How 3 Israeli food-tech founders support their industry during a war
As the Israel-Hamas war continues, these leaders face constantly changing conditions while trying to keep Israel’s food system on track. Take a look at their struggles.
December 18, 2023
War changes everyone. Even in ways that can be hard to see.
Since the bloody Hamas-led attacks on Oct. 7, much of Israel’s food tech community has demonstrated its resilience, sharing posts on LinkedIn that say, “Israeli tech delivers no matter what.”
The slogan has become a rallying cry for both entrepreneurs and investors.
“We know it is crucial in tough times to stay close together,” says Jonathan Berger, CEO of The Kitchen Hub, the food-tech incubator and investment arm of Israeli food giant Strauss Group.
That’s why the slogan was created, Berger says, to help electrify the Israeli food tech community.
Jonathan Berger, CEO of The Kitchen Hub, left, poses with two of the incubator's staff members. Credit: Jonathan Berger
“The fact that we operate from Israel doesn’t give us a break competing with startups from Silicon Valley, Germany, or from wherever,” Berger says. “The fact that we are going through a tough time is irrelevant to the business. It's our problem. We have to face it and we have to manage it. We have to find a creative solution, and this is what we've been doing.”
While there are many unknowns ahead, one thing is certain: This war will have long-lasting effects on both life and business.
“Most people don’t realize that Oct. 7 is the day most Jewish people were murdered in one day since the Holocaust,” says Gil Horsky, the founding managing partner of FLORA Ventures, an early-stage Tel Aviv-based, $80-million VC fund focused on the agrifood industry. “We need to fight terror. It’s not only an Israeli problem, it’s a global problem.”
There aren’t any easy solutions.
“In a practical manner, we're not going anywhere, and they're not going anywhere,” Horsky says. “In a perfect world, the two parties need to learn how to live together. I don't think there's another choice. But at the moment, with the amount of hatred and aggression, it’s going to be years. The amount of distrust is so big.”
Israel’s giant food-tech market
For years, Israel has been dubbed “the startup nation.”
The nonprofit, Start-Up Nation Central, focuses on climate tech, health tech and agri-food tech helping connecting companies and countries to bolster Israeli innovation. The idea: drive economic growth with entrepreneurialism. According to Startup Savant, more than 6,000 start-up companies operate in Israel. Many are focused on food, agriculture and technology to overcome unfavorable growing conditions, improve the quality and variety of crops, and increase yields through the use of artificial intelligence, robotics and biotechnology.
“Israel has an amazing agri-food tech ecosystem with more than 600 start-ups,” Horsky says. “It’s one of the countries that gets the most funding, globally, for agri-food tech outside of the U.S.”
Over the past two years, alternative protein startups in Israel raised more than $1 billion in funds from venture capital firms, second only to the U.S., according to the Good Food Institute Israel’s State of Alternative Protein Innovation Report. In 2022, Israeli alternative protein companies raised $454 million in funding—15% of all alternative protein investment globally. Those startups include cultivated meat companies such as Aleph Farms and Steakholder Foods and milk and egg alternatives like Remilk and Eggmented Reality.
High-tech funding plunged around the globe in the past year, but Israeli food tech investments fell only 20% year over year, compared to a 42% drop across all tech investments, Good Food Institute Israel reported.
That was before the war.
In the wake of the fighting, Start-up Nation Policy Institute, a nonprofit think tank, and the Israel Innovation Authority, an arm of the Israeli government focused on developing innovation, conducted a preliminary survey on the state of high-tech since the war broke out. The initial findings: More than 80% of the companies reported being harmed by the situation.
A dairy farm in a kibbutzim was destroyed during Hammas’ Oct. 7 attack on Israel. Credit: Gil Horsky
Collaborative harvesting
For Berger, the new normal has included picking cucumbers in kibbutzim, which are small, collective farming communes.
“I don’t think there’s a person in Israel that’s not volunteering, doing something extra,” Berger says.
With many Thai immigrants who were employed as farmhand labor returning to Thailand or being held as hostages, numerous kibbutz fields and greenhouses that weren’t destroyed need to be harvested.
The messages come on WhatsApp or other social media channels, asking Israelis to volunteer with their family or friends to be laborers and help pick fruits and vegetables, Horsky says.
“You have people from all walks of life from young kids to CEOs of big companies that are taking a day off or the weekend and working in the hot sun,” Horsky says. “I did it myself.”
Keeping operations going
On the day after the Oct. 7 attack, Berger immediately began calling The Kitchen Hub’s 25 portfolio companies.
“We prepared a map of the situation, of how many people were wounded, murdered, killed or missing,” Berger says.
First, they figured out the status of each employee, then every employee’s family. Then Berger began mapping how many people were drafted into service, followed by how many employees had a spouse called to service.
“We had to understand the situation in all the portfolio companies in order to map the needs,” Berger says. “We are a very active investor and very, very involved.”
The Kitchen Hub got the its parent company’s human resources team involved. “And we started to work on solutions,” Berger says. “We were under tremendous shock, and it was very difficult, but we had to continue the operations.”
One person in a portfolio company was murdered, Berger says. Another 30 or so people from all the portfolio companies were called to service, plus numerous employees with a spouse called to service.
“If someone is missing, we are filling in for him or her,” Berger says. “When there is an alarm, we go to the shelter. We stay there for a few minutes, and we go back to our desks.”
Gil Horsky, co-founder of FLORA Ventures, poses with the head of security in western Negev. Credit: Gill Horsky
With so many people being called into the reserves, many Israeli businesses are facing large voids.
At $80 million, FLORA Ventures is a small fund with three people.
“We have a young analyst who is amazing,” says Horsky, whose small fund employs just three people. The analyst was called into the reserves on the day of the attack and has hardly come back home. “Some companies have 25%-30% in reserves, some have the CEO,” he says. That makes life tough when a loved one is at the border and you’re hardly sleeping.”
Israel is a country of less than 10 million people. “So, everybody has two degrees of separation from somebody that got hurt,” Horsky says.
Palestinian men put water on a fire after an Israeli air strike on Oct. 25. Credit: Mohammed Zaanoun/Alamy
Finding a way to work through a war
Working through a war has meant finding creative solutions and unconventional methods to keep production lines running.
“There’s a lot of mobility within the startups, between different team members to support the efforts to make sure there are no delays,” Berger says.
Part of the solution has included bringing in a babysitter to watch children so a mom could go “back to the bench” to work in the lab and take care of the sales, Berger says. It has also meant bringing in students who were about to start at universities to work in the companies and employees taking on extra shifts to hit deadlines.
For Vanilla Vida, a company in The Kitchen’s portfolio that uses patented dry-curing technology to produce vanilla and flavor that is supplied to flavor houses around the world, it meant getting others to do jobs outside of their normal scope of work.
“Even people from the offices that weren’t line workers came to work on the line,” Berger says.
The ability to find creative ways to solve problems—from production to capital raising— has been essential, Berger says.