead at the UK Israel Tech Hub, British Embassy Israel, says: “With the easing of the world regulation on alternative proteins products, steered massively by the FDA’s clearance of Lab-Grown Meat in November 2022, it is expected that investments will continue to pour into the sector in the future.
“A solid combination of Israeli government backing, private sector investments and global early market adopters of alternative protein products will be the Holy Trinity which will allow the scale of this sector.”