The Rise of Corporate Venture Investments in Food-Tech and Agri-Tech

For ICL, Corporate Venture Funding transcends financial gains, catalyzing innovation and boosting its contribution to the agri-food value chain

Start-ups in the global business landscape are experiencing a surge of corporate venture capital  (CVC) collaborations. These essentially involve corporations investing directly in those start-ups in exchange for equity stakes.

With growing consumer demand for sustainable and ethically sourced better-for-you food and beverage products, numerous players are entering the food scene propelling innovations in agri-tech and food-tech. Established corporations in these sectors are increasingly turning to start-ups and engaging in corporate venturing as part of a deliberate strategic initiative to access the solutions that enable them to meet these strong consumer demands.

A win-win formula

For the CVC teams, the aim of such collaborations is to access novel technologies and secure a competitive edge in their respective dynamic and rapidly evolving industries. In return, young food-tech and agri-tech companies receive financial backing, resources, and—importantly— validation. These are essential levers for getting their concepts off the ground and into materialization. It’s a win-win model for all.

Leading agrifood corporations: ADM, Bayer, BASF, Cargill, FMC, and Syngenta have collectively made more than 90 investments in over 65 companies.

 Over the last few years these giants have been paying more attention to agri-food start-ups and have established their own VC units.  Syngenta Group Ventures stands out as one of the earliest and most engaged corporate venture capital (CVC) participants in the agrifoodtech sector. Since launching its VC in 2009 it has channelled strategic capital to numerous start-ups including Phytech, Myco Technology and Blue Nalu and has enjoyed some successful exits as with GreenLight Bioscienes.

Leading global specialty minerals company ICL  Group goes beyond just tapping into the start-up space with investments by establishing its own ICL Planet Startup Hub accelerator. The accelerator merges ICL’s longstanding, experience, and product offerings with new external concepts. ICL Planet Startup hub scouts game-changing agrifood tech and climate companies addressing critical global needs and with the potential to have a positive environmental impact.

ICL Planet Startup Hub – ICL’s Venture Arm

The hub largely serves pilot-ready start-ups and more mature market-ready start-ups, as well as some in their early stages operating within the agri-tech,food-tech and climate domains. The focus is primarily on crop nutrition, alternative proteins, natural ingredients, plant-based functional ingredients and climate technologies, mainly energy storage.

Since its inception, ICL Planet invested in six companies. Beyond funding, the portfolio companies enjoy R&D collaboration, with options for field trials, application laboratories and new product pilots, as well as full collaboration in leading them successfully to the market.

“ICL recognizes ICL Planet’s role as a paramount strategic catalyst for it’s holistic business development and growth strategy. CVC is a risky business, but it is essential if we are to stay ahead in this constantly evolving, competitive landscape and bring real value to our offerings,” explains Hadar Sutovsky, Vice President of Corporate Investments at ICL, and general manager of ICL Planet. “When you do it right, with well-defined model, strategy, and focus, the strategic rewards of corporate investments are phenomenal—not only for the companies in terms of the financial rewards and business growth, but for all stakeholders”.

Focused discipline

The hub accommodates several specialized business units, each focusing on specific disciplines, for example biologicals and clean label  food ingredients. “It’s not just a financial collaboration as with a traditional venture capitalist whose central goal is to reap the returns on its investment. For us it’s more about the strategic value it can bring and is collaboration of efforts,” points out Sutovsky. “We operate a hybrid model, merging principles from incubation, acceleration, and venture capitalism to create a new investment concept. It gives us the flexibility and space to steer the partnership on the road to success, ensuring that the milestones, both commercial and in product development, are fully and successfully achieved.”

Sutovsky notes that the hub specifically seeks out complementary start-ups and technologies whose offerings can be inculcated into the company’s expanding portfolio of products and perhaps even could evolve into an acquisition.

An example of the promising agri-tech start-ups already enjoying acceleration under ICL is the San Diego, California-based start-up Plantible Foods, Inc. The emergent company teamed up with ICL food specialties to create a clean-label alternative to the chemically modified binder methylcellulose, common in meat alternatives. It is produced from the fast-growing aquatic plant Lemna spp (a.k.a. duckweed).

Also under ICL’s investment umbrella is Lavie Bio, an AI-driven microbials company specializing in the design of cutting-edge biologicals for crop protection and nutrition. Having armed the new venture with USD10 million investment, their collaboration focuses on co-developing innovative biostimulants and is set to enrich ICL’s agricultural division portfolio of products.

“Studies show that start-ups that receive strategic corporate backing are more prone to success,” informs Sutovsky. “That is why more start-ups are seeking this form of cooperation as opposed to merely venture capital backing. They recognize it as a more meaningful partnership.”

In the midst of global geopolitical and economic instability, there has been a notable period of investor caution, leading to a slowdown in investments across nearly all industries. This has led venture investors to be more selective about their investment choices. “We were in rough waters, but for corporations such as ICL, this as an opportune moment for growth. Despite the challenges, corporations have shown remarkable resilience. Throughout 2023, the agrifood-tech industry managed to weather the storms of uncertainty and is emerging as a growing field capable of providing stable backing for start-ups” concludes Sutovsky.