Israeli Agrifoodtech Faces Funding Crisis Amid Conflict and Global Trends

The agrifoodtech landscape in Israel has faced significant challenges in the wake of the recent conflict, with funding figures reflecting a stark decline. Since the Hamas attack on October 7, 2023, Israeli agrifoodtech startups have closed just 17 funding rounds, raising approximately $161 million. This marks a dramatic 72% decrease compared to the same period the previous year, and a staggering 73% drop in the number of deals. As a result, Israel’s share of global agrifoodtech funding has plummeted to just 1%, half of what it was over the last decade.

However, Amir Zaidman, chief business officer at The Kitchen, Israel’s prominent food tech incubator and venture capital investor, asserts that these figures do not tell the complete story. He emphasizes that the broader global slowdown in foodtech investment, particularly in alternative proteins, has had a more pronounced impact on Israeli startups than the ongoing conflict itself. Data shows that global agrifoodtech funding from October 7, 2023, to October 7, 2024, fell by 9%, with deal counts dropping by 44%. Zaidman notes that the Israeli foodtech landscape, heavily focused on alternative proteins, is particularly vulnerable to these trends.

Despite the tumultuous environment, there are signs of resilience within the Israeli agrifoodtech sector. Zaidman points out that in the first quarter of 2024, Israeli startups raised more funds than in the same period of 2023, prior to the conflict. This shift suggests that companies are actively seeking to adapt and reassure investors of their viability. Notably, a substantial portion of the funding—around $115 million, or 71% of all wartime funding—was secured in the first quarter of 2024, indicating a recovery effort.

The funding landscape has seen notable deals, including a $39 million series C round for Bluewhite, a company specializing in tractor automation, which underscores the potential for innovation even amid adversity. Other significant contributions include $20 million raised by Greeneye Technology for precision spraying pest control systems and $17.5 million for SeeTree, which focuses on developing an intelligence platform for trees.

Looking ahead, the ongoing conflict has made it challenging for new investors, particularly those without prior exposure to Israeli startups, to engage with the market. Zaidman acknowledges that media portrayals of the situation may deter potential investors, but he remains optimistic about the resilience of those familiar with the Israeli foodtech ecosystem. He notes that many of these investors prioritize the business and technological merits of startups over geopolitical concerns.

Despite the current challenges, Zaidman believes that the qualities that define Israeli startups—resilience and the ability to achieve more with less—are becoming increasingly vital. He expresses confidence in the potential for Israeli entrepreneurs to overcome obstacles and innovate in the agrifoodtech space. As the industry navigates these tumultuous times, the focus on adaptability and strategic investment may pave the way for a stronger future, reinforcing Israel’s position as a hub for food technology innovation.

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