JVP Founder and Executive Chairman Erel Margalit at the May 2019 Seeds and Chips food tech ... [+]
Venture capitalist Erel Margalit has taken 12 companies public on Nasdaq and is responsible for building some of the most successful big data, artificial intelligence and cybersecurity startups that have come out of Israel. But after 25 years, Margalit has now turned his focus towards food and agriculture technology—what he calls the last frontier of investing. His firm Jerusalem Venture Partners has raised more than $1.4 billion across 9 funds, and has recently invested in startups like InnovoPro, a seller of vegan protein made from chickpeas, and DouxMatok, a flavorings company that has isolated a sugar substrate so that 40% less can be used to provide the same level of sweetness. Opportunity abounds: JVP estimates there are more than 230 food and ag tech startups in the country.
“Processed foods need less sugar and less starch. We need a new protein strategy for the world. We need to be packaging food very differently so that we can keep our oceans clean. We need new crops because the climate is changing completely,” says Margalit. “Israel has been saving itself by bringing new crop strategy to places that were called deserts 50 years ago and are now flourishing because we found the right mix and the right way to irrigate and the right strategy.”
The problem, he says, is that few are thinking about commercializing the technologies on an international scale and too much is happening independently.
A new partnership with Mars, the $35 billion maker of M&Ms, Snickers and Iams pet food, aims to fix that. JVP and Mars are now teaming up to create a research and development center in Israel dedicated to scaling and commercializing tech solutions that touch any aspect of the global food system, from farming to nutrition. Margalit says the research center will give funds to Israeli startups and will also work with academic researchers at institutions, such as the Hebrew University, the Weizmann Institute, the Technion, Migall and Tel Hai College—and early successes may get spun off into new companies.
“A lot of times the innovation comes from the universities. It comes from the younger people. It comes from small companies. You need people who are able to put these things together to do that. What we do is we bring people together,” says Margalit, who grew up on a kibbutz that invented the original sprinkler.
InnovoPro is a vegan protein ingredient manufacturer based out of Israel.
The financial terms of the deal were not disclosed. But it comes at a time when the food and ag tech industries are hot with investment activity. Globally, food and ag tech startups raised $16.9 billion last year, up 43%, according to AgFunder's 2018 investing report. And Beyond Meat’s stellar IPO—up more than 70% since its May 2 debut—is a testament to where startups can go.
It will be the first research center that Mars has opened in Israel, though the candy and pet food giant has recently launched similar research in other parts of the world. Take its partnership with Google and Unicef for the African Orphan Crops Consortium, in which researchers teamed up in 2011 to sequence the genomes of 101 indigenous staple crops to improve their nutritional content, the yield and their quality of its stand up against climate change.
“We look to work with the most prominent institutions in the world and create opportunities to form contracts and joint contract research opportunities around discoveries that we see will impact the food system in a real, positive way. That’s the intention here,” says says George Graham, vice president of Mars Advanced Research Institute. “Through JVP, we’ve got five of the top Israeli institutions and their network. We have a single point of access into their laws and into their tech transfer arms. It’s a very efficient and productive way to partner with that system.”
