Here’s a statistic that’s keeping heads of state all over the world up at night: the world’s demand for food is expected to jump by 70% by 2050, as compared to 2000. The world’s population is expected to grow from 7 billion today to 9 billion in 2050, a growth of almost 30%. This means an additional 2 billion people will need food, and even today food demands are growing significantly due to the urbanization of the world and the advancement of populations of China and India, who are demanding more varied, quality food.
Clearly the scarcity of food and water, and the growing costs of basic foods, are one of the factors driving the demonstrations and movements around the world (“Occupy Wall Street” and others). This is also what’s pushing heads of state to seek out solutions. Influential economist Nouriel Roubini, or “Dr. Doom” as he is often called, who predicted the credit crisis, has already voiced his opinion many times regarding the rise in food prices, and said that they are leading to inflation in developing markets and could cause governments to crash.
In light of all this, it’s no surprise that around the world the race is on to develop advanced agricultural technologies, which will bring food solutions to the world’s population and prevent crisis. Professor Eugene Kandel Head of the National Economic Council at the Prime Minister’s Office, outlined the leading agricultural arenas at the Agrivest Summit: Precision Farming, Food, Machinery, Livestock and Aquaculture, Animal protein production, seeds, fertilizers and pesticides.
The Agrivest Summit marked the opening of Agritech 2012, and brought together investors interested in Agritech and Israeli companies developing innovations in the field. The Summit was initiated by Israel NewTech, the Investment Promotion Center, Mofet Venture Accelerator in association with Agritech 2012. The location of the Summit was symbolic of agriculture at its best – the first agricultural school in Israel, “Mikve Israel”.
Ruzgar Barisik, Senior Investment Officer, Clean Technologies, IFC at the World Bank, explained that the World Bank has been active for many years in the advancement of technologies which can help the developing world, and said that food, agriculture, and water solutions are at the forefront of their interest. Barisik participated in a panel that was chaired by Oded Distel, head of Israel NewTech and Director, the Investment Promotion Center at the Ministry of Industry, Trade and Labor. According to Barisik, the IFC prefers to not make seed investments, but rather to come in at a slightly later stage. He also pointed out that in Israel there is strong government support for companies at the initial stages, and so the IFC can find companies which have already proven initial viability and can accompany them to the next level, and also serve as a first strategic customer for them.
Also on the panel was Richard (Rich) Kottmeyer, JD, Global Agriculture and Food Leader, IBM USA. IBM entered the water arena a few years ago under the strategic decision that this would be one of its central growth engines, and the Company is now expanding to include agritech. According to Kottmeyer, IBM has founded a very large fund for investment in agritech. Kottmeyer explained that IBM’s main contribution to the water and agriculture spheres is in the optimization of relevant technologies.
In a presentation he delivered at the Summit, Mitchell Presser, Partner at Paine & Partners USA, told that at Paine, they are interested in agriculture companies that have significant upside potential, which have a pressing need for additional funding or assistance in global expansion. He also said that Paine is interested in efficient programs for climate prediction, in order to better prepare for extreme climate conditions which could impact crop yields. He added that one of the most severe problems in the water arena is that water is cheap, and added that the more expensive water becomes, the more efficient the use of it will become.
Gideon Soesman of Greensoil Investments, Israel, said that entrepreneurs should focus on developing technologies which meet widespread global needs, rather than those relevant for only limited areas, and also to creating cyclical, full solutions, rather than those which address one aspect of a complex problem. Additional Israeli investors Israel Cleantech Ventures and Aqua Agro, two cleantech focused VC’s, were also at Agrivest. Jack Levy, Partner at Israel Cleantech Ventures, said that his fund is seeking out agricultural technologies for a second fund they have founded and which has already begun making investments.
Mark Kahn, who founded Omnivore Capital, an investment fund established in India in 2010, explained that India presents a number of challenges to entrepreneurs, including problematic infrastructure, and a scarcity of at least 20% in skilled workforce in agriculture as well as a problematic irrigation culture. Khan pointed out however that this also makes for a great business opportunity for the entrepreneurs of the world, as India is in urgent, great need of irrigation and agriculture technologies which will help her to successfully overcome the rapid urbanization that nation is undergoing. Kahn explained that India is in need of fast solutions in water and soil reclamation, as well as in animal protein creation and distribution technologies. “Today India is the most exciting area for Agritech entrepreneurs. The question is only how you the innovators will deal with the challenges it presents.” He also said that investment bodies from around the world are already being more flexible in supporting early stage companies.
14 start-up companies in different technological areas presented at Agrivest, and raised a lot of interest. The Summit hosted a large number of participants – a statistic which speaks for itself. Scores of visitors came, showing a great interest in advanced technologies, proving that undoubtedly, agritech is a very hot arena for cleantech funds, and the investment community overall.