Siddhi Capital, a U.S.-based fund managing assets worth $250 million, is joining the investor consortium of the Fresh Start foodtech incubator, alongside Tnuva, Tempo and OurCrowd. The fund is set to drive new investments in early-stage startups and help rejuvenate the region’s foodtech ecosystem.
Good news for Israel’s foodtech sector - which in recent years has suffered a sharp decline in investment - and especially for the Fresh Start foodtech incubator in Kiryat Shmona. After many of its startups were forced to relocate during the war, raising fears they might not return, ynet learned that the U.S.-based investment fund Siddhi Capital is joining the incubator’s investor consortium alongside its current partners - Tnuva, Tempo and OurCrowd.
The fund, which specializes in foodtech and manages assets of around $250 million in the U.S. and international markets, has committed to investing NIS 30–40 million in a new wave of portfolio companies, ensuring continued growth and innovation. In addition, Siddhi Capital will provide close support to help startups expand into global markets, leveraging its network and experience. Efforts are now underway to bring at least some of the startups back to operate once again in Kiryat Shmona alongside new startups.
Alongside major global food corporations such as PepsiCo, General Mills, Kellogg’s, Tyson, Mondelez and Cargill, Siddhi Capital has invested in around 100 companies to date - about half of them in foodtech across nine countries, including Israel, at early investment stages.
The Fresh Start incubator was established in Kiryat Shmona about five years ago and is led by CEO Dganit Vered and CTO Tami Miron. So far, its partners have invested over NIS 135 million in 15 startups, including Blue Tree, which developed technology to reduce sugar in natural beverages; Plantopia, which produces dairy proteins from engineered plants; and Profuse, which developed a technology that supports cultured meat production. The entry of Siddhi Capital marks a strategic expansion aimed at bringing in new startups and revitalizing activity in the region.
“Despite the war, the fund is deepening its activity in Israel out of appreciation for the focus of Israeli foodtech companies on developing technologies and ingredients that can be adopted by major food manufacturers,” said Steven Finn, co-founder and co-managing partner of Siddhi Capital.
“We love Israeli innovation and Israeli entrepreneurs, who are highly goal-oriented and know how to create great value for investors. I believe that, with our leverage and experience, we can achieve great success together. The Israeli incubator model is particularly attractive for investors thanks to the Israel Innovation Authority, which matches every shekel invested with one of its own.”
Not the boom it once was
The foodtech industry was a global sensation in 2020–2021, fueled by dire predictions of an impending global food shortage in the coming decade. Startups promising lab-made alternatives - milk, meat, honey and more - sprouted like “mushrooms after the rain.” But unlike the high-tech sector, foodtech turned out to be a much longer and costlier journey: bringing a viable product to market at an affordable price takes years and substantial ongoing investment.
The downturn is illustrated by the stories of four Israeli companies that went public on the Tel Aviv Stock Exchange in 2021 - NextFerm, Wilk, Bee-io Honey and SavorEat. At their peak, their combined valuation reached around NIS 1 billion, but they have since plunged to a total value of just NIS 60 million.
NextFerm, which developed yeast-based ingredients including vegan protein for the food industry, has lost 90% of its value, dropping to NIS 15.6 million.
SavorEat, which produces plant-based meat alternatives, fell from NIS 285 million at its peak to NIS 5 million today.
Wilk, which developed cultured milk, has failed to generate revenues since its IPO and plunged from NIS 296 million to NIS 5.3 million.
Bee-io Honey, which developed cultured honey, once reached a valuation of NIS 200 million, but later accumulated NIS 52 million in losses and debt, and failed to commercialize its product. Its market value now stands at just NIS 16.8 million.
“There was a major hype around foodtech investments during the COVID-19 period,” Finn explained. “But one of the issues was that many investors without deep sector expertise backed projects with limited chances of success. That said, the global food industry continues to evolve, and Israeli foodtech still has the potential to become a significant player in this field.”
Tnuva Chairman Haim Gavrieli praised the investment fund's foray into the Israeli market. “The entry of Siddhi Capital into the incubator during wartime represents a significant vote of confidence in Israeli foodtech and a boost for new portfolio companies, which serve as a central growth engine for the development of the Galilee and the north," he said.
"As Israel’s leading food company, we see it as our responsibility to connect resources, knowledge and collaborations with the local and international ecosystem, with the aim of promoting innovative solutions that will contribute to the global food market.”
Hanan Brand, deputy CEO and head of the Startup Division of the Israel Innovation Authority, said that “The entry of Siddhi Capital into the incubator represents a major reinforcement of Israel’s foodtech ecosystem and underscores the confidence of international players in local innovation. We welcome this collaboration and view it as an opportunity to strengthen the incubator’s activities in Kiryat Shmona.”
Cali Chill, partner and chief investment officer at OurCrowd, and chairman of Fresh Start added that “We’re excited to have Siddhi Capital join us as a partner in Fresh Start. OurCrowd and Siddhi Capital have a strong history of co-investments in foodtech companies both in Israel and the U.S. We are confident that this partnership will play a major role for Fresh Start’s new portfolio companies in their growth stage, helping them penetrate new markets and generate significant value to the Israeli innovation ecosystem.