Eager Israeli food startups shrug off Beyond Meat’s market woes

When Beyond Meat Inc. went public in May 2019, investor excitement over the sizzle of its plant-based burgers sent the stock soaring, giving the California-based company a market value of almost $14 billion. Three years later, the shares have fallen more than 90%, fueling concern about whether consumer demand for meat alternatives will live up to the expectations they’ve generated.

In Israel, home to a thriving vegan culinary culture and more than 400 food-tech startups, the prevailing outlook is optimistic. While several Israeli companies are producing plant-based versions of beef, chicken and fish – as well as eggs and dairy products – another frontier of so-called cultivated meat, which is made from animal cells grown in a lab, is gaining traction.

“Plant-based meat as it is today won’t get people to stop eating meat,” Guy Nevo Michrowski, CEO of Israel’s ProFuse Technology, told The Circuit. “The only thing that will get them to switch is something that really tastes like meat and that is what is already happening.”

ProFuse raised $2.5 million last month in a funding round led by New York’s Green Circle. Investors included Tnuva, one of Israel’s top two food producers; beverage-maker Tempo; OurCrowd, a Jerusalem-based platform for crowdfunded venture capital investment; and Newport Beach, Calif.-based Finistere Ventures.

Until now, high cost and lengthy production time have been the main problems in making cultivated meat marketable. If these can be solved, cultivated meat can take off exponentially as demand continues to grow, Michrowski said, citing projections that meat consumption will double by 2050 as the world’s population reaches 10 billion. Despite the initial hype, he said, companies like Beyond Meat and Redwood City-based Impossible Foods have not produced a satisfactory substitute for steak-lovers. Michrowski himself is a vegan for ideological reasons, but says he has no problem eating cultivated meat.

ProFuse’s technology, which nurtures the cells in a nourishing liquid, was developed over six years of research at Israel’s Weizmann Institute of Science. The process can potentially enable the large-scale manufacture of meat in bioreactors at a cost similar to producing farm-grown beef, chicken and pork, Stu Strumwasser, managing director of Green Circle, said last month after the new investment was announced. ProFuse’s method “may substantially accelerate that process and thus fundamentally change the calculus for the commercialization of lab-grown meat,” he said.

Another Israeli company working on cultivated meat is Aleph Farms, which gained fame for producing the world’s first lab-grown steak. With actor Leonardo Dicaprio among its investors, Aleph Farms raised $105 million last year to bring its steaks to market by 2023. The funding round was led by DisruptAD, the venture capital platform of the Abu Dhabi sovereign wealth fund ADQ,  and the Growth Fund of Greenwich, Conn.-based L Catterton, the largest global consumer-focused private equity firm. The company’s process of cultivating cells extracted from cattle was developed at Israel’s Technion Institute of Technology and supported by Strauss Group, Israel’s other top food manufacturer.

The United Arab Emirates and Bahrain, which import the vast majority of their food, have been developing partnerships with Israeli food-tech companies since the 2020 Abraham Accords, which normalized relations between Israel and the two Gulf states. Aleph Farms and DisruptAD have discussed building a manufacturing facility in Abu Dhabi to produce cultivated meat products and sell them across the Gulf.

The alternative protein market as a whole drew $1.75 billion in investment in the first half of 2022, according to the Good Food Institute Israel. Of that, $320 million was invested in Israeli companies, second only to the U.S. Consumer demand for plant-based alternatives (PBA) to meat, however, have stalled in the U.S., according to a report by Deloitte published in September.

“The addressable market may be more limited than many thought,” the report said. Dramatically improved taste in recent years unlocked new interest in PBA meat. But the portion of the U.S. population open to trying (and repeat buying) it may already have reached a saturation point.” Among the reasons cited for the halt in market growth were the higher price compared to meat and “cultural resistance to a product some view as ‘woke,’ the report said.

Until its shares started their steady slide in July 2021, Beyond Meat looked like a sure winner. The stock, which reached a peak of $234.90 in 2019, and was trading as high as $178 in 2021, has fell last week to a low of $12.76.

Introduced in 2012, it offered an enticing combination – a completely plant-based product that looked like meat, could be cooked like meat, and tasted more like meat than any previous product. The company took off first with strips of fake chicken, then created products emulating beef and pork. There were rollouts in Whole Foods, and a major partnership with  McDonalds dubbed the McPlant burger, which was discontinued this year in the U.S. 

But since the 2019 IPO, Beyond Meat has failed to meet sales targets. Part of the problem was the impact of COVID-19 restrictions on restaurants, many of which closed for months during the pandemic, and the company’s shift in focus to supermarkets. One bizarre incident that may indicate the level of tension at Beyond Meat was the arrest of Chief Operating Officer Douglas Ramsey in September after he got into a fight in an Arkansas parking garage with another driver and bit the man’s nose. Ramsey was suspended by the company.

Among other Israeli companies that have drawn large international investment is Redefine Meat, which uses a proprietary 3-D printing process to turn plant-based proteins into steaks. The Rehovot, Israel-based company, whose logo is an upside-down cow, raised $135 million in January in a funding round led by Tel Aviv-based Hanaco Ventures and London’s Synthesis Capital.

SavorEat, an Israeli company that trades on the Tel Aviv Stock Exchange features a robot chef making plant-based dishes to order, is rolling out its technology on U.S. college campuses. The machine it sells allows food operators to “customize the meal based on level of doneness as well as fat and protein level,” Barak Orenstein, vice president of marketing,  told The Circuit . “This has not been done before.”

Despite Beyond Meat’s market plunge, Israeli companies see a bright future for meat substitutes and expect even more companies to join the race for the perfect alternative steak.

“If the megatrends of health and wellness and sustainability persist, the foundations of the industry will remain strong,” Orenstein said.

UAE-Israel cyber intelligence firm grows with its perch in the Gulf

Years before the Abraham Accords enabled Emiratis and Israelis to openly run businesses together, Abdulla Baqer operated a back-channel in Dubai that brought Israel’s cybersecurity expertise to the Arab world. Working with intelligence veterans in the Middle East, Asia and elsewhere, the charismatic entrepreneur helped facilitate the growing commercial ties that were poking through the longtime Arab-Israeli divide.

Those were days when Israel’s computer startups were becoming competitive with Silicon Valley for government contracts around the world. Check Point Software Technologies and CyberArk were sensations on Wall Street and virtually every country in the world sought access to the smartphone-penetrating software made by Israel’s NSO Group. Former Prime Minister Benjamin Netanyahu, who made a groundbreaking public visit to the Sultanate of Oman in 2018, often described cyber know-how as the linchpin of Israeli diplomacy. Today, Israel is using a similar formula to strengthen ties with Saudi Arabia, the region’s biggest economy.

After the Accords were signed at the White House two years ago, Baqer and his partners unveiled Black Wall Global, a firm that finds little need these days to obscure its mission of marketing Israeli technology to nations that have been reluctant to deal directly with the Jewish state. Baqer, 45, is also co-president of the UAE-Israel Business Council, through which he coaches Israelis on using the United Arab Emirates as a platform for dealing with Arab markets.

“There are a lot of countries that don’t allow Israeli companies to set up shop,” Baqer told The Circuit. “They can always come to the UAE, partner with a UAE company and basically go out and be sold as an Emirati company.”

With Baqer in Dubai, Black Wall is led by a collection of Israeli intelligence veterans and computer scientists. Chairman Asher Ben Artzi worked for 34 years in Israel’s Shin Bet internal security agency and its National Police force, becoming director of the Israeli branch of Interpol, the International Criminal Police Organization. Khoo Boon Hui, who was president of Interpol after retiring as Singapore’s police commissioner, is Black Wall’s honorary president. Others include CEO Anri Amir David, a consultant to Israeli defense contractors and fellow at Russia’s International Academy of Technological Sciences; and Arik Barbing, former director of the Shin Bet’s cyber division.

“We cover it all, from intelligence to cyber defense, border control and protection of critical infrastructure facilities and big data,” Black Wall says on its website. “We provide governments, law enforcement, security forces, and global enterprises with the highest level of safety and security.”

Black Wall is one of the smaller Israeli-led companies that have prospered in the new atmosphere of normalized relations with the Gulf states. Israel and the UAE signed a free-trade agreement in May that eliminates most tariffs and is projected to bring annual trade between the two countries over the next five years to more than $10 billion.

The biggest deal between the Emirates and Israel has been Delek Drilling’s $1 billion sale last year of its stake in an offshore Mediterranean gas field to the UAE’s Mubadala Petroleum. State-owned Israel Aerospace Industries has signed drone-development deals with Edge Group, a government-owned defense company in the UAE. And OurCrowd, a Jerusalem-based venture capital investment platform, set up a subsidiary in the UAE and last November became the first Israeli VC registered by the Abu Dhabi Global Market to operate in the emirate

Baqer points out that the path to Gulf-Israel joint ventures was paved by the Israeli companies that he said operated for decades “under the radar.” The practice, he explained, was to register affiliated corporate entities in third countries and operate through Israeli dual citizens with separate passports who could travel to Arab countries that didn’t have diplomatic relations with Israel.

In the lore of secret dealmaking, the experience of AGT International stands out. The company, led by Israeli entrepreneur Moti Kochavi, won a contract from the Abu Dhabi government in 2008 to create a “smart city” network of surveillance cameras, electronic fences and sensors that paid about $6 billion over seven years. During that period, AGT’s Israeli affiliate, Logic Industries, ferried dozens of engineers each week on an unmarked charter plane between its headquarters in Israel and the UAE capital, according to some of the employees involved who lived in a secure compound under made-up names.

Another example is Israeli defense contractor Elbit Industries, whose American subsidiary had a contract with the Saudi government to sell and service TOW anti-tank missile systems. The relationship came under strain when an employee of Elbit’s American unit died under mysterious circumstances while working in the northwestern Saudi city of Tabuk and the company required Israeli and U.S. diplomatic intervention to retrieve the body.

Now, as president of the new business council, Baqer helps Israelis develop their frontal approach, explaining the nuances of Emirati business culture and guiding them not to expect quick results.

“So many companies came to the UAE at the beginning of [the Abraham Accords] and then they disappeared,” Baqer said. “We decided that we need to help educate Israelis about how Emiratis think and Emiratis about how Israelis think so that they can avoid making mistakes.”

Baqer’s knack for navigating the sensitive realm of Arab-Israeli relations impressed the Israeli founders of the UAE-Israel Business Council. He’s become instrumental in the council’s efforts to promote building further contacts in the Gulf.

“The most interesting thing about trade with the UAE [and Israeli companies] is not so much what trade they’re going to do with the UAE but what trade they’re going to do through the UAE,” Fleur Hassan-Nahoum, a co-founder of the business council and a deputy mayor of Jerusalem, told The Circuit. “For any Israeli companies that see themselves trading with the East, Dubai and Abu Dhabi are very interesting hubs for them to do it through.”

Israeli Prime Minister Yair Lapid has sought to expand Israel’s relations with Arab countries and enlisted U.S. help during President Joe Biden’s Middle East trip in July. Biden wrote in The Washington Post that he flew directly from Israel to Saudi Arabia for a summit meeting with Gulf Cooperation Council leaders in Jeddah as a “small symbol of the budding relations and steps toward normalization between Israel and the Arab world, which my administration is working to deepen and expand.”

Affinity Partners, a private equity firm founded by Jared Kushner, the former White House adviser and son-in-law of former President Donald Trump, plans to invest millions of dollars in Israeli startups from the $2 billion it raised from Saudi Arabia’s sovereign wealth fund, according to The Wall Street Journal.

Israelis with experience in trade with Saudi Arabia said much has changed in recent years. “It used to be, OK, pretend to be American, pretend to be British, pretend to be this or that,” Shmuel Bar, chief executive of Herzliya, Israel-based IntuView, told The Circuit before Biden’s trip. “That’s no longer the case. When you talk to them, it’s not, ‘let’s play make-believe.’”

Saudi Minister of State for Foreign Affairs Adel al-Jubeir said during Biden’s visit that normalization with Israel was a “strategic option,” but only if Israel agrees first to a two-state solution with the Palestinians.

Hassan-Nahoum, 48, who grew up in Gibraltar, where her father was mayor and chief minister of the British territory, said Israel’s commercial relations with Saudi Arabia are following a “similar pathway” to the business links with the UAE before the Abraham Accords, when an estimated 200 companies were engaged with the tiny Gulf state. She said many Israeli companies in fields ranging from food-tech to renewable energy are now operating discreetly in the Saudi kingdom.

“We may not get a big shiny ceremony on the White House lawn, but I think Saudi Arabia is in the process of normalizing quietly with Israel,” Hassan-Nahoum said.

In a first, Israel participates in Global Aerospace Summit in Abu Dhabi

In another debut for Israel stemming from the Abraham Accords, the country’s leading aviation manufacturer — Israel Aerospace Industries (IAI) — participated in a major industry conference last week in the United Arab Emirates.

The three-day Global Aerospace Summit, held at the Emirates Palace in Abu Dhabi and hosted by the Mubadala Investment Company, covered topics ranging from aviation and space to cybersecurity and innovation. It brought together more than 1,000 senior executives from the aerospace and defense sectors in countries around the world that are eager to foster global collaboration and partnerships.

The presence of IAI, which produces aerial and aeronautic systems for both military and civilian use, broke new ground for Israel nearly two years after it signed normalization agreements with the UAE and several other Arab nations.

“What is important is that we are in the UAE and this summit is a semi-historical event for us because we are attending it for the first time ever,” Sharon Biton, IAI’s vice president of marketing for the Middle East and North Africa, told The Circuit.

Global Aerospace Summit in Abu Dhabi (Courtesy)

The summit, now in its sixth edition, also welcomed 120 expert speakers that engaged the audience with more than 30 hours of panel discussions and workshops aiming to help shape the future of the industry. 

IAI was one of the sponsors for the Global Aerospace Summit. With 15,000 employees, including 6,000 engineers, the company, according to Biton, is the largest high-tech firm in the Middle East. A leader in both the defense and commercial markets delivering state-of-the-art technologies in air, space, naval, cyber and homeland defense, IAI is fully owned by the Israeli government. It designs, produces, develops and maintains civil aircraft, drones, fighter aircraft, missile, avionics and space-based systems. 

In 2021, IAI reported annual sales of approximately $4.5 billion with an order backlog of $13.4 billion. 

“The UAE is a hub for the Arab world in general, and the Abraham Accords gave us a big boost so that we as Israelis are now able to come to all kinds of places [in the UAE] and we get licenses to market in all kinds of places,” Biton said. “The UAE as a business hub symbolizes success for the region.”

Since Israel signed the Abraham Accords at the White House in September 2020 with the UAE and Bahrain, it has rewritten the rules of Middle East business after being shunned by most of the Arab world following its establishment in 1948. Among other significant developments in the past two years have been the first direct flights to the Gulf states from Israel and invitations for Israel to participate in the Dubai Expo and the World Cup soccer championship matches in Qatar later this year.

While IAI was the only Israeli company with a physical booth at the summit, several other Israeli individuals from the industry were present and participated in various panels, including one on “Cybersecurity in the Aerospace Sector,” which examined the most significant cyber security challenges facing the aerospace sector. It was led by Mohamed Al Kuwaiti, the head of cyber security for the UAE government, with speakers including Yigal Unna, former director general of the Israel National Cyber Directorate, and IAI’s Esti Peshin, the company’s vice president and general manager of its cyber division. 

In the talk, Peshin highlighted the need for cyber security solutions for commercial aviation.

In a panel on R&D investments, Eytan Eshel, IAI’s chief technology officer, stressed the company’s work as a bridge.  “IAI’s Innovation Center is a prime example of bringing together startups and the defense ecosystem to develop new, unique solutions,” he said. “We invest in the future by investing in innovation.”

Jacob Rozmann, vice president and general manager of Lahav Aerostructures in IAI’s Aviation Group, emphasized the importance of forging regional ties between Israel and the region., “Regional cooperation for transforming supply chains will result in quicker shipment, lower costs and a stronger industry network,” Rozmann said.

Global Aerospace Summit in Abu Dhabi (Courtesy)

Irit Fried, who is in charge of education programming in IAI’s Space Division, said teaching young people about opportunities beyond earth’s orbit is critical. “Our mentorship programs share knowledge and passion with students and inspire future commitment to space.” 

Over the last few years, IAI has expanded its business activities in the UAE. In November 2021, Abu Dhabi-based EDGE, the region’s leading technology company for defense, signed a memorandum of understanding with IAI during a ceremony at the 2021 Dubai Airshow to establish a maintenance center for a selection of IAI’s systems in the UAE. 

“This summit is about meeting people,” Biton said, “and it is about bringing into action our slogan, which states ‘Together we have a Brighter Future.’ We are aiming for a mutual future that must be brighter and that must talk about not only providing Israel with solutions but also cooperation.”

The summit, added Biton, was “a tremendous success with lots of traffic of very important people that led to very important meetings, which led to interesting opportunities. We felt a warm welcome from the Emiratis as individuals representing IAI and as ambassadors of the State of Israel — emotionally and business-wise.”

Addressing the gender imbalance in Israeli high-tech

Not far from Ben Gurion Airport, in a spacious and airy hangar, sits Israel’s latest collection of highly sophisticated Unmanned Aerial Vehicles (UAVs). Large and small, short distance and longer range — even the first Israeli drone, circa 1980, strung from the ceiling — the space has everything one might expect to inspire, create and develop these innovative flying machines. However, among the workstations, spare parts and a plethora of highly trained engineers, there’s one thing conspicuously missing: women.

The space is part of a sprawling campus belonging to Israel Aerospace Industries (IAI), a state-owned company that develops all manner of civilian and military aerial systems it sells to more than 100 countries. It is a leader in the field both in Israel and around the world, however, among its 15,000 engineers only around a third are female.

The shortage of female engineers at IAI mirrors Israel’s broader technology and innovation sector today where women make up roughly a third of employees. And IAI is among the leaders in the industry looking for ways to address this gender imbalance.

“We want to raise the percentage of women in the engineering positions in the high-tech world in the future, not only for the IAI but for all of Israel,” Gili May, IAI’s chief relationship officer, who is responsible for the company’s social responsibility outreach, told Jewish Insider. “I think IAI has an obligation to fight for the right of women to take their place in the field of engineering. Of course, we hope that those graduating from our program will come back to us in the future, but that does not really matter as long as some of the girls from this program end up becoming engineers.”

The company’s Engineers of the Future program, launched six years ago, offers 100 teenage girls each year the chance to take a peek inside the industry, showing them the kind of jobs available and even connecting them with female mentors already working in the field who can guide them through their hectic adolescent years.

“I was always interested in science, and I always wanted to head in that direction but doing this program really helped to develop my dreams, it showed me what was possible and what I might be able to accomplish,” Eliya Harari, who participated in the program in 2017, told JI.

Now 21, Harari is completing a degree in computer science at Bar-Ilan University. She said that while she was interested in computers in high school, she did not receive too much encouragement or support from her family, her teachers or her peers.

“When you are young, there are so many things that you want to do and it is distracting,” Harari said. “But when I joined the [IAI] program, I met other girls who were like me, and that really made it fun and gave me some support.”

A recent study by Power in Diversity, a joint venture of more than 60 Israeli venture capital firms and more than 170 Israeli startups aimed at promoting diversity and inclusion, found that women account for only 33% of all industry employees. Dror Bin, CEO of Israel’s Innovation Authority, told JI in an interview last month that boosting the number of women in the sector was one of the authority’s main priorities, also in part to address an overall shortage of manpower in the country’s high-tech sphere.

“The manpower shortage in Israel’s high-tech [sector] is chronic,” said Maty Zwaig, CEO of Scale-Up Velocity, a branch of Start-Up Nation Central, which seeks to advance Israel’s high-tech industry and provide solutions to its human capital challenges.

Zwaig said that along the traditional route to careers in Israeli high-tech there were many points where young women could and should be encouraged and engaged much more, which would ultimately increase their participation in the industry.

“The pipeline to the high-tech industry in Israel begins with STEM, then there is the army and then university,” she described, using the acronym for the curriculum focused on science, technology, engineering and math. “We have a clear understanding of points where things go wrong, where we lose girls in the system.”

According to the Council for Higher Education in Israel, while the number of students overall studying STEM has increased over the past decade, still only 29% of students in subjects such as computer sciences, electrical engineering and electronics are female, Haaretz reported last month. The report highlighted that the gender gap begins in junior high school, where boys make up most of the students taking such subjects and continues on through the “pipeline” that Zwaig describes.

The number of girls or young women involved in science and technology dwindles even further when Israelis reach the army, said Zwaig, a former lieutenant colonel in the IDF, where she headed R&D units in the Intelligence Corps, citing her organization’s own research. 

Only around 27% of army programmers are women and only 17% of cyber units are female, she said, adding that by the time many young women reach university, degrees focused on technological or science – subjects that almost guarantee a future in engineering or some aspect of high-tech and innovation – feel out of reach.

At IAI, which has been working to advance female engineers in its own ranks, the four-month training program for junior high school girls not only promotes STEM, it also works to develop bonds with those already working in the field.

Dikla Avraham, one of the few female engineers at IAI and a mentor for the program (not Harari’s mentor), said that such outreach was important in introducing “young women to the world of engineering and science,” which they might be reluctant to join because it such a male-dominated industry.

The program, she said, gave young women confidence and the mentoring showed that it is possible to also become wives and mothers, even while working in a highly competitive and very demanding industry.

May, who is also IAI’s spokesman, said that encouraging teenage girls to stick with scientific subjects throughout high school, the army and into university when there were so many life distractions came down to is “branding.”

“Of course, you need the basic capabilities in order to succeed in one of these subjects, but you don’t have to be a rocket scientist in order to matriculate in physics,” he pointed out. “We want to emphasize that studying these subjects is cool and that being an engineer is cool too.”

Scale-Up Velocity’s Zwaig is hopeful too, saying that even beyond the traditional life path laid out for Israelis, “it is never too late for women to go back and learn these topics” and find employment in the high-tech field.

Among the programs run by Scale-Up Velocity, is a retraining course for ultra-Orthodox women who are the main breadwinners in their community and are becoming increasingly present in Israel’s high-tech hub.

“If women want to do something that pays more, then they can find a way in,” Zwaig concluded. “The main problem is that women, at a certain stage, tell themselves this field is not for them, but there are so many positions they can do, it’s just a matter of self-perception.”